Before the Supreme Court replaced the Privy Council as the highest court of appeal in the land, there was always the worry that New Zealand was not really big enough to have its own last-chance saloon in law. The argument was that the small population made it impossible to produce enough judges of sufficient calibre.

As it turns out, smallness has created another kind of problem. The legal profession, at least in its upper echelons, is so small that there are bound to be close and long-standing relationships between senior lawyers and judges which may create the appearance of conflicts of interest.

The possibilities have been amply demonstrated by the case of Supreme Court Justice Bill Wilson, who finds himself facing the Judicial Complaints Commissioner because, when he was a Court of Appeal judge, he failed to fully disclose the extent of his indebtedness to a lawyer appearing before him.

After some years of dogged work and legal applications, the plaintiffs, who lost that case, discovered that Justice Wilson's declared business relationship with Alan Galbraith, QC, was quite different from what they had been led to believe. In fact, the judge owed the Queen's Counsel nearly $250,000.

Last year, the Supreme Court sent the case back to the Court of Appeal for a rehearing, saying that this relationship "might raise a question in the mind of the observer about the judge's ability to address the issues raised ... without being unconsciously affected by this ongoing aspect of his business relationship with counsel".

But the matter does not end there because now the Judicial Complaints Commissioner must decide whether the judge's conduct in failing to promptly and fully disclose the nature of the relationship needs to be referred to either the Chief Justice or the Attorney-General. Unfortunately, either course of action may also raise questions of the kind mentioned by the Supreme Court because Justice Wilson has had close associations with both office holders.

He and Mr Galbraith have been in a racehorse-owning partnership with Chief Justice Dame Sian Elias. On the other side of the equation, Justice Wilson and Attorney-General Chris Finlayson were partners at the law firm Bell Gully and Mr Finlayson is on record as calling him a friend. So whichever way this case may turn, it gives rise to the very kinds of doubts that the courts, quite rightly, are at pains to avoid.

The appearance of fairness and even-handedness is, in its own way, just as important as the substance of those ideals. Traditionally, the courts have maintained the appearance by keeping their inner workings secret and not becoming embroiled in public controversy.

In this case the strategy has failed. For example, until this issue blew up, the guidelines for judicial conduct were secret. Now we know that, among other things, when judges are in doubt about whether to disqualify themselves, they should make "full disclosure of the circumstances". Bearing that in mind, the public can weigh a Supreme Court statement that Justice Wilson may not have anticipated the view his colleagues would take on the applicable principles.

It is hard, therefore, to see a possible outcome to this case which will not raise further questions in the minds of observers.

But whatever the outcome of this particular case, the courts should reconsider the old policy of secrecy and remoteness as a means of preserving confidence in the system generally. More openness in the form of a public register of judges' pecuniary interests - much like that which applies to MPs - would be much more effective.

Compulsory listing of such things as business interests, partnerships, trusts and, importantly, debts would make any possible appearance of conflicts of interest immediately apparent and therefore defuse any controversy such as the one engulfing Justice Wilson before it had a chance to arise.

And it would have the added benefit of removing the onus from judges trying to anticipate how their colleagues might interpret their obligations.