Phil Taylor

Phil Taylor is a Weekend Herald and New Zealand Herald senior staff writer.

Justice in the firing line

The Supreme Court building in Wellington. Photo / Mark Mitchell
The Supreme Court building in Wellington. Photo / Mark Mitchell

There is unprecedented public criticism of New Zealand's top court. The quality of several Supreme Court judgments have been criticised here and overseas, and concerns expressed about the impact on our case law and international reputation.

Critics include Jim Farmer, QC, Tony Molloy, QC, and former appellate judge Sir Edmund Thomas - and some comment is stinging.

Many are calling for judicial specialisation throughout the High Court to improve performance.

"I can't recall a time when our most senior local court - the Court of Appeal before 2004 and the Supreme Court since then - has been the subject of so much criticism," senior commercial barrister Anthony Grant wrote in online magazine NZ Lawyer.

Grant believes judicial performance in commercial cases is hurting business and the Government's aspirations.

"If the Government thinks New Zealand can become an international financial centre, it should reflect on such criticisms, because there is no possibility that international financiers will bring their business here if they lack confidence in our legal system," Grant said in a column that refers to an editorial in Trusts and Trustees .

The April 2010 edition of the respected international journal looked at trust law in a variety of countries. Its editorial said of New Zealand: "The acute problem is the lack of judicial specialisation, combined with a high proportion of judges (below the very distinguished exceptions of Peter Blanchard and Andrew Tipping on the Supreme Court) whose judicial utterances display a serious ineptitude for equity and trust matters."

The journal is co-edited by Molloy - a frank critic of the profession and the judiciary - and has a stellar international editorial board.

Farmer is another who says expert commercial judges are needed and the Law Commission has noted, as part of its review of the law underpinning the courts, that such concerns exist "in the commercial community". It suggests expert panels be set up, while Attorney-General Chris Finlayson recently said "there is much to be said for some specialisation in the High Court".

The Law Commission, however, has indicated many judges are against it and senior barristers have told the Herald that Chief Justice Sian Elias is opposed to formal specialisation and expects every judge to have broad competence.

It is unusual that criticism of the Supreme Court is so public and those voicing it include the likes of Farmer.

He takes issue with two cases. Of the first (in which he was counsel for the losing party) he said the court had dealt with competition law in a "superficial way". "I do not comment ... on the outcome," he writes in his blog, "but I think I am entitled to endorse the views of many others practising in this important area of law and policy that we were entitled to much better principled guidance than we received in the short judgment that was delivered."

The second case is the court's ruling that quashed the conviction for offensive behaviour of a protester who set fire to the New Zealand flag at an Anzac Day dawn parade in front of returned servicemen and their families. The court seemed to hold that some degree of public disorder must result from the action before the offence is committed.

"It is hard to suppress a call for some homely commonsense and a far greater degree of sensitivity for those who were offended", Farmer said.

Later on television's Court Report he suggested that the Supreme Court restricts the number of cases it hears and tries to deliver a single judgment in order to better provide clarity of the law.

Lawyer and former Act Party MP Stephen Franks notes that Farmer's comments are "a mild version of the worries widely expressed among eminent barristers". That accords with comments made to the Herald by two senior commercial barristers, both of whom requested that they not be named because they regularly appear before the top courts.

Both say they know of overseas business people who are shying away from doing business here because of concerns with some judgments.

But while the Supreme Court has not made an encouraging start, nor did Australia's top court. "The High Court of Australia wasn't [initially] staffed by judges who had the firepower and discipline and ability to do a great job," says one of the barristers. "It has taken years for the Australian High Court to recover its mana."

"It was always going to be a big ask [for New Zealand] to translate from the Privy Council to a highly competent Supreme Court," he says. "You just don't get the depth of talent out of four million that you do out of 65 or 25 million."

But he also doubts the best people were picked. "What we did was promote everybody en masse from the Court of Appeal to the test team. It was understandable but it wasn't smart." He rates Justice Blanchard (who with Justice Tipping was appointed a Privy Councillor in 1998) as the best of the current Supreme Court judges, but says New Zealand doesn't do as well as Australia and England at transferring its best lawyers to the bench.

Lack of recognition and prestige and comparatively low income (top barristers can earn far more than the $431,000 salary of a Supreme Court judge or the $460,000 earned by the Chief Justice), were possible issues.

Justices Elias, Blanchard and Tipping were appointed at the court's establishment and have been joined by Justice John McGrath in 2005, Justice William Young in 2010 and Justice Robert Chambers last December.

The prospect of appeal to the Privy Council had a cautionary effect on our top court that one barrister says is now lost. "With the Court of Appeal ... there was always a weather eye as to what might happen in London and so they were bloody careful and very good by being very careful.

"I think people who are familiar with [the Supreme Court] will be of the view that it is not up to standard, and it starts at the top."

In defence of the Supreme Court, QC Rodney Harrison says the benefits include easier access, particularly in areas of law other than the Privy Council's staple of commercial and tax cases. Fears of a lack of independence have been put to rest by a willingness to overturn Court of Appeal decisions.

The British court heard up to a dozen New Zealand cases a year before the establishment of the Supreme Court, which has since heard on average 29 substantive appeals (argued in person). A third of those have been criminal appeals - a much higher ratio than heard by the Privy Council.

More cases means more opportunities for criticism, notes Otago University law professor Andrew Geddis, more so as the top court gets the most refined and contentious issues to decide. Different styles - the Privy Council delivers a unified decision whereas the Supreme Court judges regularly give individual judgments - can lead to less clarity and therefore to criticism. "With the Privy Council," says Geddis, "you did know what the ruling was."

The difference is seated in their origin. The Privy Council started as an advisor to the King of England and so had to speak with one voice. All judges of the Supreme Court are equal, so the Chief Justice can encourage but not insist on uniformity.

But, says Geddis, uniformity for the sake of clarity can lead to an undesirable narrowing of the law which inhibits its application.

Assessing the quality of the court's decisions is problematic, Harrison said in a response published in NZ Lawyer to Grant's critique, but it didn't necessarily follow that the law as declared by New Zealand's top court "is of lesser quality simply because it differs from that of say England or Australia".

While the Justice Bill Wilson affair (the judge resigned during an inquiry into whether he had adequately declared a conflict of interest) may have damaged public confidence in the Supreme Court, Harrison believes "the legal profession as a whole does not lack confidence in the Court and its future".

Others, however, say many commercial litigants are turning to mediation and arbitration due to disenchantment with the courts.

Though the latter appears to be growing, by how much is unclear, as the process is private and data for defended civil hearings in High Courts is inconclusive.

The number of court hearings dropped to 301 cases in 2010 (a quarter less than the previous three years) but rebounded to 479 cases last year. A Justice Department spokesman said a lighter criminal case-load in the past two years had enabled the High Court to focus on progressing civil cases. Irrespective of whether that explains the sudden bounce-back, chief High Court judge Justice Helen Winkelmann has acknowledged "cases are being referred to mediation in greater numbers by lawyers".

A trend away from public litigation to the private arbitration system comes with a danger to the development of law, which relies on cases being tried in court, and also to the type of courtroom experience needed to develop good advocates and judges.

Much of last year's caseload increase was in Auckland. Even so, Grant suspects that amounts on average to less than one for each of the city's barristers a year. He believes specialisation will improve confidence in the system and boost usage whereas now people are put off by cost, delay and unpredictability of outcome.

Barrister Colin Henry would have welcomed some specialist knowledge on the bench in a recent refugee case in which he appeared. It was presided over by a newly appointed judge with a background in insurance defence work. "The judge took nine months to deliver a judgment ... overturned on appeal a year later," Henry said in a letter to NZ Lawyer, "a classic case of 'justice delayed' that could well have been avoided by having a specialist judge."

Brendan Brown, QC, is not surprised more people might be opting for mediation or arbitration for disputes suited to that. In these financially constrained times, people are more willing to seek a quick and cost-effective outcome that allows them to have an ongoing relationship with the other party.

But he is not convinced that there is a significant trend away from the courts or a general disillusionment. Many areas of law - including his specialties of intellectual property, tax and competition law - require a definitive judgment. A patent is valid or it isn't, he says. Only a court can say an arrangement is tax avoidance.

England has specialist courts for such narrow fields as construction, technology and patent cases but there isn't the work here for that and may not be even for broad-brush specialisation. There is already scope in commercial and patent law for a judge to have an economist or scientist sit with them.

Brown says the commercial lists that operate in Auckland and Wellington (for which three judges in each centre are nominated) could possibly be refined to become a commercial court. "I think [that] would be the answer to the noise we hear ... I was going to say groundswell but there is no such thing as a groundswell. A lot of the stuff is repeated by the same people."

The Law Commission says the generalist nature of the High Court is "one of its strengths". But Farmer disagrees: "... it is, in my view, a weakness, not just in ensuring that the most appropriately qualified and experienced judges determine commercial cases but in all kinds of cases as well."

This included, wrote Farmer, criminal trials in which judges with little or no trial experience are expected to preside to the detriment of prosecutors and the accused.

He said some litigants saw it as a "lottery" whether an appropriate High Court judge would be assigned to a commercial case.

The perception that the High Court was losing commercial cases to private arbitration run by former High Court judges with reputations in commercial law was "a matter for public concern".

Farmer does not believe a rotating panel of commercial judges in the general jurisdiction of the High Court would be enough to restore lost confidence, and favours having a distinct "Commercial List, Commercial Division or a Commercial Court".

Molloy notes that other professions such as medicine and engineering specialise as a matter of necessity. "The courts are fouling their nest on a regular basis because judges are getting rubbish from lawyers and they don't recognise it," he told this month's North & South. Errors were consequently making their way into judgments, being quoted as precedents and "before you know it your law is corrupting".

At the Supreme Court level, where its six judges are appointed until compulsory retirement at age 70, evolution will take time, even though two of its members (Blanchard and Tipping) retire later this year.

Australia's top court transformed itself through careful appointments by successive governments as judges retired, says a senior barrister. "And then they got a cracker chief justice in Murray Gleeson".

Question marks

Six Supreme Court decisions that have been criticised

1 Commerce Commission v Telecom (0867)

Upheld lower court decisions and found Telecom did not have an anti-competitive purpose when it imposed its 0867 dialling regime on competitors.

Critics: Jim Farmer, QC; Paul Scott, law lecturer, Victoria University.

Farmer: "As (losing) counsel in the case, I do not comment here on the outcome ... but I think I am entitled to endorse the views of many others practising in this important area of law and policy that we were entitled to better principled guidance than we received in the short judgment that was delivered. Giving guidance and certainty on issues of public importance is, after all, part of the raison d'etre for the Court. The claim that New Zealand and Australian law on what constitutes taking advantage of market power are now in harmony will simply not withstand analysis."

Scott: "The Supreme Court has missed the point, misread Australian law, and taken a wrong turn ..." The judgment was also "internally inconsistent".

2 Valerie Morse v the Police

Overturned the conviction for offensive behaviour of a protester who set alight the New Zealand flag in front of veterans and their families at an Anzac dawn parade. The judges held that the District Court trial went amiss because it did not consider that for the offence to be committed some degree of public disorder must result from the action.

Critic: Jim Farmer: "If the Supreme Court wishes to gain acceptance as the source of wisdom on all legal matters, it did itself no favours." Separate judgments analysed the history of legislation and relevant case law "in great detail and with great skill" but "it is hard to suppress a cry for the injection of some homely common sense and a far greater degree of sensitivity for those who were offended".

3 Hamed and others v R [2011] NZSC 101

Urewera police raid case held that film and photographic evidence was illegally obtained through trespass and in breach of protections against unreasonable search and seizure. Parliament subsequently passed legislation to clarify law regarding covert recording by police.

Critics: Sir Edmund Thomas and Jeff Simpson, Government. Thomas said the judgment created confusion in the law and "made it difficult for judges at first instance to sensibly carry out the required balancing exercise. The Chief Justice's opinion that the police have no powers other than powers conferred by statute is in error."

"The Chief Justice's opinion that an unlawful search is necessarily an unreasonable search is unsustainable. Unlawfulness of itself, possibly no more than a technical or procedural defect, cannot be equated with unreasonableness."

4 Penny and Hooper v Inland Revenue [2011] NZSC 95

Ruled that two surgeons should not be allowed to funnel their income through company and trust structures thereby avoiding the top personal tax rate.

Critic: Tax barrister Geoff Harley (represented Penny and Hooper).

Harley said the court had got certain facts and reasoning wrong. The impact since has been far-reaching - the IRD began a crackdown this month on others who may have used similar arrangements in the past to avoid tax. Such arrangements became popular when the top tax rate was 39 per cent.

5 Gibbons Holdings Ltd v Wholesale Distributors Ltd [2008] 1 NZLR 277

Decision that subsequent conduct of parties can be used as an aid to interpret a contract.

Critics: Law Quarterly Review, Court of Final Appeal in Hong Kong which included Sir Thomas Gault (a member of the Supreme Court at time of Gibbons but not on panel that delivered the decision). Commercial law specialist Anthony Grant wrote; "[Gault's] participation in a decision that politely rejected the Supreme Court decision in a case involving such an important topic as the interpretation of contracts has raised eyebrows overseas about what I will call euphemistically the 'reliability' of the Supreme Court."

6 Kain v Hutton [2008] 3 NZLR 589

Inheritance dispute relating to transfer of assets between trusts.

Criticism: "Mis-state[d] the true principle of construction concerning the exercise of powers".

Critic: Leading British QC, Frances Barlow, who said it "mis-state[d] the true principle of construction concerning the exercise of powers".Quote: The decision was "contrary to established authority" and represented "the triumph of form over substance".

- NZ Herald

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