A Supreme Court judge went on holiday with a Queen's Counsel while considering a high-profile appeal case in which the top lawyer was representing one of the parties.
Stephen Mills, QC, was the lawyer for former Conservative Party leader Colin Craig in his long-running defamation case against Jordan Williams, who won a record $1.27 million payout following a 2016 jury trial.
There were appeals and counter-claims by both Craig and Williams which ended up in front of the Supreme Court, the final avenue for litigation appeals in New Zealand, in a hearing last September.
Then in April this year, the Supreme Court released its judgment which favoured Colin Craig and ordered a retrial, on the grounds the jury in original High Court trial had been misdirected.
The five Supreme Court judges were split 3-2 on the ruling, with Justice Terence Arnold siding with the majority against Williams.
However, following the Supreme Court hearing - but before the judgment was delivered - it emerged that Mills went on a sailing holiday with Justice Arnold over the summer break.
There is no suggestion the judge and the QC discussed the case.
But documents released to the Herald reveal Williams' legal team has now applied for the Supreme Court decision to be recalled.
Williams declined to comment as the matter was before the court.
However, Colin Craig said his lawyer was professional and sought the approval of Williams and his legal team before going on holiday with Justice Arnold.
"In this particular case, Mr Mills took the very appropriate step of telling Mr Williams that [the holiday] had been planned and offering him the chance to say no," said Craig.
"He was offered that opportunity. If Mr Williams had concerns, he could have said no. But he didn't. I think that's quite professional [of Mr Mills]. I don't think Mr Mills can be criticised. He took Mr Williams at his word."
However, this conversation between Mills and Peter McKnight, Williams' lawyer, took place only after the Supreme Court hearing had concluded.
Mills is away from his office and did not respond to email, phone and text messages.
As the matter was before the court, McKnight declined to comment as to why he did not tell Mills to cancel the planned holiday with Justice Arnold.
While friendships between judges and lawyers are common in New Zealand's small legal world, the guidelines for judicial conduct state "care should be taken to avoid direct social contact with practitioners who are engaged in current cases before the judge".
"A judge may accept invitations to speak at law firms or barristers' chambers but should be careful to avoid any perception of a lack of impartiality," the rules state.
The rules for a judge to recuse themselves from cases where a potential conflict of interest may exist are not clear cut.
But the guiding principle is that a judge is disqualified from sitting on a case where "there is a real possibility that in the eyes of a fair-minded and fully informed observer the judge might not be impartial in reaching a decision".
The guidelines, released in 2017 by recently retired Chief Justice Dame Sian Elias, states once an appeal to the Supreme Court has been sought, each judge has a duty to tell their judicial peers about any "known circumstances which may give rise to a concern among the litigants, or the public".
If, after discussing the matter with the other judges, the judge feels he or she cannot act impartially (or a fair-minded observer might reach that view), the judge is supposed to recuse themselves.
If the judge feels they can be impartial, they are supposed to issue a minute to the parties involved in the litigation to draw their attention to the circumstances and invite any concerns to be raised.
If an objection is made, a decision on whether or not the judge should stand aside will be made by the other Supreme Court judges.
The Herald has been declined access to the "recall application" until the Supreme Court hearing on the matter, or if there is no oral hearing, a judgment is released.
This is because the rules that govern access to court documents give greater weight to "orderly and fair administration of justice" over the principle of open justice in the period before a hearing takes place.
But the Supreme Court did release two minutes which show new lawyers have taken the place of Mills and McKnight, who are now key figures in the legal battle.
Defamation expert Julian Miles, QC, is representing Colin Craig and Michael Reed, QC, - perhaps best known for successfully defending David Bain at his retrial - is Williams' new counsel.
Both legal teams had filed submissions and whether further factual material was needed was a matter for the Supreme Court, according to the minute issued on 27 May 2019.
"In particular, we see no need at this stage to seek a memorandum from Justice Arnold."
The application to recall the Craig v Williams judgment will inevitably reignite debate around the social and business relationships between the judiciary and the bar.
Justice Bill Wilson resigned from the Supreme Court in 2010 following a controversy over his shared business interests with Alan Galbraith, QC.
Wilson, who was on the Court of Appeal at the time, was on the three-judge panel which heard an appeal case (Saxmere Company v Wool Board Disestablishment Company) in which Galbraith appeared for the Wool Board company.
The close friends were joint owners in a horse stud, which Saxmere was unaware of at the time.
Saxmere lost in the Court of Appeal, then appealed to the Supreme Court - to which Wilson had been promoted by this point - saying the judge should have withdrawn because of his links to Galbraith.
In July 2009, the Supreme Court rejected any apparent bias and found that "a fair-minded observer would not have had a reasonable apprehension of bias" arising from the personal and business (land and racehorse interests) relationship Justice Wilson had with Mr Galbraith.
It was only after Saxmere came back to the Supreme Court a second time that - under direct questioning by his fellow judges - Wilson revealed Galbraith had advanced $242,804 more than Wilson into the company accounts.
"We are of the clear opinion that the objective lay observer could reasonably consider that...the Judge was at the relevant time beholden to Mr Galbraith because of the imbalance, and that this might unconsciously affect the impartiality of the Judge's mind in deciding a case in which Mr Galbraith was appearing," the Supreme Court said in October 2009.
As a result, for the first time, the Supreme Court recalled its judgment and sent the case back for re-hearing in the Court of Appeal.
Wilson later resigned in 2010 but has always denied any impropriety, or that the different balances in the ownership of the horse stud meant he was indebted to Galbraith.
"I did not owe Alan Galbraith a cent,'' he said in a 2011 interview with the Herald on Sunday.
"I did not owe our jointly owned company a cent."