A judge of the Supreme Court, New Zealand's highest court, has brought a legal challenge to an inquiry into his conduct. The inquiry could result in a recommendation that he be removed. The inquiry arises from allegations about:

• the way in which he disclosed a business relationship with counsel for one of the parties to a case that he heard when he was a judge of the Court of Appeal;

• his failure to recuse himself from the case; and

• his conduct in relation to later related Supreme Court proceedings.

Facts

The background case concerned the Wool Board Disestablishment Co Ltd's refusal, on several occasions, to provide funding for Saxmere Company Limited and some Merino wool marketing organisations. The High Court found that the Wool Board had acted negligently and in breach of statutory duties. The Wool Board appealed to the Court of Appeal. 

The judge in question was then a Court of Appeal judge. The president of the court assigned him as one of the three judges to hear the Wool Board appeal. Before the hearing, the judge spoke informally with counsel for Saxmere and disclosed his relationship with counsel for the Wool Board. Counsel for Saxmere was informed that the judge and counsel for the Wool Board were close personal friends (which counsel for Saxmere already knew), and that they had a business relationship. Exactly what was said is unclear. Saxmere did not object to the judge hearing the appeal. 

The three Court of Appeal judges unanimously allowed the appeal, finding no negligence or breach of statutory duty. For reasons given by the president, the court allowed the Wool Board's appeal and dismissed Saxmere's cross-appeal. 

First Supreme Court judgment

Saxmere subsequently discovered more details of the relationship between the judge and counsel. It appealed to the Supreme Court.

By then, the judge was a member of the Supreme Court, although he was not sitting on the appeal. He provided the Supreme Court with a written statement in reply to affidavit evidence concerning his relationship with counsel and the oral disclosure that he had made before the Court of Appeal hearing. Among other things, the affidavits and the judge's reply revealed that counsel and the judge were close, longstanding friends. They shared an interest in thoroughbred horse breeding and racing, and in 1998 had formed a company in which they each held a 50% shareholding. The company bred one or two horses a year and owned property on which a substantial horse stud venture was operated.

The Supreme Court approved the test that has been adopted - albeit with subtly different formulations - in New Zealand, England and Australia, whereby a judge is disqualified "if a fair-minded and informed lay observer would have a reasonable apprehension that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide". This principle gives effect to the requirement that justice should be done and be seen to be done. The court noted that the fair-minded lay observer is presumed to be intelligent, to view matters objectively and not to be unduly sensitive, suspicious or complacent about what may influence a judge's decision. 

Applying the test to the facts as they were then known to the court, it concluded that a fair-minded observer would not have had a reasonable apprehension of bias on the judge's part. The court was not concerned by the alleged friendship or the professional associations between the judge and counsel; rather, it concentrated on the identified business relationship that had been identified as existing between them. Nothing in the facts indicated that the judge was beholden to counsel because of the business dimension to their relationship, in the opinion of Justices Blanchard and McGrath. The former noted that such a situation might exist if, for example, the judge had been lent money by counsel or depended on him to meet some liability; however, nothing indicated such indebtedness in this case. The latter added that in view of the alleged doubt concerning the exact nature and extent of the financial relationship between the judge and counsel, he was satisfied that:

"in following the approved procedure of making a written statement to this court concerning the complaint, the judge will have disclosed to the court all facts that might be relevant to the issue we have to address."

Second Supreme Court judgment

Saxmere applied for recall of the decision. The grounds included a claim that the judge was beholden to counsel because of their financial interdependence and mutual obligations. The judge filed a second statement with the court, in which he responded to the claims. He described the difference in shareholders' contributions to the company by means of a percentage margin. He also offered to provide accounts on a confidential basis. At the court's request, the judge supplied the dollar amount of the differential in contribution in a further statement.

It transpired from the further disclosure that counsel and the judge had made substantial advances to the company to finance the acquisition and development of its land, and that such advances - at that point - had been unequal. The judge said that, as a general principle, he and counsel attempted to achieve approximate equality of contribution, but that imbalances in the level of their accounts developed periodically because of differing payments made to or on behalf of the company. When they became aware of a significant imbalance, they agreed on how they should return to a position of approximate equality. It emerged that shortly before the Court of Appeal hearing, the imbalance had been NZ$74,249 (or NZ$242,804, calculating it on a different basis). It was also disclosed that at the time of that hearing, the company was preparing to participate in the settlement of a sale and purchase of a property, and that arrangements were being made for the company to borrow on the security of its existing land. The Supreme Court considered that the judge and counsel must have relied on one another for mutual cooperation to enable the funding and completion of the purchase of the additional land during the time when the Saxmere judgment was reserved in the Court of Appeal. 

The Supreme Court concluded that (i) the objective lay observer could reasonably consider that the judge was beholden to counsel at the relevant time because of the imbalance and the need for mutual cooperation, and (ii) this might unconsciously have affected the judge's impartiality of mind in deciding a case in which counsel was appearing.

The court recalled its earlier judgment and the substantive proceedings were remitted for rehearing in the Court of Appeal by a new panel of judges. 

The Judicial Conduct Panel Act 2004 provides a mechanism for considering complaints about a judge's conduct. A judicial conduct commissioner conducts a preliminary examination of the complaint and, if appropriate, recommends to the attorney-general the appointment of a judicial conduct panel to carry out an inquiry. The panel then conducts a hearing and reports to the attorney-general, who decides whether to initiate removal (and has complete discretion in this regard). 

Three complaints were made to the judicial conduct commissioner. The complainants included a retired Court of Appeal judge who had sat on the Supreme Court, but had played no part in any of the Saxmere proceedings and was not present at the hearings. 

Among other things, the commissioner concluded that a judge's obligations in making disclosure to a court are strict. In this instance, the judge had been under obligation to disclose promptly whatever might be relevant, and there were questions about the adequacy of his disclosure in that regard. The commissioner considered that the judge's own good-faith views on his obligations regarding disclosure to the court were important. However, questions of fact remained unresolved in respect of the advice and encouragement that the judge had received from counsel as to the disclosure that he should make. According to counsel, he had said that the judge's disclosure to the Supreme Court, before the first Supreme Court proceedings, should "include everything", including the fact that the shareholder contributions were unequal. The judge had a different recollection and did not think that counsel had expressed this view to him.

The commissioner concluded that an inquiry into the alleged conduct was justified; if established, the conduct might warrant consideration of the judge's removal. This appeared to be on the basis that his conduct, although not dishonest, potentially fell so far short of accepted standards of judicial behaviour as to warrant the penalty of removal. The commissioner recommended to the attorney-general that a judicial conduct panel be appointed to inquire into the conduct. 

Normally, the commissioner does not publish decisions or the reasons for them. However, in this case he decided that the purpose of the act - that is, to enhance public confidence in, and to protect the impartiality and integrity of, the judicial system - would be best served by making public the terms of his decision and the background and reasons for it. 

Judge's application for judicial review

The judge has brought a judicial review application in the High Court, challenging the legality of the recommendation to appoint a judicial conduct panel. Essentially, he argues that, even taking the darkest view of his conduct as described by the commissioner, it falls short of the threshold for the commissioner to recommend that a judicial conduct panel be appointed - namely, that an inquiry into the alleged conduct is necessary or justified and, if established, the conduct might warrant consideration of the judge's removal. 

The judge is expected to argue that the type of conduct that has led to the removal of a superior court judge in comparable jurisdictions has always involved dishonesty, moral turpitude or similar failings, and that a judge has never been removed for failing to disclose a disqualifying conflict of interest, still less when the failure did not involve bad faith. It will be argued that the commissioner erred in recommending to the acting attorney that she appoint a panel, and that as the commissioner's recommendation was wrong in law, it should be set aside. 

The hearing of the judicial review application is expected to have been concluded by the date of publication.