A question of judgement

Is it all right when the judge in a court case and the lawyer for one of the parties are also long-term business partners? Nicky Hager reports.

EARLIER THIS year New Zealand’s top judge, Sian Elias, excused herself from a Supreme Court case involving jockey Lisa Cropp. The judge part-owns the galloper Resolution that Cropp rides and decided that if she sat on the case her judgement could appear biased.

Auckland law professor Bill Hodge described Elias’s decision as very good practice. “We have this old adage: justice must not only be done, it must be seen to be done,” he said. The chief justice’s decision was “a very good idea”.

But in another recent case, also involving racehorses, a senior judge and a business relationship that could give rise to a perception of bias, the judge did not “recuse” himself. It raises important questions about whether New Zealand is too casual about ensuring the independence of our judiciary.

The case involves North Canterbury farmer and businessman Peter Radford. In the Sunday Star-Times two years ago, columnist Rod Oram described Radford’s success marketing super-fine wool garments into expensive northern hemisphere markets when other woolgrowers were struggling. Oram applauded a High Court decision that required the old Wool Board to stop playing favourites and provide some development funding to Radford’s endeavours. Then things went wrong. The Wool Board’s successor company, DisCo, appealed the decision in the Court of Appeal and won. Instead of getting development funding, Radford and other superfine woolgrowers now face tens of thousands of dollars in court costs. The rights and wrongs of the legal cases are still in dispute, but then a quite different issue arose.

Radford says he first became aware of the issue when he met another businessman at a Christchurch social function. They were discussing their experiences of legal cases and the other man asked who the lawyers and judges had been in Radford’s unsuccessful Appeal Court case. Radford explained that the barrister for the Wool Board was Auckland QC Alan Galbraith and listed the judges, including the recently appointed Justice Bill Wilson. The other man commented that he regarded Galbraith as probably New Zealand’s top QC but looked puzzled at the mention of Justice Wilson. Didn’t Radford know? Justice Wilson and Galbraith were long-term business partners. The man, who himself has horse-racing interests, explained that they jointly owned one of New Zealand’s largest racehorse breeding operations.

The question of a judge and the senior lawyer for one side of a case being business partners is now being investigated by Judicial Conduct Commissioner Ian Haynes. The commissioner was established in 2005 “to receive and assess complaints about the conduct of judges”.

Justice Wilson has responded to questions from Haynes saying that he had mentioned his and Galbraith’s “shared ownership of a horse stud” to Radford’s lawyer, Francis Cooke, before the case. Cooke says he was told by phone only that they owned one or some horses together, not uncommon in legal circles so did not ring alarm bells.

“I did not know of Rich Hill Ltd or of Rich Hill Stud,” he assured his clients earlier this year. But the heart of a complaint lodged on Radford’s behalf is that, whatever was disclosed, Justice Wilson should not have continued judging the case when one side was represented by his business partner.

The ethical issue goes as follows. It’s widely accepted that if a judge discovers that the lawyer for one side is a relative, the judge will immediately step down and hand the case to another judge. Otherwise justice will not be seen to be done. So what about a business partner? How close is too close?

From the outside, the answer seems clear. Judges are intended to be the ultimate independent public officials, free from outside influence and scrupulously impartial. As a former president of the Law Society said, “The independence of the judiciary is the cornerstone of our legal system.”

To help protect this independence, judges are appointed permanently (to the age of 68) so they have no fear of offending the governments that appoint them. They are also paid generously so they do not have to do other work that could create conflicts of interest. Where any potential conflicts of interest arise, the convention is that judges will voluntarily step down.

Justice Wilson’s business relationship with Galbraith is not minor. Rich Hill Stud, near Matamata, is worth tens of millions of dollars. In this year’s yearling sales alone, Rich Hill sold 52 horses for an average price of $70,000 each: $3.6 million in total. It also earns large stud fees (the 2008 service fee for the stallion Pentire is $22,500 plus GST) and fees for managing other people’s horses. Neither man owns any other businesses. For each of them the stud is probably his largest personal financial asset.

Wilson and Galbraith are 50/50 owners and joint directors of Rich Hill Ltd and Galbraith co-owns a second company, Rich Hill Thoroughbreds Ltd, with the stud managers. The partnership began when both men were senior lawyers. Initially the stud’s website said the stud “is owned by a partnership consisting of respected QCs and horse enthusiasts Alan Galbraith and Bill Wilson, leading Matamata Veterinarian Colin Thompson and his son John Thompson who oversees the management of the farm”. When Wilson became a judge, the website was altered clumsily to read “a partnership consisting of respected QC and horse enthusiasts Alan Galbraith and Justice Bill Wilson . . .”

But the significance of the changed relationship was enormous. Co-owners, co-directors, fellow horse enthusiasts and now potentially on different sides of the bench in court. Only two months after Wilson was sworn in as a judge in February last year, that’s what happened. The case, on April 2-4, 2007, was DisCo vs Peter Radford’s Saxmere Company Ltd.

A formal complaint about the apparent conflict of interest was submitted on Radford’s behalf by Canterbury law professor Duncan Webb earlier this year. Webb is the author of the main New Zealand textbook on legal ethics, Ethics and Professional Responsibility, and is on the Law Society’s ethics committee.

His complaint to the judicial conduct commissioner noted that Justice Wilson and Galbraith were friends but said the core of the complaint was their substantial business enterprise. “Such a business must require a high degree of trust and dependence on each other which, it is submitted, makes it inappropriate for Justice Wilson to hear argument from Mr Galbraith on substantive matters,” he wrote. He quoted a US Canon of Judicial Ethics which says “A judge shall not engage in financial and business dealings that involve the judge in frequent transactions or continuing business relationships with those lawyers or other persons likely to come before the court on which the judge serves”.

The fact that the existence of a business relationship was mentioned to Radford’s lawyer a few days before the court hearing did not alter the complaint. “Firstly, the disclosure was wholly inadequate and significantly downplayed the degree of the common financial and business interests,” Webb wrote. “Secondly, where bias exists the judicial officer concerned is obliged to deal with it. A waiver by the litigants (even if fully informed) is not adequate.” Webb appears to be arguing that the only proper course for Justice Wilson was to withdraw from the case, as the chief justice had done in the Cropp case.

Underlying these cases is the fact that New Zealand is a small place, where senior legal people often know each other. Judges and senior lawyers are likely to have past and present links and the courts could not function if judges were constantly stepping down. But the same issues arise in other countries and there are well- established procedures when the inevitable conflicts of interest arise. Last year the Council of the Chief Justices of Australia (which includes New Zealand’s chief justice as a member) published a revised Guide to Judicial Conduct that recommends what judges should do when the possibility of bias arises.

The guide says, first, that if a “fair- minded lay-observer might reasonably apprehend that the judge might not bring an impartial mind” to the case, the judge should disqualify himself or herself from the case “at the earliest opportunity”. In cases where bias may exist and the judge is uncertain what to do, the guide says that “the judge should raise the matter at the earliest opportunity with the head of the jurisdiction [in this case the head of the Appeal Court] . . . and the parties or their legal advisers”. It says that in such cases the matter should be raised in open court and submissions should be received from the parties.

Finally, it says that “if the judge decides to sit, the reasons for that decision should be recorded in open court. So should the disclosure of all relevant circumstances.”

Justice Wilson clearly appreciated there was an issue, which is why he mentioned it to Radford’s lawyer. He did not refer to raising the issue with the head of the Court of Appeal, Justice Young, in his letter to the commissioner. He did not, in open court, raise the matter, invite submissions, provide reasons for his decision to sit nor disclose all the relevant circumstances of the relationship.

This guide to judges was quoted at length by three Appeal Court judges in separate cases last year, who concluded that “we find that helpful advice”. Justice Wilson was one of the three judges.

Webb’s complaint went to the judicial conduct commissioner in May but immediately hit delays because the court had lost all 25 volumes of records of the case. Then commissioner Haynes questioned whether he had jurisdiction, a view that Webb disputed strongly. Radford’s lawyers have appealed to the solicitor-general but have been told that the solicitor- general “will await the commissioner’s decision before making any further comment”.

The judicial conduct commissioner is yet to prove the position has teeth. The commissioner’s latest annual report records that Haynes dismissed all of the 72 complaints he dealt with last year. None was referred to the attorney-general for further investigation and none even to the head of the relevant court. Haynes is still investigating the Radford complaint, with no indication of how long it could take.

The process has already been too slow for Radford and his fellow woolgrowers. The former Wool Board is right now making decisions about dispersing millions of dollars of funds that were at the centre of the original court action. The woolgrowers have this past week sought special leave to be heard at the Supreme Court.

Haynes did not reply to a call from the Sunday Star-Times this week before leaving on an overseas trip. Justice Wilson and Galbraith declined to comment.