Legal profession friends of Supreme Court judge Bill Wilson thought he should take the "honourable" way out and resign, according to a complaint to the Judicial Conduct Commissioner (JCC) obtained by the Weekend Herald .

A striking aspect of the complaint is the anguish it reveals of friends involved on all sides.

The complaint, which takes the view that the judge had "failed to meet the required ethical standard of judicial conduct", has been made by a friend of Justice Wilson, retired appellate judge Sir Edmund Thomas.

In his 18-page document Sir Edmund indicates he felt compelled to make the complaint because of what he considers "a serious breach of judicial ethics" and what might be the consequences for the Supreme Court, judiciary and the profession.

"It would have been more comfortable to have refrained from drawing the information I have to the attention of the Chief Justice, the Attorney-General and the Solicitor-General [and] the Judicial Conduct Commissioner," he wrote.

However, the Supreme Court has indicated that Justice Wilson's failure to disclose full relevant details of his business relationship with Alan Galbraith, QC, may have simply been due to the requirements being unclear.

In its November 2009 judgment on the issue the court said:

"It may be that because reported decisions ... relating to the relationship between Judges and counsel are quite rare - there appear to have been none in New Zealand - that the Judge had not anticipated the view which we would form of the applicable principles in that connection."

In his complaint, Sir Edmund (who is widely known as Ted Thomas) says: "I have necessarily become conscious of a number of aspects that have caused me deep concern."

The issues, as he saw them, include:

* Justice Wilson is a Judge of the highest court of the land where it is doubly important that the highest standard be maintained.

* "The overriding consideration must be the integrity of the Court.

* "The public's confidence in the Court and in the administration of justice [should not be impaired].

"The public look to the judiciary for stability ... integrity ... impartiality. If that integrity is not maintained the basic principle of judicial independence becomes that much harder to justify. The rule of law itself is placed in jeopardy. These sentiments are not empty rhetoric; they represent the reality of our unwritten constitution in which the independence of the judiciary and the rule of law are fundamental.

* "It is difficult to believe that Justice Wilson's conduct will not have seriously harmed the collegiality of the Court.

"As a past appellate judge, and one who has sat on the Supreme Court, I can testify that I would find it difficult to work alongside Justice Wilson."

Some senior members of the profession would feel let down by Justice Wilson's conduct and Sir Edmund added that he had particular concern for younger practitioners who could feel disillusioned if "... a Judge who is guilty of a serious lapse" remains on the Court and the system proves inadequate or unable to deal with it, and for law students who he characterised as "utterly lacking in cynicism.

* * *

It seems that as Sir Edmund heard more, his disquiet grew until he reached the point of deciding to make a complaint himself. The journey to that point began in late June or early July 2009 over lunch on a Friday with one of his closest friends, Jim Farmer, QC. Mr Farmer is a good friend of Galbraith.

"Mr Farmer told me that something big was afoot in the Supreme Court and that it was unbelievable. He was visibly upset," Sir Edmund says in his complaint letter.

"Mr Farmer then divulged that at the time Justice Wilson had sat in the Saxmere case in the Court of Appeal and Mr Galbraith had appeared as counsel for [the Wool Board], the Judge owed Mr Galbraith $500,000."

Sir Edmund points out that the sum was an overstatement which was subsequently corrected. The figure the Supreme Court eventually arrived at was $242,804.

"The indebtedness had not been disclosed to the Court. Mr Farmer advised me that Saxmere was seeking a re-hearing. The matter would eventually break in the media and become public knowledge. If Justice Wilson did not resign, he would be hounded by the media and forced to resign."

In addition to the fact that Justice Wilson had not made full disclosure to the Court, Sir Edmund had understood that Galbraith had been pressing Justice Wilson for payment in 2007.

"Mr Farmer was extremely critical of Justice Wilson's failure to disclose the indebtedness and endorsed a comment made by Mr Carruthers [Colin Carruthers, QC] that 'Bill [Justice Wilson] has feet of clay'."

Sir Edmund states that he was told that Carruthers, a friend of Justice Wilson, "had tried and tried to persuade him to disclose the indebtedness but he had adamantly refused".

This had become more distressing for those in the know after the Supreme Court ruled on July 3 last year that on the basis of information provided by Justice Wilson, there appeared to be no basis for a finding of apparent bias.

Apparent bias is a legal term that doesn't mean that bias is apparent. The legal test is a judge is disqualified from a case "if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide".

In the context of that judgment, it in fact meant there was no reason for thinking the judge is biased. The Supreme Court concluded that Rich Hill Ltd, the company the judge and the QC owned, was "a passive land holding vehicle for the partnership which did not appear to have any indebtedness".

However, Justice Blanchard wrote in paragraph 25 of his judgment:

"The objective observer might then turn his attention to whether the Judge might in some way be beholden to Mr Galbraith because of the business dimension of their relationship and might unconsciously favour the side represented by Mr Galbraith because of some fear of disadvantage to himself (the Judge) if Mr Galbraith's client were to lose the case."

The paragraph continued: "Such a situation might theoretically exist if, for example, the Judge had been lent money by counsel or was dependent on counsel in order to meet some liability. However, the materials placed before the Court reveal nothing of this kind. There is nothing to indicate any indebtedness by the Judge to Mr Galbraith, not any indication of any liability of their joint company Rich Hill Ltd, to meet its obligations.

"It is in fact, save for a breeding operation confined to one or two horses per year, a passive land holding vehicle and does not appear to have any significant debts."

Sir Edmund notes that, in fact, Justice Wilson was substantially in debt to Galbraith, their company was in debt to the bank and with Galbraith's co-operation the company had entered into a guarantee for about $1 million to provide security for a bank loan for Justice Wilson.

Sir Edmund writes that Justice Wilson had told Galbraith after the July 3 judgment that he had been "vindicated".

Galbraith, he said, had been "astonished" at this claim as the judge had failed to disclose the relevant facts and Galbraith had been pressing him for payment.

"Paragraph 25 caused considerable consternation. Mr Galbraith was said to be 'very unhappy'," Sir Edmund says in his complaint.

It was decided that Galbraith would go to the Chief Justice and advise her of Justice Wilson's indebtness. However, events soon after the July 3 judgment overtook this.

Galbraith, Farmer and Carruthers conferred and it was decided to hold off on approaching the Chief Justice to enable Carruthers to speak to Justice Wilson and persuade him to resign.

The three QCs were agreed that Saxmere must have a re-hearing, Justice Wilson had no option but to resign and that if he did not "it was inevitable the media would get on to it and make his tenure impossible and the Court itself would suffer in the process."

But they also thought Justice Wilson should have the chance to take "the honourable course" of making a voluntary disclosure and resigning.

Sir Edmund states that he was informed by Farmer that the financial position had deteriorated substantially since 2007 and that, on his judge's salary ($405,000), Justice Wilson did not have the ability to meet the build-up in the amount of his indebtedness.

Discussions were under way for Galbraith to buy the judge out of their company.

Prompted by further information, Sir Edmund decided to inform the Chief Justice, Dame Sian Elias a friend of his and of Justice Wilson (Dame Sian had shared in the ownership of racehorses with the latter).

Sir Edmund records that he spoke to the Chief Justice by phone on July 20 and read her the notes he had made of his communications with Farmer but did not disclose Farmer's identity.

Dame Sian had told him that she had received "a categorical assurance" from Justice Wilson that he was not "beholden" to Galbraith. She felt unable to act when the source was anonymous and in the absence of a formal complaint. The Chief Justice was "sickened" by what he told her, Sir Edmund wrote, and repeatedly asked him to persuade his source to come forward and make a formal complaint.

Sir Edmund followed up by writing a letter dated July 27 2009 to the Chief Justice more formally outlining the information he had received.

He did not reveal his source, however, until he wrote to the Judicial Conduct Commissioner on 21 December.

Dame Sian replied (letter dated 12 August) "advising me that the matter would be directly addressed by the Judge and by the Court and that this was in hand".

The matter is now in the hands of the Judicial Conduct Commissioner, Sir David Gascoigne, who also has a complaint on the matter from Saxmere. Sir David is being assisted by Murray Gleeson, a former chief justice of Australia.

* * *
The Test

The position of Judicial Conduct Commissioner was established in 2005 to deal with complaints about judges and to enhance public confidence in, and to protect the impartiality and integrity of, the system. It is the task of Sir David to decide whether Justice Wilson's conduct amounts to sufficiently serious judicial misconduct to recommend to the Attorney-General that he appoint a Judicial Conduct Panel to formally investigate.

Such a step would be unprecedented.

The criteria upon which Sir David can dismiss the case is narrow and appears not to apply.

The other option is to refer the matter to the Chief Justice, Dame Sian Elias. In the opinion of Sir Edmund, that course is problematic because of her friendship with Justice Wilson. It was because of that friendship that she disqualified herself from sitting on the Supreme Court hearings regarding whether Justice Wilson should have stood down from the Saxmere case.

If a Judicial Conduct Panel is appointed, it would report to the Attorney-General, Chris Finlayson, its findings of fact along with its opinion as to whether the conduct warrants dismissal.

Finlayson and Justice Wilson were both partners at the same time in law firm Bell Gully until the judge left in 1996.

In a statement he provided to the Herald in December, the Attorney-General said his relationship with the judge was professional.

* * *
A slow revelation: how the facts emerged

The Justice Wilson controversy grew not from a failure to declare his relationship with Alan Galbraith, QC, but a failure to provide full relevant facts at an early stage.

Over a period of two years, Justice Wilson made several disclosures regarding the relationship.

March 2007
On being appointed to the Court of Appeal panel, Justice Wilson telephoned Saxmere's senior counsel, Francis Cooke, QC. Justice Wilson's recollection is he told Cooke, "that Mr Galbraith and I shared in the ownership of a horse stud".

Cooke's recollection of the judge's words was to the effect that "we are good friends and have shared horseracing interests". "I thought they owned one or more racehorses together," Cooke said in evidence. He had not known they were owners of Rich Hill Stud.

Cooke's view was there was no actual bias and, accordingly, Saxmere did not object to him sitting.

July 2008
In a letter responding to the Judicial Conduct Commissioner (who had received a complaint on behalf of Saxmere), Justice Wilson confirmed his recollection was that he had informed Cooke "that Mr Galbraith and I shared in the ownership of a horse stud".

December 2008
In a statement to the Supreme Court, Justice Wilson provided further details including that his and Galbraith's company received fees for agisting racehorses on land they owned, that a land sub-division was occurring and that he was involved in breeding, selling and racing horses as a member of three partnerships comprising the chief justice Dame Sian Elias, her husband Hugh Fletcher and Galbraith.

He said he had not made a formal disclosure "because I considered that there was no conflict".

The Supreme Court denied Saxmere's appeal stating in its judgment of July 3 2009 that there was nothing available to the court to indicate that the judge was beholden to Galbraith in any way.

October 2009
In a statement in response to Saxmere's application for the Court to recall its July 3 judgment, Justice Wilson gave further information including that the horses owned by the partnerships, "although few in number were high in value"; that imbalances occurred from time to time in the contributions he and Galbraith made to their company but that at the time he sat on the Saxmere case had had thought their contributions were about equal.

That was borne out, he said, by the year's accounts which showed his contributions were about 6 per cent less than Galbraith's.

He also revealed in that statement:

* That at the time he sat on the Saxmere case, he and Galbraith were also settling the purchase of land adjoining Rich Hill's property and arranging a mortgage to fund it.

* That although he believed the allegation of apparent bias was unfounded, in order to avoid being subjected to similar allegations he had sold his interest in Rich Hill Ltd to Galbraith and resigned as a director and wound up the three horse partnerships.

22 October 2009
In a further statement in response to a request from the court for the dollar amount of the difference in his and Galbraith's shareholder contributions at the time of the Saxmere hearing, Justice Wilson provided information from which the Court determined that he had been effectively in debt to Galbraith by "an aggregate sum of $242,804". Justice Wilson was one of a panel of Court of Appeal judges who found in favour of Galbraith's client and overturned the High Court decision which had favoured Saxmere. Justice Wilson supplemented his statement with information that included that the judge and counsel's company was buying land and arranging a mortgage at the time of deliberations on the Saxmere case.

The Supreme Court in its judgement of November 27 2009 said both Justice Wilson's indebtedness to Galbraith and the raising of the loan "might raise a question in the mind of the observer about the judge's ability to address the issues raised by the appeal without being unconsciously affected by this ongoing aspect of his business relationship with counsel".

"The judge and Mr Galbraith must have been reliant upon one another during the very time the Saxmere judgment was reserved in the Court of Appeal."

The Supreme Court recalled its earlier judgment and sent the Saxmere case back to the Court of Appeal for re-hearing before a new panel of judges.

* * *

Justice Bill Wilson sat on other cases on which Alan Galbraith, QC, was counsel at a time when he was in debt to the QC.

Sir Edmund Thomas says in his complaint to the Judicial Conduct Commissioner that he and other senior lawyers, whom he names, believe the parties involved in the cases may be entitled to apply for a rehearing based on Justice Wilson's indebtedness at the time to Galbraith.

The judgments in these cases do not record - and Sir Edmund has told the JCC he does not know - whether Justice Wilson disclosed to counsel in these cases his indebtedness to Galbraith. But Sir Edmund says in his complaint that in his opinion, as the judge's level of indebtedness increased in 2008 and 2009, "it would obviously be relevant" to know whether he told counsel of this at the time of the various hearings.

The cases Sir Thomas identified are:

* New Zealand Exchange Ltd v Bank of NZ 2008.
* The Commerce Commission v Carter Holt Harvey 2009.
* NZ Recreational Fishing Council v Sanford Ltd 2009.
* Ngai Tahu Property Ltd v Central Plains Water Trust 2009.

The decisions in the first two cases were favourable to Galbraith's clients, while Justice Wilson's judgment in the third went against the QC's clients.

The fourth case has not been finalised.

The Herald was party to another case, Simunovich Fisheries Ltd and Others v Television New Zealand Ltd and Others, which went against Galbraith's client.

In that case, Justice Wilson declared his business interests with Galbraith but not whether he was indebted to him.

In its second judgment on the Saxmere matter, the Supreme Court said it might be that Justice Wilson had not anticipated the view the court would take regarding the detail of disclosure required, because reported decisions on the subject were "quite rare".

There have in fact been no such cases in New Zealand.

* * *

Eight million dollars is at stake in the case that gave rise to the claim that Justice Bill Wilson had a conflict of interest through his business relationship with one of the lawyers.

Saxmere Company versus the Wool Board Disestablishment Company (Disco) dates back to the old Wool Board, which marketed and sold all NZ wool.

That did not suit a small group of producers, notably Peter Radford, principal of Saxmere, who had built up a flock of rare Saxon sheep and developed new technology and a marketing strategy for adding value to the unique superfine Saxon fibre.

They lobbied Parliament, with the result that "the Saxon clause" was inserted in to the Wool Board Act 1997. It provided the opportunity for some growers to do their own marketing.

The lawsuit relates to levies paid to the Wool Board that Saxmere and others claim should have been repaid to them.

They claim to be owed about $30 million; but Disco holds reserves of only $8 million.

Disco argued that it repaid the levies by paying Merino New Zealand. Saxon wool growers' countering argument was that by making the payments to Merino NZ, Disco had effectively given their levies to their opposition.

Saxmere partially won in the High Court, which found the Wool Board liable for breach of statutory duty and negligence in relation to one of four of the board's decisions.

But this was overturned by the Court of Appeal whose three-judge panel included Justice Wilson.

As a result of learning more about the business relationship between the judge and Galbraith, Saxmere made a complaint to the Judicial Conduct Commissioner and went to the Supreme Court.