The judge in the South Canterbury Finance fraud trial has declined an application by the defence to stand down.

Justice Paul Heath is the sitting judge in the High Court trial of former SCF chief executive Lachie McLeod, 50, and two of the company's former directors, lawyer Edward Sullivan, 72, and accountant Robert White, 70.

Today's hearing was held after the head of the Serious Fraud Office (SFO) told a conference prior to the trial beginning that they were lucky to have Justice Heath as the trial judge.

Justice Heath this afternoon told the Timaru court he had considered all the evidence and had decided to dismiss the application, and the trial would now continue.


In what has been described as New Zealand's biggest ever fraud trial, McLeod, Sullivan and White have all denied a $1.6 billion fraud.

The trial before Justice Heath alone is set down for 3-4 months and is a document heavy case, with the Crown relying heavily on the evidence of paperwork.

A total of 40 Crown witnesses, including former SCF employees, people involved in transactions with various companies, and forensic or expert witnesses, are expected to be called.

The start of the trial was delayed for an hour last Wednesday morning over concerns that a comment made the previous week by the boss of the SFO could have led to a perception that Justice Heath was biased towards the Crown.

SFO director Julie Read referred to Justice Heath as "our judge'' while speaking at the 13th Annual Corporate Insolvency and Restructuring Conference in Auckland.

Lawyers for the three accused, Pip Hall QC, Bruce Squire QC, and Jonathan Eaton QC wanted a delay to the start of the trial in order to look more closely at the issue and to see if the judge should consider stepping down from presiding over the trial.

Justice Heath said it was "extraordinary'' to think anyone would possibly think he would be anything other than impartial.

He declined to recuse himself, saying proceedings should continue, and if defence counsel wished, they would be given time to formally pursue the matter further, which is what occurred today.

- Additional reporting by Kurt Bayer of APNZ