The appeal of a silk's purse

From across the ditch comes the sulphurous whiffs of judicial impropriety ... New Zealand appeal judge's conflict of interest ... Justice Bill Wilson failed to give full, open disclose about his financial involvement with senior counsel for litigant ... Traffic of distressing emails

New Zealand's judiciary has been embroiled in a dreadful conflict of interest episode that has appalled judges and commentariat alike.

The Saxmere affair has been rumbling for a year, but was spiced-up recently with the leaking of a mass of emails on how to handle the crisis.

The online correspondence was between one of the country's top barristers Jim Farmer QC, who is also known to the Sydney Bar 'n' Grill, and retired appeal judge Sir Edmund (Ted) Thomas.

Wilson & Galbraith: woolly friendsIn 2007 Justice Bill Wilson sat on an appeal that overturned a High Court decision in favour of Saxmere Company Ltd and others - wool growers who had been awarded an $8 million refund in taxes from the now wound-up NZ Wool Board.

The Court of Appeal decision is here.

Counsel for the Wool Board was Alan Galbraith QC, a friend and business partner of Justice Wilson.

Together they had an equal interest in a company called Rich Hill Ltd that leased land to a separate horse stud entity.

Wilson made an informal disclosure to counsel for Saxmere about his joint investment with Galbraith.

However, he failed to make a full, open disclosure, which the Supreme Court found subsequently that he should have made.

At the time of the hearing he was indebted to Galbraith to the tune of at least $250,000. This was not disclosed to the court either.

The position that existed at the time Wilson sat on the appeal hearing was that he had advanced $984,176 to the company and by arrangement with Galbraith has assumed responsibility for the paying the interest and principle on $168,555 of bank debt.

The total of those amounts was $1.2 million.

However, Galbraith had advanced nearly $75,000 more to the company.

Wilson's aggregate indebtedness to the company was $242,000, because he had not made any repayments on the bank debt.

Further, at the time of the hearing of the Saxmere appeal Rich Hill was preparing to buy a $2.2 million property, along with some other parties, to extend its horse stud interests.

Wilson: fighting removalRich Hill was to borrow its one-third share to finance this purchase, so the judge and Galbraith were reliant on each other for "mutual cooperation" to see through the funding and complete the land purchase.

One estimate placed Wilson's indebtedness to Galbraith at $602,000 because on top of $242,000 the barrister had guaranteed the judge's personal bank borrowing of $360,000 for his share of Rich Hill's land purchase

The Saxmere interests appealed - unsuccessfully.

Justices Blanchard, Tipping, McGrath, Gault and Anderson decided there was no apprehended bias. McGrath said:

"I am satisfied that the feature of mutual trust and confidence and mutual financial interest cannot be perceived to have such an influence over a judge in the circumstances of Wilson J.

Objectively these aspects add nothing to what is present in ties of friendship and personal association. In particular, there is nothing which indicates that the financial aspect could make the judge beholden to Mr Galbraith. A fair-minded and informed observer would accept that the judge’s professional obligations are more than sufficient to keep aspects of the business association from diverting the judge and that their presence does not alter the position in respect of the personal friendship and professional association aspects.

This is not, of course, a case in which the judge has any financial interest in the outcome of the litigation."

See Supreme Court decision, July 3, 2009.

Jim Farmer: advice from ThomasApparently the Supreme Court judges were not in possession of the entire factual landscape. "There was nothing to indicate any indebtedness by the judge to Galbraith."

The Supreme Court existed in a cone of unawareness at the time of its July 3 judgment last year, even though Farmer, Thomas and others knew a good deal about the financial arrangements.

Further disclosures were made by Wilson as to his financial relationship with the company and Galbraith.

The Saxmere interests applied for a recall of the Supreme Court decision.

Four months after dismissing the wool growers' initial appeal Blanchard, Tipping, McGrath and Anderson all decided that ...

"These circumstances ... would, if disclosed before the earlier hearing, have led the court to the conclusion that the case on apparent bias was made out.

There is therefore a very special reason why justice requires recall of our earlier judgment."

See Supreme Court decision, November 27, 2009.

The order was for a new panel of judges to look again at the original Saxmere appeal - three years after Wilson and two others found for the Wool Board. 

Wilson's brazen lack of open disclosure faces a public inquiry by a judicial conduct panel.

The Judicial Conduct Commissioner, Sir David Gascoine, recommended to Attorney General Chris Finlayson that he appoint a group of worthies to start digging.

Another minister, Judith Collins, has assumed the AG's responsibilities for handling the complaint against Wilson, because the judge and Finlayson both had been partners in the law shop Bell Gully.

Wilson disputes some of the factual issues to be investigated and has sought judicial review of the panel's jurisdiction.

The judge's lawyer, Colin Carruthers QC, said:

"The commissioner did not have jurisdiction to recommend to the attorney general that a panel be convened, and accordingly the attorney general did not have jurisdiction to appoint a panel."

Anyway, Wilson says his conduct does not justify his removal from office and nowhere in comparable jurisdictions has a judge been removed for failing to disclose an conflict of interest and that his failure was not a result of "bad faith". 

Last month the New Zealand High Court rejected Ted Thomas' application to be joined as a defendant in Wilson's action against the Attorney General, the Judicial Conduct Commissioner and the Judicial Conduct Panel. See here.

Here are some of the recent developments in the proceedings to stop the Judicial Conduct Commissioner's reference:

Misconduct claims against Wilson conjecture, Sept 2

Wilson not in debt, Sept. 1

Wilson and Thomas fail in bid to suppress email trail, Aug. 10

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Sir Ted ThomasJim Farmer and Ted Thomas are old friends. In fact, it seems everyone is an old friend of everyone else in this saga. However, their friendship became strained over tension between concern for protecting the "system" and Farmer's duty to his client.

Farmer was advising Alan Galbraith on how to handle Bill Wilson's non-disclosure. He privately sought Thomas' advice as a retired appeal judge.

Here's some of the key exchanges from their email traffic between July and October last year.

Thomas to Farmer, July 4, 2009

"The first objective must be to ensure that Alan comes out of this squeaky clean.

But the second objective cannot be ignored if we are to live with ourselves; that is protecting the integrity of the judiciary...

The only satisfactory solution is for Bill to go..."

Thomas to Farmer, July 6, 2009

"Bill is clearly desperate. He has lied about the fact that some monies, if not the half million, were not due at the time of the Saxmere hearing."

 Farmer to Thomas, July 6, 2009

"Obviously it would have been far better if I had never confided any of this in you, because Alan has been relying on me for advice and counsel. My reason for discussing it with you was that because the ramifications of this are so enormous - for Bill, for Alan, for the Supreme Court, for the system as a whole - was to ensure that I gave the best advice that I could to Alan. I would be very concerned if you intervened in the process at this stage (beyond your continued counsel to me) out of concern for the system...

The time for protecting the system will come soon enough but it should do so without prejudicing Alan's position in the meantime."

Thomas to Farmer, July 15, 2009

"And so the matter drifts when it cannot be allowed to drift. Cases are being heard each week which may be contaminated by Bill's presence... I am strongly of the view that the matter must be brought to the Chief Justice's notice by the end of the week.

If you cannot persuade Alan to do that before Friday I will feel bound to intervene. The reputation of the court is in issue."

Farmer to Thomas, July 15, 2009

"There have been positive developments but I am now reluctant to convey these to you if there is any prospect of your informing the Chief Justice of the source of your information. I would in fact be dismayed if you were to do that."

Thomas to Farmer, July 17, 2009

"I think that where we essentially differ is in our perception of the position when Bill is continuing to sit. I do not share the view that everything is okay providing the Chief Justice and the other members of the court do not know that Bill failed to make full disclosure.

In my view the court is compromised every time Bill sits. The court is dysfunctional - contaminated might not be too strong a word - and every litigant is appearing before a court which ... is not as independent as the litigant has the right to expect."

Farmer to Thomas, July 18, 2009

"I am not a keeper of the court's conscience and am of the view that my primary obligation is to Alan, not just as a matter of professional obligation but by virtue of my deep friendship for him.

There is a limit to how far I will go to uphold the integrity of the judicial system if the judges themselves won't."

Farmer to Thomas, July 19, 2009

"Sian [Dame Sian Elias, the chief justice] will be in a difficult position and I would think it possible that if Bill goes down he will endeavour to ensure he takes her with him."

Farmer to Thomas, July 19, 2009

"I think a new dimension that has emerged is Sian's position. It is probably the case that she has been aware - to what extent I do not know - for some time of the fact that the real situation does not accord with what Bill has been declaring or that he has not been making full and proper disclosure."

Thomas to Farmer, July 23, 2009

"Either you have been bullshitting me or Alan has been bullshitting you. As you know, and as I know and accept, you have not been bullshitting me. So where does that leave Alan?

Sian rang me from Hong Kong on Sunday night and discussed this matter with me for over half an hour...

First, Alan has not put the facts to her. He has not given her the material which you said he was preparing...

Secondly, Bill has not spoken to the CJ about the matter since the court's judgment came out. He had not made full disclosure as you claimed..."

Farmer to Thomas, July 24, 2009

"I won't respond in detail but I do not welcome the pressure that you are putting on me. I am not happy about the fact that you have told Sian that Colin [Colin Carruthers QC, counsel for Wilson J] , Alan and I all think that Bill should resign even though that is the fact.

If this matter is probed, it will be likely to bring down Sian as well as Bill.

While I have no brief for Bill, I do regard Sian as a close friend and I will always put friendship and loyalty above concerns for the 'system' which has its own processes for looking after itself."

August 5, 2009 NZ blogger Vince Siemer publishes some information about Wilson's conflicted position.

Farmer asks Thomas whether he leaked to Siemer.

Thomas to Farmer, September 21, 2009

"I resent the thought that I may have tipped Siemer off... I now think that I may have made a mistake in not disclosing the source of my information in my letter to the powers that be...

Perhaps, if I am to be compared to someone getting into bed with a dog and catching fleas it is not too late. Just back off that sort of drivel."

Thomas to Farmer, September 22, 2009

"Going through my collected papers I have been surprised at the number of occasions that I have assisted your career or promoted your interests... But loyalty can be strained and your comment certainly had that effect.

I am not, therefore, prepared to give you a blanket assurance that your identity as the source of my information will not be disclosed. Much will depend on developments...

Somewhere along the way, it was decided to back pedal. You were persuaded to go along with what I described at the time as a 'fools errand'; trying to persuade Bill to resign. Of course, that did not work.

Subsequent developments have the faint smell of a cover up..."

Thomas went on to say that he thought Farmer, Galbraith and Carruthers would not be able to appear as counsel in any case heard by Wilson.


Full email correspondence