IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2010-409-000559 [2016] NZHC 2356
IN THE MATTER of the Insolvency Act 2006 IN THE MATTER
of the bankruptcy of DAVID IAN HENDERSON
BETWEEN
HAVENLEIGH GLOBAL SERVICES LIMITED AND FM CUSTODIANS LIMITED
Judgment Creditors (Substituted
Creditors)AND
DAVID IAN HENDERSON Judgment Debtor
Hearing: 26, 27 September 2016 Appearances:
J Foster and C R Vinnell for Official Assignee
D I Henderson (bankrupt) in personT Cooley as counsel assisting the court (present but not making submissions on this application)
Judgment:
4 October 2016
JUDGMENT OF ASSOCIATE JUDGE OSBORNE
as to recusal
Introduction
[1] David Ian Henderson was adjudicated bankrupt on 29 November 2010 and was to have been automatically discharged from bankruptcy in January 2014.
[2] The Assignee in November 2013 filed an objection to Mr Henderson’s
discharge, pursuant to s 292 Insolvency Act 2006 (the Act). As a result, Mr
Henderson was required to be publicly examined under s 295 of the Act.
HAVENLEIGH GLOBAL SERVICES LIMITED v HENDERSON [2016] NZHC 2356 [4 October 2016]
[3] I was the Associate Judge to whom the conduct of the public examination was allocated. I have since conducted a public examination of Mr Henderson which I adjourned in October 2015 for final submissions.
The recusal application
[4] On 18 April 2016, when the hearing of final submissions was pending, Mr Henderson filed an application for an order that I be recused from further conducting the public examination.1 The matters he raises may be grouped under four heads:
(a) Issue 1 – my previous involvement in litigation against Property
Ventures Investments Ltd;
(b) Issue 2 – my conduct of the public examination;
(c) Issue 3 – my receiving a letter from Graeme Thorne; (d) Issue 4 – my conversation with a District Court Judge.
[5] The Assignee opposes the recusal application.
Recusal for apparent bias – the law
[6] As summarised by Professor Philip Joseph, apparent bias arises when a decision-maker has some personal or professional relationship with a party or witness, or a prejudice against or preference towards a particular party or result, or a predisposition leading to a predetermination of the issues.2
[7] The Supreme Court in Saxmere Company Ltd v Woolboard Disestablishment
Company Ltd (Saxmere (No 1)) dealt definitively both with the definition and the test of apparent bias.3
1 Mr Henderson’s grounds of application included a reference to “actual bias”. Mr Henderson did not, in his written synopsis, develop any submission as to actual bias. He confirmed to the Court at the start of his oral submissions that he was resting his submissions on apparent bias.
2 Philip Joseph Constitutional and Administrative Law in New Zealand (4th ed, Thomson Reuters, Wellington, 2014) at 1076, adopted in R v Gan [2016] NZHC 2031 at [8].
3 Saxmere Company Ltd v Woolboard Disestablishment Company Ltd [2009] NZSC 72, [2010] 1
NZLR 35 [Saxmere (No 1)].
[8] The test for apparent bias is whether 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.4 The test involves a question of possibility (not probability). The possibility must be “real and not remote”.5
[9] The recusal enquiry requires two steps:6
(a) first, the identification of what is said might lead a Judge to decide a case other than on its legal and factual merits; and
(b)secondly, there must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits.
[10] The judgments in Saxmere (No 1) identify the following characteristics of the
“fair-minded lay observer”:
·The observer is an “ordinary sensible member of the public with appropriate knowledge of all the relevant circumstances including the general workings of the legal system”.7
· The observer is taken to understand that:8
(i) The Judge is expected to be independent in decision-making and has taken a judicial oath accordingly.
(ii) A Judge is obliged to sit on any case allocated to the Judge unless grounds for disqualification exist.
(iii) The judicial system functions on the basis of deciding between litigants irrespective of the merits or demerits of any counsel who represents them.
·The observer’s apprehension is not to be tested by reference to individual or motivated views of the particular litigant who alleges bias (that person being the least objective observer of all).9
4 At [3], per Blanchard J, [89] per McGrath J, [38] per Tipping J.
5 At [4], per Blanchard J, [94] per McGrath J.
6 At [4], per Blanchard J.
7 At [38], per Tipping J.
8 At [8], per Blanchard J.
9 At [10], per Blanchard J. In Zaoui v Greig HC Auckland CIV-2004-404-317, 31 March 2004 the
Court (Salmon and Harrison JJ) similarly stated “…the subjective views of the complainant are
[11] As observed by Kirby J in Johnson v Johnson:10
The fictitious bystander will also be aware of the strong professional pressures on adjudicators (reinforced by the facilities of appeal and review) to uphold traditions of integrity and impartiality. Acting reasonably, the fictitious bystander would not reach a hasty conclusion based on the appearance evoked by an isolated episode of temper or remarks to the parties or their representatives, which was taken out of context. Finally, a reasonable member of the public is neither complacent nor unduly sensitive or suspicious.11
[12] The Supreme Court in Siemer v Solicitor General identified the onus in relation to an allegation of apparent bias:12
The recent decision of the Court which addressed an issue of apparent bias indicated that where an association between a judge and a person having an interest in litigation leads a litigant to seek recusal, that party must be specific about the connection perceived between the circumstances giving rise to concern, and why they establish that a fair-minded observer would have a reasonable apprehension about the Judge’s impartiality. The facts relied on in relation to the association had to be spelt out, as well as why concern reasonably arises that the judge might not decide the case on the true merits. The person who asserts that there is a situation giving rise to apparent bias bears the onus of establishing that this is the case.
Authorities as to the judicial approach at hearings generally
[13] I was not referred by counsel or Mr Henderson to any particular New Zealand authority in relation to the assessment (in an apparent bias context) of judicial conduct in relation to the hearing itself. If there is to be a ground of recusal based on apparent bias arising once a proceeding has commenced, it would most logically come about because the Judge in the course of the proceeding has displayed such a high degree of favouritism or antagonism as to preclude fair judgement and/or lead to pre-judgement.
[14] The plurality of the High Court of Australia put it this way in Re Watson; Ex parte Armstrong:13
neither relevant nor decisive within the scope of an objective inquiry”, citing the judgment of
Lord Hope in Porter v Magill [2002] 2 AC 357 at [104].
10 Johnson v Johnson [2000] HCA 48, (2000) 201 CLR 488.
11 R v S (RD) [1997] 3 SCR 484.
12 Siemer v Solicitor General [2010] NZSC 12, (2010) 19 PRNZ 663 at [6].
13 Re Watson; Ex parte Armstrong (1976) 1 36 CLR 248 (HCA) at 263.
If fair-minded people reasonably apprehend or suspect that the tribunal has pre-judged the case they cannot have confidence in the decision.
[15] The High Court visited the same subject matter in Johnson v Johnson.14
Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ referred to the above passage in Re Watson but continued by noting two things that needed to be remembered at the same time:15
… the observer is taken to be reasonable; and the person being observed is a “professional Judge whose training, tradition and oath or affirmation require [the Judge] to discard the irrelevant, the immaterial and the prejudicial.”
The judgment continues:16
At the trial level, modern judges, responding to a need for more active case management, intervene on the conduct of cases to an extent that may surprise a person who came to Court expecting a Judge to remain, until the moment of pronouncement of judgment, as inscrutable as the Sphinx.
[16] I would add, in the context of a public examination, that the Judge’s intervention arises not only as an aspect of active case management but from the requirement upon the Court itself to conduct the public examination with an inquisitorial, far-reaching approach.
[17] In the context of recusal, the United States Supreme Court has also explained, in Liteky v United States:17
First, judicial rulings alone almost never constitute a valid basis for a bias or partiality motion. In and of themselves … they cannot possibly show reliance upon an extrajudicial source…. Second, opinions formed by the judge on the basis of facts introduced or events occurring in the course of the current proceedings, or of prior proceedings, do not constitute a basis for a bias or partiality motion unless they display a deep-seated favouritism or antagonism that would make fair judgment impossible. Thus, judicial remarks during the course of a trial that are critical or disapproving of, or even hostile to, counsel, the parties, or their cases, ordinarily do not support a bias or partiality challenge. They may do so if they reveal an opinion that derives from an extrajudicial source; and they will do so if they reveal such a high degree of favouritism or antagonism as to make fair judgment impossible.
14 Johnson v Johnson, above n 10.
15 At [12].
16 At [13].
17 Liteky v United States (1944) 114 S.CT 1147 (SC) at 1157.
[18] The Court of Appeal of New South Wales in Galea v Galea considered criticism of aspects of the trial judge’s conduct of a trial.18 The appellant claimed that interventions by the trial Judge during cross-examination of the appellant and comments both to the appellant and his counsel resulted in a miscarriage of the trial. In the words of Kirby A-CJ, passages of the transcript of which the appellant complained evidenced:19
… a high degree of impatience on the part of Powell J, with the answers which the appellant was giving to the cross-examiner.
The Court unanimously dismissed the appeal. Kirby A-CJ referred to the undesirability of there being a “sphinx-like” judge.20 His Honour continued that the hypothetical lay-observer’s assessment of a judge’s conduct must be in the context of the whole of a trial, adding:21
A judgment of the loss of impartiality and neutrality would not be made from a short and emotional exchange taken out of context and then weighed in isolation. Judges, like witnesses, are human.
Waiver
[19] The right to challenge proceedings conducted in breach of the rule against apparent bias may be lost (certainly in relation to proceedings of a civil character) by waiver, either express or implied.22
[20] In Sisson v Canterbury District Law Society the Court of Appeal described the elements of waiver:23
[39] The elements of waiver in this context are not in dispute. The Court must be satisfied that the person said to have waived “acted freely and in full knowledge of the facts”. The act or omission must be a “voluntary, informed and unequivocal election by a party not to claim a right or raise an objection which is open to that party to claim or raise”. As was recently said in Smith v Kvaerner Cementation Foundations Ltd:24
18 Galea v Galea (1990) 19 NSWLR 263 (NSWCA).
19 At 273.
20 At 278.
21 At 279.
22 Joseph, above n 2, at [25.5.2]; Halsbury’s Laws of England (5th ed, vol 61) at 635.
23 Sisson v Canterbury District Law Society [2011] NZCA 55, [2011] NZAR 340.
24 Smith v Kvaerner Cementation Foundations Ltd [2006] EWCA Civ 242, [2007] 1 WLR 370 (CA).
[29] … The vital requirements are that the party waiving should be aware of all the material facts, of the consequences of the choice open to him, and given a fair opportunity to reach an unpressured decision
(footnotes omitted).
[21] In Sisson, the Court referred to its own previous decision (the leading New Zealand authority) in Auckland Casino Ltd v Casino Control Authority.25 In that case, the unsuccessful applicant for a casino licence had allowed the licence hearing to proceed without protest over a professional/financial relationship between authority members and the successful applicant. In Sisson, the Court of Appeal referred to with approval the observation of Cooke P in Auckland Casino where the President stated:26
…the appellant decided to press on as a participant in the hearing, without raising the bias objections … thus deliberately taking the chance of the result before the Authority and reserving, as far as that was possible, any challenge on the ground of bias unless and until there was an adverse decision from the Authority. Factors influencing this election included fear of alienating the Authority and fear of public opinion. We accept that there was a real dilemma and confess to some sympathy with the appellant.
[22] In Auckland Casino the Court of Appeal upheld the finding in the High Court that any ground of objection based on bias had been waived. Robertson J in the High Court had referred to the overwhelming evidence of knowledge of the relevant circumstances on the part of lawyers, directors, advisors and supporters at various
times prior to the conclusion of the Casino licence hearing.27
[23] These decisions of the Court of Appeal bind this Court and state the law as I
must apply it to waiver.
[24] In his submissions, Mr Henderson referred to passages in the judgments of the Privy Council in Millar v Dickson and Lesage v The Mauritius Commercial Bank Ltd.28 The Privy Council found that in neither of the cases (involving apparent bias)
had there been a waiver. In both cases the outcome turned on whether the act or
25 Auckland Casino Ltd v Casino Control Authority [1995] 1 NZLR 142 (CA).
26 At 150.
27 Auckland Casino Ltd v Casino Control Authority HC Auckland M81/94, 13 July 1994.
28 Millar v Dickson [2001] UKPC D4, [2002] 1 WLR 1615; Lesage v The Mauritius Commercial
Bank Ltd [2012] UKPC 41.
omission of the person said to have waived apparent bias was a “voluntary, informed and unequivocal election by a party not to claim a right or raise an objection which is open to that party” (being the same test as has been applied by the Court of Appeal in New Zealand).
[25] In the Californian text, Judicial Disqualification: Recusal and Disqualification of Judges, Richard Flamm discusses in detail the recognition of implied waiver in United States jurisdictions, with extensive reference to case law.29
The author explores why the Courts have recognised the operation of waiver in this area:30
The primary purposes for the implied waiver rule… are the same as those that justify a timeliness requirement generally – to nullify the rewards of “sand-bagging” through employment of dilatory tactics, and to prevent parties from disqualifying judges after obtaining an inkling of their views as to the merits. Indeed, without an implied waiver rule, a party would be able to take his chances on a favorable decision, verdict, or sentence; secure in the knowledge that, should that decision or verdict turn out to be unfavorable, or the sentence too severe, he could later obtain a second hearing or trial by asserting that the judge had been operating under a legal disqualification at the time that the opinion, verdict, or sentence was rendered.
(footnotes omitted).
[26] One of the cases Richard Flamm refers to in his footnotes is a 1998 decision of the United States Court of Appeal’s 11th circuit, Bivens, Gardens Office Building v Barnett Banks, Inc in which counsel for the complaining party:31
…were aware a full three months before this case went to trial that [the judge] had employed Perez as a law clerk … Yet they made a strategic decision not to raise the issue until they saw how the trial came out … The recusal provision was intended to be a shield, not a sword. An issue involving recusal cannot be used as an insurance policy to be cashed in if a party’s assessment of his litigation risks turns out to be off and a loss occurred.
[27] This approach is closely related to that of the Court of Appeal (England and
Wales) in Locabail (UK) Ltd v Bayfield Properties Ltd that:32
29 Richard E Flamm Judicial Disqualification: Recusal and Disqualification of Judges (2nd ed, Banks and Jordan Law Publishing Co, Berkeley, 2007).
30 At 594 – 595.
31 Bivens, Gardens Office Building v Barnett Banks, Inc (1998) 140 F.3d 898 (11th Cir. 1998) at
[29].
It was not open to [the litigant] to wait and see how her claim … turned out before pursuing her complaint of bias … [She] wanted to have the best of both worlds. The law will not allow her to do so.
The Court also observed:33
The greater the passage of time between the event relied on as showing a danger of bias and the case in which the objection is raised, the weaker (other things being equal) the objection will be.
[28] It is unnecessary in this case that I seek to determine whether waiver might occur in criminal cases. The Court of Appeal in Erris Promotions Ltd v CIR reserved the point.34 In his oral submissions Mr Henderson developed a submission that waiver should not be permitted in criminal cases and, by analogy, in the context of proceedings such as the public examination of a bankrupt because the bankrupt by reason of his bankruptcy is “detained”. Mr Henderson suggested that such “detention” occurs during bankruptcy by reason of the bankrupt’s inability to leave New Zealand without the Assignee’s permission.35 However, the decision of the Court of Appeal in Slavich v Official Assignee established that bankruptcy does not amount to a “detention”, the Court stating, “Mr Slavich [an undischarged bankrupt] is not detained. He is free to go wherever he likes in New Zealand.”36
The nature and subject-matter of a public examination under s 295 Insolvency
Act
The nature of the examination
[29] The present application falls to be considered in the context of the public examination which I have been conducting.
32 Locabail (UK) Ltd v Bayfield Properties Ltd [2000] QB 451 (CA) at 480.
33 At 480.
34 Erris Promotions Ltd v Commissioner of Inland Revenue (2003) 16 PRNZ 1014 (CA) at [33]. In Erris the Judge in the question had many years earlier been involved as counsel for one of the parties on taxation issues. The Court of Appeal observed at [33] that “[t]hese proceedings are significantly connected with the issues involved in his former brief.” Such a connection (Step 2 of the Saxmere (No 1) analysis) does not exist in this case – the Regalwood summary judgment
proceeding turned on application of legal principles to a property transaction (unrelated to the
subject matter of the public examination) in which PVIL’s position was vindicated as a matter of
law.
35 Insolvency Act 2006, s 433(1)(f). With particular reference to the Court of Appeal’s judgment in
R v Reekers [2011] NZCA 125, [2011] NZAR 272.
36 Slavich v Official Assignee [2010] NZCA 117 at [2].
[30] The public examination is an extraordinary process. The bankrupt is summoned for inquisitorial and investigative purposes and not as part of ordinary civil litigation between litigant parties. In this case, the nature of the process was explored in significant detail, in the light of opposing submissions, before the public examination itself commenced. Mr Henderson had raised issues relating to the procedure. My judgment in that regard is described as Pre-examination Ruling (No
2).37 Upon an extensive review of the authorities, I concluded:
[27] The process of the public examination has the following aspects:
(a) The examination of the bankrupt occurs under s 177 of the
Act.
(b) It is conducted by the Court, not a party or parties.
(c) Parliament requires a report to be filed by the Assignee, but makes no provision for a reply by the bankrupt (except through examination).
(d) The examination is intended to be inquisitorial and far reaching (while remaining relevant), the bankrupt having no entitlement to notice beforehand of who will ask questions and what the questions will be.
(e) The examination of the bankrupt is not a cross-examination in the ordinary sense of civil litigation – it is the Court’s examination.
(f) The bankrupt must answer all questions the Court asks or allows the bankrupt to be asked.
(g) The bankrupt is not excused from answering a question on the grounds of self-incrimination. However, statements made by the bankrupt at his/her examination are inadmissible in criminal proceedings against the bankrupt (except in relation to perjury or when charged with an offence such as wilfully misleading the Official Assignee).
(h) The Court is precluded from ordering that an examination is ended unless the Court is satisfied that the bankrupt’s conduct, dealings and property have been sufficiently investigated and that the investigation is finished.
[31] My reference in the judgment to an “inquisitorial and far-reaching”
examination reflects the description of Hosking J in In re Hardy (a bankrupt), ex parte Official Assignee where his Honour also referred to the concept of a “most
37 Havenleigh Global Services Ltd v Henderson [2015] NZHC 1762.
searching inquisition”.38 In the course of argument brief reference was made (including by me) to the extraordinary powers of the historical Star Chamber in which individuals could be forced through an inquisitorial procedure to answer questions on oath notwithstanding that the answers might incriminate them.
[32] My judgment identified the nature of the public examination, including the passage as to the process set out at [30] above, and then dealt with Mr Henderson’s applications which related to cross-examination and discovery.
[33] Subsequently, on the first morning of the public examination (3 August
2015), I began the examination with an explanation of the process which was about to take place. I referred to the pre-examination rulings which had been made. I again identified the inquisitorial nature of the process. The explanation of process is attached as Schedule A. It reinforced the findings in my earlier judgment as to the nature of the process.
[34] Mr Henderson is articulate and fearless and demonstrates (albeit as a layman) significant skills in understanding and conducting litigation. But, to some extent understandably, in the course of the examination he often strayed from evidence into lengthy submissions when the first stage of the public examination is to elicit the relevant factual background. The exchanges which have occurred from time to time have occurred in the process of getting the relevant information out.
The scope of the examination
[35] The scope of the examination required under s 295 of the Act is indicated by the matters which are required to be covered in the Assignee’s report under s 296(2) of the Act. Those matters include the bankrupt’s affairs, the bankrupt’s conduct before and after adjudication and any other matter that would assist the Court in making a decision as to the bankrupt’s discharge. Under s 298 the Court may refuse
discharge and may grant discharge (either with or without conditions).
38 In re Hardy (a bankrupt), ex parte the Official Assignee [1922] NZLR 108 (SC) at 119.
[36] Before Mr Henderson’s public examination commenced, I had to rule on the scope of the concept of the bankrupt’s “conduct” as referred to in the Act. In Havenleigh Global Services Ltd v Henderson, after extensive argument, I rejected a narrow construction of the term “conduct” advanced by Mr Henderson.39 I found that a broad approach was required.40 This judgment was the subject of an appeal by Mr Henderson, which in turn led to the postponement in 2015 of the start of the
public examination. The path to the start was later cleared when Mr Henderson abandoned his appeal.
[37] In his submissions on this application, Mr Henderson has drawn attention to a passage in the judgment of Associate Judge Abbott in Peters v Marac Finance Ltd.41
His Honour observed that, “conduct unconnected with the bankruptcy, either in producing it or affecting it after commencement, is not to be taken into account.”42
To the extent that such a test might suggest a narrower approach to concepts such as “conduct” than I have found them to have, that will be an issue for consideration and final submissions on the public examination. The identification now of the Re Peters dictum does not alter the historical fact that the public examination, including the questioning at the public examination, has occurred in the light of my earlier interlocutory judgments and rulings.
Issue 1 – my previous involvement in litigation against Property Ventures
Investments Ltd
The issue
[38] Mr Henderson deposes that he apprehends that I might not bring an impartial and unprejudiced mind to the outcome of his public examination by reason of my having acted as counsel for the plaintiff in Regalwood Holdings Ltd v Property Investments Ventures Ltd until my appointment to the bench in 2009.
[39] As Mr Henderson recalls it, he was at the time of the Regalwood litigation the director of Property Ventures Investments Ltd (PVIL). PVIL’s shares were in turn 49
39 Havenleigh Global Services Ltd v Henderson [2014] NZHC 499.
40 At [43] – [52].
41 Peters v Marac Finance Ltd [2014] NZHC 1755, [2015] NZCCLR 2.
42 At [43].
per cent owned by Property Ventures Ltd (PVL) of which Mr Henderson was managing director. Entities associated with him held a large portion of the shares (around 40 per cent) in PVL. The Regalwood litigation involved the construction of an agreement for the sale and purchase of a commercial building in the then-current Real Estate Institute of New Zealand and Auckland District Law Society standard form. Regalwood obtained in the High Court, on summary judgment, a declaration
that its cancellation of the agreement was valid and consequential orders.43 PVIL’s
appeal to the Court of Appeal was dismissed.44 I represented Regalwood in both the
High Court and the Court of Appeal, where Regalwood was successful.
[40] The summary judgment hearing in the High Court took place on a single day in December 2007 and was heard on the usual basis of affidavit evidence without cross-examination. The central issue, the validity of Regalwood’s cancellation was, as reflected in the fact the case ultimately went to the Supreme Court, fundamentally legal. The validity was to be determined by reference to the law of abatement and the correct construction of the settlement requirements under the agreement.
[41] I was appointed an Associate Judge of the High Court at a time when PVIL had appealed to the Supreme Court with the appeal yet to be heard. PVIL ultimately succeeded on that appeal, the summary judgment orders being set aside and the proceeding remitted to the High Court.45
[42] Mr A J Forbes QC appeared for PVIL at each stage of the Regalwood litigation. Upon my appointment to the Bench in February 2009, I became the single Associate Judge resident in the South Island. I recused myself from any decision- making in relation to the Regalwood litigation as it continued in the High Court. At the same time, I offered to remain available as an Associate Judge to deal with matters in the Regalwood litigation of a purely case management nature. In the
event, there was no need for further case management of the Regalwood proceeding
43 Regalwood Holdings v Property Ventures Investments Ltd (2007) 9 NZCPR 703 (HC).
44 Property Ventures Investments Ltd v Regalwood Holdings Ltd [2008] NZCA 422, [2009] 1
NZLR 481.
45 Property Ventures Investments Ltd v Regalwood Holdings Ltd [2010] NZSC 47, [2010] 3 NZLR
231.
as PVIL was put into liquidation in June 2010 (following the Supreme Court judgment of 28 April 2010). The proceeding was shortly thereafter discontinued.
[43] I did not recuse myself from involvement in any other litigation involving Mr
Henderson directly or involving entities associated with him.
[44] Mr Henderson submits that by reason of apparent bias I ought to have recused myself from hearing any further matter involving Mr Henderson, and in particular that I should have recused myself from conducting his public examination.
The articulation of a logical connection under Saxmere (No 1)
[45] It is for Mr Henderson, having identified my involvement as counsel in Regalwood as the relevant background matter, to articulate the logical connection between that matter and a feared deviation from the course of determining the outcome of his public examination on its merits.
[46] Mr Henderson’s Notice of Application for Recusal was extremely brief. Instead of enunciating grounds, it referred to “evidence”. In his affidavit in support, Mr Henderson identifies my involvement as counsel in Regalwood. He refers to the importance to PVIL of its acquisition of the subject property. He states that as Regalwood’s counsel, I described PVIL’s pre-settlement concerns as “a trivial matter”. He says that his counsel advised him that “the other side” simply saw PVIL as raising a pre-settlement issue as a means of avoiding settlement because PVIL was not in a financial position to do so, which he says was incorrect. He refers to the subsequent passage of the litigation through appeal and correctly records that I had continued as counsel for Regalwood until I was appointed to the bench. He refers to financial difficulties that both PVIL and PVL were facing through this time, culminating in liquidation and the loss of an opportunity to benefit from the eventual outcome of the litigation.
[47] Mr Henderson, in relation to the appearance of bias, referred also to a communication between Mr Forbes and myself following my appointment to the Bench. As the main relevance of that exchange relates to the issue of waiver, I deal with it substantially in that context below. The examination of whether my
involvement in Regalwood created an appearance of bias must in the first place be judged by reference to the facts of that involvement rather than to any discussions about it (subject to the one observation I make at [65](f) below).
Mr Henderson’s submissions
[48] In his submissions, Mr Henderson referred to the evidence as I have summarised it above. Mr Henderson submitted, without reference to any evidence, that Regalwood instigated “an aggressive course of litigation” which was “palpably nasty and aggressive”. The record of the summary judgment proceeding indicates otherwise – it was a procedure involving the usual affidavit evidence ultimately turning on the acceptance or rejection of legal argument.
[49] Against that background, Mr Henderson in his written submissions answered his own rhetorical question, as to whether grounds for disqualification (on the basis of apparent bias) existed, with “an unequivocal ‘yes’”. He explained that conclusion by asserting that the well-informed lay observer would consider that the Associate Judge would forthwith be disqualified from hearing any further matter involving Mr Henderson (by reason of the involvement in Regalwood). Mr Henderson did not attempt to articulate the logical connection required under Saxmere (No 1). Rather, the reasoning deployed by Mr Henderson involved the circularity that apparent bias existed because a well-informed lay observer would consider it existed.
[50] In his oral submissions, Mr Henderson recognised that his written submissions had failed to address Step 2 of the Saxmere (No 1) enquiry – requiring the articulation of the logical connection between the matter relied upon and the feared deviation from deciding the case on its merits. Before articulating that connection, Mr Henderson referred me to the observation of Lord Bingham in
Davidson v Scottish Ministers (No 2) where his Lordship observed of bias:46
What disqualifies the judge is the presence of some factor which could prevent the bringing of an objective judgment to bear, which could distort the Judge’s judgment.
46 Davidson v Scottish Ministers (No 2) [2004] UKHL 34, 2005 1 SC (HL) 7 at [6].
[51] Mr Henderson then referred to his affidavit where he identified four Judges and one Associate Judge who had recused themselves from hearing any litigation associated with Mr Henderson. A feature of his evidence in relation to two of the Judges was the many years since those judges had acted for him or given his company advice. A feature in relation to two other Judges was that their former firm or employer had been involved in litigation against Mr Henderson or his interests.
[52] Mr Henderson then articulated the Stage 2 step in this way:
The well-informed lay observer would sense the likelihood of my deviating from the course of deciding the public examination on its merits because I had not without discussion recused myself after recently acting as counsel in litigation against a company associated with Mr Henderson when five other Judges, without discussion, had recused themselves because they had either acted for Mr Henderson or against Mr Henderson, some going back many years.
[53] Mr Henderson’s conclusion that a fair-minded observer would apprehend bias on my part from my involvement in the Regalwood litigation is unsustainable when the circumstances are viewed objectively and dispassionately, as is required. Mr Henderson, in advancing his initial conclusion to the Court, effectively put himself up as the fair-minded observer, failing to appreciate, as observed by the Supreme Court in Saxmere (No 1), that the particular litigant who alleges bias is the least objective observer of all. Mr Henderson’s evidence on the apprehension of bias was supported by that of Rodney Hide who deposed that Mr Henderson is his “best friend”. Mr Henderson, in his submissions, identified the significance he attached to Mr Hide’s affidavit when, in quoting some of Mr Hide’s observations he described Mr Hide as “the lay observer”. The numerous opinions expressed by Mr Hide in his evidence suffered from the similar shortcoming in relation to objectivity as does Mr Henderson’s.
[54] Mr Henderson’s submissions also failed to recognise the relevant time for assessment of the allegation of apparent bias in relation to the public examination. The question is to be determined at the point I came to conduct the public examination and not at the date of my initial appointment to the Bench.
[55] I therefore move forward to 2015 when the public examination of Mr Henderson came before me. I heard pre-examination issues in mid-July 2015. I conducted the public examination of Mr Henderson over nine days between
3 August 2015 and 20 August 2015, with a further three days in October 2015. The examination was then adjourned for the filing and hearing of closing submissions. It was not until December 2015 that Mr Henderson first raised any issue as to bias, and then not in relation to the 2009 Regalwood litigation.
Events occurring in the passage of time – 2009 – 2015
[56] Of the proceedings I have presided over, those directly relating to Mr Henderson began I believe in early 2010 when I heard a creditor’s application for summary judgment against Mr Henderson. Further proceedings followed. Later in
2010 I heard a creditor’s application to have Mr Henderson adjudicated bankrupt. Mr Henderson was represented by Mr Forbes in opposing the adjudication. Following a hearing on 29 November 2010 I adjudicated Mr Henderson bankrupt.47
[57] In 2014 I heard and determined further matters in Mr Henderson’s
bankruptcy, relating variously to the issuing of summonses under the Insolvency Act
2006 and documents sought by the Assignee. In June 2015 I determined an appeal
of Mr Henderson from the Assignee’s refusal of permission to leave New Zealand.48
[58] After the allocation of Mr Henderson’s public examination to me, I heard and determined from July 2015 and 23 March 2016 twelve interlocutory applications or matters relating to the public examination.
[59] From 2009 I also heard and determined numerous proceedings involving entities associated with Mr Henderson.49 Significant among those proceedings was the proceeding in which an order was made putting PVL into liquidation.50 In many
of those proceedings, the entities related to Mr Henderson were represented by
47 Havenleigh Global Services Ltd v Henderson HC Christchurch CIV-2010-409-559, 29
November 2010.
48 Henderson v Official Assignee [2015] NZHC 1341.
49 Including Property Ventures Limited, Gibbston Downs Wines, Gibbston Water Services Ltd, Five Mile Holdings Ltd, Spinach Design Ltd, RFD Finance Ltd, RFD Investments Ltd, Te Anau Ventures Ltd, Naval Ltd and Castlereagh Properties Ltd.
50 Commissioner of Inland Revenue v Property Ventures Ltd (in rec) (2010) 24 NZTC 24,403 (HC).
counsel (variously Mr Forbes, Mr K W Clay, Mr J E Butler, and Mr J Moss). Mr
Henderson gave evidence in a number of them.
[60] In none of the proceedings I have referred to was a recusal issue raised of the nature now advanced.51
[61] In relation to a good number of my decisions, Mr Henderson or his related entities exercised their rights of review and/or appeal. In none of those reviews or appeals did they assert apparent bias in the procedure I had adopted.
Drawing the threads together
[62] The matters raised by Mr Henderson in relation to my involvement as counsel in the Regalwood litigation fail to meet the test of apparent bias in Saxmere (No 1).
[63] The present issue is distinctly different from the situation of counsel who has advised on or appeared in a case and is then elevated to the judiciary. If the very same case comes before him or her as Judge, recusal is the obviously appropriate course.52 That is exactly the position as it applied to the Regalwood litigation. Hence my recusing myself from sitting in an adjudicative capacity in that proceeding.
[64] Where, as in this case, the proceeding is a fresh proceeding and the aggrieved party asserts some disqualifying feature arising from earlier litigation, it is for the aggrieved party under the Saxmere (No 1) rule to demonstrate specifically the connection between the historical circumstances and the reasonable apprehension of partiality at the particular hearing.
[65] The factors relevant to objective assessment include these:
51 In proceedings brought by Gibbston Downs Wines Ltd and Spinach Design Ltd, both represented by Mr K W Clay, counsel raised an issue of the potential for “reverse bias” upon the basis of remarks made by the other party concerning a decision I had made. There was no issue raised as to conduct on my part. I heard submissions and refused to disqualify myself.
52 In the Marriage of Murphy and Armstrong [1978] 35 FLR 482 (Fam CA) at 488.
(a) Mr Henderson was not a party to the Regalwood litigation.
(b)Mr Henderson’s principal connection to the Regalwood litigation was as a director (not executive) of PVIL and its parent company (PVL) and (indirectly through his family interests) a shareholder in the parent company. The primary evidence for PVIL was provided by John Raso, an Investment Manager with PVL. Mr Henderson filed a very brief affidavit before Mr Raso’s affidavit was able to be sworn, in which Mr Henderson deposed that Mr Raso’s draft evidence was correct. He included two paragraphs as to discussions concerning PVIL’s entitlement to an abatement of the price.
(c) While Mr Henderson submits (without an evidential basis) that there was “an aggressive course of litigation” which was “palpably nasty and aggressive”, the record shows that the Regalwood litigation proceeded (by the nature of the summary judgment application) on affidavit evidence (without cross-examination). The outcome turned on the identification of the correct legal principles to be applied. The fair-minded lay observer, on reading the judgment in this Court and on appeal, would be able to appreciate that.
(d)I was embarking upon Mr Henderson’s public examination more than seven years after the summary judgment hearing and six years after I had last had any involvement in the Regalwood litigation, which Mr Henderson identifies as the cause of his concern. The fair-minded observer would understand that six years on I would have a relatively modest independent recollection of a summary judgment matter which took one day of hearing in the High Court and one day (on
legal points) in the Court of Appeal.53
(e) Neither Mr Henderson nor his associated entities appeared to draw any concern out of my conduct of the many hearings which took place
53 The observation of the Court of Appeal in Locabail, set out at [27] above, as to the growing weakness of an objection as time passes following the event relied on, is applicable.
between 2009 and 2015 based on a perception of apparent bias stemming from my involvement as counsel in the Regalwood litigation.
(f) It is common ground that upon my appointment to the bench I raised with Mr Forbes (Mr Henderson’s counsel in the Regalwood litigation) the matter of my involvement in the Regalwood litigation as one which might raise the possibility of recusal. It has been authoritatively recognised that such identification of the matter, with the opportunity for the relevant party to object, shows by the very act of disclosure that the Judge has nothing to hide and is fully conscious of the factors which might be apprehended to influence his or her
judgment.54
[66] In making his oral submissions as to a connection between the matter and a feared deviation, Mr Henderson focussed upon the decision of five Judges to recuse themselves from involvement in litigation involving Mr Henderson. Mr Henderson’s analysis effectively excluded consideration of the facts identified in my preceding paragraph. He relied also on the fact that I had recused myself from sitting in proceedings involving other parties, when I had declared that I had some involvement assisting with litigation in which one of the witnesses was a witness in the current proceeding.
[67] The fact that other judges, by reason of prior dealings or contact with or against Mr Henderson, had recused themselves cannot logically affect the application of the Saxmere (No 1) test in deciding whether I might be perceived to be affected by apparent bias in the public examination of Mr Henderson. That is a determination to be made on a careful consideration of the particular facts relied upon by Mr Henderson (my involvement in the Regalwood litigation), the public examination of Mr Henderson and my conduct of it. The fact that other judges may have recused themselves by reason of the particular matters which affected them
(either necessarily or unnecessarily) is not a matter to be factored into the Saxmere
54 Davidson v Scottish Ministers, above n 46, at [19] per Lord Bingham, at [54] per Lord Hope at
[54]; “… a proper disclosure at the beginning is in itself a badge of impartiality”.
(No 1) analysis. Similarly, the fact that I have recused myself in litigation involving other people, by reason of the particular background, cannot logically inform the question of apparent bias raised in this case.
[68] Mr Henderson further submitted that because on my appointment I had indicated to Mr Forbes a willingness to take no part in contentious matters in other proceedings (as well as the Regalwood proceeding), this was of itself evidence that the test for apparent bias was established. That is not so. The test for apparent bias flowing from my involvement in the Regalwood litigation is to be applied at the commencement of the public examination. Furthermore, my raising of the issue at the time of my appointment cannot be equated to a determination of the issue. As much is indicated by the evidence of Mr Henderson’s solicitor that “Mr Forbes advised me that he did not foresee any difficulty”.
[69] The relevant facts for the fair-minded lay observer are those set out at [65] above. In terms of Saxmere (No 1) the fair-minded lay observer, aware of these facts, would also take into account the general workings of the legal system, my judicial oath, the judicial obligation to sit on cases as allocated (unless disqualification grounds exist) and the functioning of the judicial system without regard to the individual merits of the legal representation on either side.
[70] On an objective assessment, it would be apprehended that, when Mr Henderson’s public examination commenced in mid-2015, I would be bringing an impartial mind to the outcome of the public examination.
Waiver
[71] Mr Vinnell for the Assignee submits that, even were the Court to have found apparent bias established on Issue 1 (which it has not), Mr Henderson has waived his right of objection.
[72] I conclude that the conduct of Mr Henderson and his counsel between the
2009 (when I was appointed) and December 2015 when he first raised the first possibility of recusal clearly constitutes an implied waiver on the part of Mr Henderson, of any issue arising from my involvement in the Regalwood litigation.
[73] Although there is common ground that there was in 2009 communication between Mr Forbes and myself as to the possibility of my recusing myself generally from matters involving Mr Henderson and related entities, there is disagreement as to detail and outcome. The main relevance of the 2009 communication is as a background to the implied waiver which occurred through Mr Henderson’s subsequent conduct.
[74] The relevance of the 2009 communication concerning recusal was first brought into focus when Mr Henderson filed his affidavit with his application for recusal on 20 April 2016. He deposed that, “At no stage has Associate Judge Osborne ever raised with me the issue of recusal or the issue of any potential conflict he might have …”.
[75] My prior involvement in the Regalwood litigation was a fact of which Mr Henderson was already fully aware. In some cases of apparent bias the litigant can become “informed” as to the relevant circumstance only if the Judge discloses it – such cases may include family relationships, professional relationships, and assistance or support given privately. In relation to this case, the Regalwood litigation (including my role as counsel for Regalwood) was fully public and known to Mr Henderson.
[76] Mr Henderson, after filing his recusal application, applied for a Judge to direct that the hearing of the recusal application be transferred from me to a Judge.55
As that application was to be heard by a Judge, I recorded in a Minute dated 13 May
2016 a number of matters relating to the recusal application, including that:56
At the outset, I arranged for the matter of my involvement in any of those proceedings [involving Mr Henderson or his associated entities] to be raised with Mr Forbes on behalf of his client. The communication would have been either through Minute or through the Registrar. I offered to take no part in contentious matters on other proceedings (in the same way as was applying to the Regalwood/Property Ventures litigation). Mr Forbes responded that his clients had no issue with my dealing as Associate Judge with all matters in other proceedings.
55 The application was dismissed: Havenleigh Global Services Ltd v Henderson [2016] NZHC
1113.
56 Havenleigh Global Services Ltd v Henderson HC Christchurch CIV-2010-409-559, 13 May
2016 [Minute at [5].
[77] That is how, when I recorded my Minute in May 2016, I recalled the events of 2009. It is still how I recall them.
[78] Subsequently, Mr Henderson requested clarification as to the form of my communication with Mr Forbes. I asked the Deputy Registrar to arrange a search of the most likely files (which are numerous and date back to 2009). The search did not locate a particular Minute, Memorandum or other communication on the subject of recusal (other than a Minute in which I had noted my recusal in the Regalwood litigation). The Deputy Registrar advised Mr Henderson accordingly.
[79] Mr Henderson has filed a second affidavit which deals with the communication between Mr Forbes and myself. There is also an affidavit of Grant Smith, a Christchurch solicitor who has acted for Mr Henderson and associated entities since 1998. He was the instructing solicitor of Mr Forbes in the Regalwood litigation.
[80] In his affidavit, Mr Smith refers to the Minute I had issued and states:
I recall Mr Forbes raised with me, presumably about the time of Associate Judge Osborne’s appointment that this matter had been raised with Mr Forbes by the Associate Judge. The impression I was left with was that it had been raised in an informal, if not social setting.
The essence of that conversation was that Associate Judge Osborne had raised with Mr Forbes whether there would be any objection to him hearing matters involving Mr Henderson. Mr Forbes advised me he did not foresee any difficulty but would discuss it with Mr Henderson. I do not recall hearing anything further on the matter.
[81] In a further affidavit, Mr Henderson refers to my communication with Mr
Forbes. He deposes:
I have no recollection whatsoever of any such arrangement and nor can I
find any reference to it or detail around it.
I do have a recollection of Mr Forbes contacting me by telephone at my office at some date I believe to be in early 2009 in which the notion of recusal was discussed.
In that telephone conversation Mr Forbes recounted to me that he had been to a function the night before – the purpose of which was to celebrate the appointment of Rob Osborne to the role of Associate Judge in Christchurch. He advised that during the course of that party that (now) Associate Judge
Osborne had approached him and raised the issue in conversation with him that I, or entities associated with me, might inevitably be appearing before him and because of his past involvement in acting against me in the Regalwood matter, would I have an issue with that.
I recall that conversation because it was the first time I had been aware of Rob Osborne’s appointment to the bench and I was highly intrigued by the appointment.
At that time I had little idea about the concepts of recusal and certainly no idea about the conventions relating to recusal.
As inevitably would be the case in such circumstances, I asked Mr Forbes what his thoughts were and advice would be. He suggested to me that an application for recusal can be made at any time and that in the meantime we should just “see how he goes”.
[82] Unsatisfactorily, Mr Henderson did not file any affidavit evidence of Mr Forbes who, as an officer of the Court, would have been expected to provide evidence if asked to do so. Mr Henderson sought to explain in his submissions a background to his not having provided an affidavit from Mr Forbes – which I understood to be that Mr Henderson instead suggested to the Assignee that she call Mr Forbes as a witness. None of this explains Mr Henderson’s failure himself to adduce evidence from Mr Forbes. There is an inference to be drawn which might go in favour of a finding of express waiver. But the issue may be resolved at the level of implied waiver because such waiver is clearly to be implied through the subsequent conduct of Mr Henderson’s counsel and of Mr Henderson himself. In relation to previous proceedings in which Mr Henderson was represented, the relevant conduct was that of counsel. In relation to other proceedings, including the public examination, it has been the conduct of Mr Henderson himself.
[83] To adopt Mr Henderson’s own words, he (and Mr Forbes) apparently did observe to “see how I went” over following years in many proceedings. Mr Henderson did not until this application take an objection to my sitting in the light of my judicial performance until evidence in the public examination had been given and closing submissions were about to be presented.
[84] Mr Henderson’s election was not forced upon him – he was at each point aware of a right to object on grounds of apparent bias but chose not to do so. He had
had, at the time the public examination commenced, “a fair opportunity to reach an
unpressured decision as to my involvement”.57
[85] Accordingly, all elements to establish an implied waiver are established. Mr Henderson was “informed” in that he knew the material fact that I had been counsel for Regalwood in the Regalwood litigation and was aware of the detail of that proceeding, Mr Henderson knew of his right to object to my sitting and Mr Henderson had a long, fair opportunity to reach an unpressured decision in relation to each of the subsequent proceedings which came before me (including in the application to adjudicate him bankrupt).
Issue 2 – my conduct of the public examination
The grounds of complaint as to my conduct of the public examination
[86] The series of complaints raised by Mr Henderson (collected by me as Issue 2)
relate to my conduct of his public examination.
[87] Mr Henderson did not in his application for recusal identify particular aspects of my conduct which were impugned. Rather, the task of identifying the particulars is to be undertaken through a reading of his affidavit evidence and his submissions.
[88] Mr Henderson’s written submissions extend over 60 narrative pages. From
them the following heads of complaint may be identified:
(a) My conduct before the public examination commenced. (b) Mr Henderson’s self-representation.
(c) The conduct of a Star Chamber.
(d) The extending of indulgences to counsel for the Assignee
(e) The reading-over of the transcript.
57 Smith v Kvaerner Cementation Foundations Ltd, above n 24.
(f) The examination of Mr Henderson in relation to Strategic Finance litigation.
(g) Directions in relation to reports of s 165 examinations. (h) Discussion as to ways around 30 October 2015 ruling.
(i) Expediency afforded to the Assignee in December 2015.
(a) My conduct before the public examination commenced
(i) The matter
[89] Mr Henderson refers to a judgment I delivered in March 2014 by which Mr Henderson was ordered to deliver up to the Assignee documents which the Assignee sought for the purposes of preparing her report for the public examination.58 Mr Henderson filed an appeal. The issue identified by Mr Henderson is that I “required him to abandon the appeal” before the Court would commence the public examination. Mr Henderson ultimately abandoned his appeal.
(ii) The articulation of the logical connection
[90] Mr Henderson submitted that this event was an example of my “various prejudicial requirements”. The alleged prejudice, I infer, is that Mr Henderson may have had an arguable basis on appeal to resist provision of particular documents and that the subsequent availability of those documents has worked against Mr Henderson in the public examination.
(iii) Discussion
[91] The appropriate time at which to commence the examination, in the light of a pending appeal, was for decision in an interlocutory context. Such a decision cannot reasonably be said to foreshadow a pre-judgement in relation to the substance of the public examination itself. Furthermore, as Mr Vinnell noted in his submissions, the
question of adjournment of the public examination first came before Dunningham J
58 Havenleigh Global Services Ltd v Henderson [2014] NZHC 499.
at the request of the Assignee on 19 May 2014. The public examination at that point was scheduled to commence on 9 June 2014. Mr Henderson had not delivered up the documents as ordered. Mr Henderson opposed adjournment of the public examination. Dunningham J granted an adjournment. Her Honour recorded:
Mr Henderson cannot have matters both ways. Either the hearing is adjourned while he pursues his appeal against Associate Judge Osborne’s directions judgment, or he complies with those directions in sufficient time to allow the hearing on 9 June 2014 to proceed.
[92] There can be no reasonable apprehension of bias in relation to these events, both because of their case management nature (unrelated to the substance of the public examination) and because, in my subsequent case management, I adopted the approach reflected in the decision of another Judge, which had not been appealed.
(b) Mr Henderson’s self-representation
(i) The matter
[93] Mr Henderson has represented himself in the public examination, as he had in relation to numerous matters preceding public examination. Legal aid is not available. Mr Henderson identifies three particular matters:
(a) Although I appointed counsel to assist the Court on the public examination, I did not appoint counsel to assist Mr Henderson.
(b)During a conference on 17 December 2015 (after the conclusion of evidence and when Mr Henderson’s closing submissions were due to be filed) I required “comprehensive submissions” without further explanation of what that meant.
(c) When Mr Henderson asserted that he did not know what “comprehensive submissions” meant, I observed to Mr Henderson that, while he kept telling me that he could not afford a lawyer in this context, it appeared that he was able to access money when he needed to meet a tax debt.
(ii) The articulation of the logical connection
[94] Mr Henderson identified these matters (in relation to the non-appointment of counsel to assist him and in relation to my exchanges with him on 17 December
2015) as “highly unwarranted, gratuitous and indicative of an unacceptable attitude towards him”. In his oral submissions he added that they “clearly show a propensity for pre-determination”.
(iii) Discussion
[95] The matter raised by Mr Henderson as to his lack of representation could not reasonably raise an apprehension of bias. Where a party is unrepresented, the appointment of counsel to assist the Court is a traditional means by which the Court seeks to address the lack of representation. It is not the Court’s role to provide representation to the party himself.
[96] My observations in the exchange of 17 December 2015 were self-evidently focussed on ensuring that Mr Henderson, to his advantage, filed comprehensive submissions. Precisely what comprehensive submissions might look like was not a matter the Court could reasonably be required to spell out in a Chambers conference which began at 5.00 pm that evening. The context of the remarks as to Mr Henderson’s potential ability to source funds to obtain legal assistance in relation to submissions is that Mr Henderson had frequently through the public examination cited a financial inability to obtain legal assistance whereas recent publicity had indicated an ability to settle a tax debt.
[97] What was involved on 17 December 2015 was a robust exchange which would move the public examination, through full closing argument, to a conclusion. While aspects of my remarks can be seen as critical of Mr Henderson they cannot reasonably be taken to display such antagonism as to make fair judgment impossible.
(c) The conduct of a Star Chamber
(i) The matter
[98] Mr Henderson identifies my reference to the Star Chamber in the course of the interlocutory hearing in mid-July 2015 when the scope of the public examination and of the Assignee’s report for the public examination was in issue. Mr Henderson identifies his understanding of a Star Chamber as being “an inquisitorial Court that was well known for its arbitrary methods and severe punishments”.
[99] Mr Henderson says that he was not prepared for the sheer length of the public examination which unfolded with evidence running to 1,300 pages and some 6-7,000 questions (Mr Henderson’s figure) asked by the Court. Mr Henderson concludes that I allowed the public examination to get completely out of hand in a grossly unfair way.
(ii) The articulation of the logical connection
[100] Mr Henderson in his oral submissions explained that in adopting a Star Chamber process, the Court had adopted something which had been abolished precisely because the Star Chamber had not adopted principles of natural justice. Mr Henderson did not specifically relate an alleged breach of natural justice to an apparent bias whereby the Court might not decide the substantive issues in the case on their merits.
(iii) Discussion
[101] For the purpose of this hearing I have reviewed the transcript. The examination of Mr Henderson has taken an extraordinary time. The time of itself cannot inform the issue of partiality or impartiality. A review of the transcript and of the documents which have been considered in the course of Mr Henderson’s public examination reflects the sheer scale and reach of Mr Henderson’s business enterprises and activities.
[102] The number of civil proceedings and judgments involving Mr Henderson or associated entities similarly reflects that range of activity and ultimate financial
plight. In a draft reply to the National Enforcement Unit of the then-Ministry of Economic Development in 2011, Mr Henderson stated that he had “created hundreds of businesses” and “thus developed in excess of 100 properties”. The Assignee identified 120 companies of which Mr Henderson has been a director of which 17 had been placed in receivership, 52 put into liquidation and 36 struck off the register.
[103] The sweep of the public examination was extended by the fact that this was not Mr Henderson’s first bankruptcy and that the Court necessarily had to examine matters in relation to that bankruptcy also.
[104] Mr Henderson’s examination was further complicated in relation to the enquiry into the extent of Mr Henderson’s indebtedness. The indebtedness had substantially come about through Mr Henderson’s guaranteeing of company debt. The Assignee has reported losses to creditors of companies that went into liquidation in the sum of $219,160,093. When Mr Henderson submitted an informal creditor’s proposal shortly before he was adjudicated bankrupt, Mr Henderson himself calculated his total undisputed creditors at $142,753,625.89. The enquiry into the extent of Mr Henderson’s insolvency has been further affected in the course of the examination by Mr Henderson’s oral evidence (generally without documentary support) that a very substantial proportion of the guaranteed indebtedness has been “settled”.
[105] The Court was also required to investigate Mr Henderson’s performance (as a bankrupt) of his duties under the Insolvency Act 2006. The Assignee identified a number of duties each of which requires examination.
[106] Appended to the judgment as Schedule C is a document which I prepared upon receipt of the written closing submissions of the Assignee and Mr Henderson. In it I identify what I take to be 33 topics on which submissions had been made (and evidence adduced in the examination itself). Some of the topics are relatively contained (such as income received during bankruptcy) but others are, on the evidence, expansive topics including “post-adjudication conduct” and “the bankrupt’s affairs”.
[107] These matters point to the complexity and range of issues arising in the public examination. They fall far short of illustrating the full complexity. That will emerge as and when there is a conclusion to Mr Henderson’s public examination and a judgment issues.
[108] Mr Henderson has equated the public examination of these matters which has occurred to a “Star Chamber” process. The nearest Mr Henderson has come to identifying a particular aspect of the public examination as being unnecessarily oppressive is his identification of the time the evidence lasted (12 days) as compared with the original estimate of the Assignee’s presentation (2 – 3 days). That vast underestimation is not indicative of an oppressive process. It reflects the fact that this is the Court’s examination and that the material relevant to Mr Henderson’s bankruptcy and conduct has required, for full examination of Mr Henderson, a long examination. Furthermore, the mis-estimation of hearing length is, regrettably, far from unusual. It happens. The Court’s response to the demands of an examination, as they change, do not indicate bias.
[109] In the July 2015 interlocutory hearing there was brief reference to the Star Chamber when the peculiar nature of the public examination process was being explored. The inquisitorial nature and the requirement upon the examinee to answer incriminating questions were the points of comparison. Mr Henderson’s characterising the subsequent public examination as a “Star Chamber process” fails to identify a particular way in which the public examination as conducted has moved beyond its proper bounds. He fundamentally fails to address, for the purposes of an apparent bias argument, how any suggested breach of a suitable process suggests that the Court may not decide the outcome of the public examination on its merits.
(d) The extending of indulgences to counsel for the Assignee
(i) The matter
[110] Mr Henderson contrasts the approach I adopted in relation to a particular aspect of submissions for the Assignee in July 2015 with a criticism of Mr Henderson (and a barrister) for matters contained in Mr Henderson’s submissions at a later interlocutory hearing. In particular, I allowed Dr M Palmer QC, appearing for
the Assignee, to read extensively from 1542 and 1604 bankruptcy legislation which Mr Henderson viewed as “of no benefit to the Court”. On the other hand, Mr Henderson refers to my criticism of material contained in the opinion of a Wellington barrister which Mr Henderson had obtained and adopted in his submissions on a documentary privilege argument. I observed to Mr Henderson that the Court was not assisted by the barrister providing biographical information of a curriculum vitae nature. I instructed Mr Henderson to tell the instructing solicitor and the barrister (neither of whom was in Court) that the inclusion of such biographical information should not occur.
(ii) The articulation of the logical connection
[111] Mr Henderson takes from these two incidents in the two interlocutory hearings evidence of a contrasting approach of indulging the Assignee and disparaging those assisting Mr Henderson. He did not articulate a particular connection between the matters identified and a feared deviation from the course of deciding the outcome of the public examination on its merits.
(iii) Discussion
[112] The particular points of the two interlocutory hearings identified by Mr Henderson involve nothing unusual in the context of interlocutory hearings. As an examination of many of the authorities in relation to the examination processes under the Insolvency Act readily shows, the understanding of those processes is often tracked historically (precisely because the origins of the processes are so historical). In relation to the barrister’s opinion, it was essentially an opinion provided to Mr Henderson so that he could best develop the legal arguments involved. The barrister’s curriculum vitae was not a matter properly to be put before the Court – the opinions contained in his letter stood or fell on their merits. They were taken into account accordingly.
[113] In short, Mr Henderson has entirely unreasonable conclusions which the fair- minded lay observer would not have. That lay-observer would also have seen the two particular exchanges for what they were, namely momentary points amongst many interlocutory hearings and other chambers appearances.
(e) The reading-over of the transcript
(i) Matter
[114] Section 178 of the Act provides that the public examination must be recorded in writing as the Court directs and must be read over to and signed by the bankrupt.
[115] At the commencement of the examination, I directed that if evidence was continuing at 4.00 pm on a day, the taking of evidence would then stop so that the record of examination could be read over to Mr Henderson and signed by him. At the end of the first day, an expedient was adopted whereby it was agreed by those present in Court, including Mr Henderson, that the reading back would be held over until the completion of his evidence. It transpired that the examination of Mr Henderson took well beyond the initially estimated period. The transcript became very long.
[116] As an act of expediency, I subsequently directed a process whereby Mr Henderson could attend Court and check the transcript for himself, with any errors detected to be noted and compared against the FTR recording of the hearing.
[117] Mr Henderson did not accept this process. He submits that he has been prejudiced by it.
(ii) The articulation of the connection
[118] Mr Henderson did not articulate a particular connection from this matter to apparent bias.
(iii) Discussion
[119] The approach I adopted was an expedient. It does not strictly comply with the provisions of s 178 of the Act. On the other hand, the statute was enacted at a time before FTR recording when there was, after the event, no way of comparing what the Judge’s Associate had recorded against what an examinee had actually said. Today, the very best way of checking the accuracy of the transcript is by comparing it with the FTR recording.
[120] The issue in the present context is not whether the expedient I adopted can be justified. It is whether my decision to adopt that expedient constitutes apparent bias in terms of the Saxmere (No 1) test. It clearly does not.
(f) The examination of Mr Henderson in relation to Strategic Finance litigation
(i) The matter
[121] In her s 296 report, the Assignee had identified for examination the circumstances in which Mr Henderson had guaranteed a debt owed to Strategic Finance Ltd (Strategic), supported by a statement of financial position, but had subsequently defended (and appealed) Strategic’s summary judgment claim for payment of the debt. When the summary judgment claim was initially issued, Mr Henderson entered negotiations pursuant to which he signed an acknowledgement of debt for $2,650,147.79. When payment was not made, he later pursued opposition to the summary judgment claim and, when unsuccessful, filed his appeal. The appeal was pending when Mr Henderson was adjudicated bankrupt and the appeal was not pursued by the Assignee.
[122] Ms Foster properly questioned Mr Henderson in relation to the provision of his statement of position, the entry into the Strategic guarantee and his subsequent defence of the claim. The debt to Strategic grew substantially during the course of Mr Henderson’s defence and appeal.
[123] At the conclusion of the second day of the examination, I called for the Court file in relation to the Strategic litigation. By reference to the affidavits and other documents on the Court file, I questioned Mr Henderson in detail.
[124] In his submissions, Mr Henderson identified the matter of concern in this way:
I was particularly intimidated over this affair realising that the Judge was using his enormous authority, power and resources as a Judge to try and dig up information in respect of the public examination, outside anything that the Assignee [had] presented, to try and support her case against me.
I was particularly concerned that the Judge was using this authority and resources to try and justify and support his earlier views of me and in some
way feel vindicated for the litigation he had been involved with that ultimately failed.
[125] Mr Henderson referred to a particular question which I put to him at the end of my questioning in relation to Strategic in which I had the Registrar hold up the High Court file and noted that the (substantial) file was the result of his challenge to his personal guarantee. I asked whether he accepted personal responsibility for litigation he embarked on (to which Mr Henderson replied, “Of course, Sir”).
(ii) The articulation of the logical connection
[126] As indicated by the passage which I have quoted from Mr Henderson’s written submissions, Mr Henderson views my questioning as to the Strategic litigation as derived from my need for vindication for my role in the Regalwood litigation. Mr Henderson did not address submissions specifically to how the examination in relation to Strategic might suggest that I would decide the outcome of the public examination other than on its merits.
(iii) Discussion
[127] The Strategic debt and the litigation through which the debt to Strategic grew is plainly a subject-matter within the purview of the public examination. Mr Henderson’s sense of conviction that the evidence which might count against him should be only that presented by the Assignee, not supplemented by the Court’s own investigation and examination, is misconceived and ignores the explanations of the process which Mr Henderson had earlier received.
[128] To the extent Mr Henderson then seeks to draw an inference that the examination in relation to the Strategic litigation derives from some sense of need for personal vindication on the part of the Judge, it is an inference that cannot be reasonably drawn. PVIL had ultimately prevailed in the Regalwood litigation by reason of what the Supreme Court found to be PVIL’s correct legal arguments. The fair-minded lay observer would see no connection whatsoever between the germane examination in relation to the Strategic litigation and the outcome of the Regalwood litigation.
(g) Directions in relation to reports of s 165 examinations
(i) The matter
[129] The Assignee had conducted examinations of individuals (relating to Mr
Henderson’s affairs) under s 165 of the Act.
[130] In October 2015, after Mr Henderson had been charged (in the District Court) with offences under the Act, the Ministry of Business, Innovation and Employment (MBIE) applied for permission to provide to Mr Henderson a copy of the transcript of the examinations. Section 169(1) of the Act prohibits publication of such transcripts without the Court’s permission, which the Court (under s 169(2)) may grant under such conditions as it imposes.
[131] On 30 October 2015, I issued a Minute granting the Assignee permission to provide Mr Henderson with copies of the transcripts, on the condition that the provision is for the purpose only of the District Court proceedings.
[132] Mr Henderson, when filing his recusal application and in his submissions, assumed that the Assignee’s application had been contained in a memorandum rather than in an interlocutory application. He complained that the matter should have been initiated by interlocutory application. This complaint fell away when it was identified that counsel for MBIE had in fact filed an interlocutory application. The Assignee shortly thereafter provided copies of the transcripts to Mr Henderson.
[133] On 10 November 2015, Mr C J Lange (for MBIE) filed a memorandum. Mr Lange stated that one of the examinees whose transcript had been provided to Mr Henderson had subsequently received an email from Mr Hide which appeared to indicate that Mr Hide had been provided with a copy of the transcript. Mr Lange recorded that such an event would appear to be in contravention of the condition contained in my Minute dated 30 October 2015. Mr Lange referred the matter to the Court for its further directions.
[134] On 12 November 2015, Mr Henderson filed a memorandum. He identified eight records of examination which he wished to discuss with examinees.
[135] On 17 November 2015, I issued two further Minutes. In the first, I noted the content of Mr Lange’s memorandum, I recorded that I made no specific direction in response to it. In the second Minute, I made a number of timetabling directions in relation to the public examination which was due to recommence on 1 December
2015. I recorded in relation to Mr Henderson’s Memorandum:
[18] Mr Henderson refers to a wish to discuss the records of examination with the examinees. I do not grant permission to that course. The examinees gave their examination evidence pursuant to s 165 of the Act and the Assignee has not used the record of those particular examinations in the context of the public examination. It is not appropriate that they be quizzed in relation to their record of examination. What Mr Henderson is free to do is to ask them for any relevant evidence on any particular matter but without specifically referencing the enquiry to things said or done in the examination.
[19] Mr Henderson will appreciate that the Court’s concern to protect the interests of examinees is heightened by the nature of an email which apparently was sent by Mr Rodney Hide to an examinee after Mr Hide somehow came into possession of a particular record. The content of Mr Hide’s email to that particular examinee could reasonably cause concerns to an examinee as to whether the protections intended by s 169 of the Act had been respected. Therefore nothing in the amended permission I have granted above extends to allowing Mr Henderson to reference the record of examination when speaking to any examinee.
[136] Mr Henderson explains in relation to this sequence of events that he considered the condition as to release of the transcripts had fettered him in a most significant way as he was in the middle of trying to prepare his defence to serious criminal charges. He states his belief that the transcripts should have been provided to him, not only in the context of the criminal charges, but also for the purposes of the public examination.
[137] Mr Henderson successfully applied for a review of my 17 November 2015 ruling, which allowed Mr Henderson to refer to the transcripts when speaking to the examinees.59
[138] Mr Henderson’s complaint is that my 17 November 2015 ruling was made without hearing from him and was wrong.
59 Henderson v Ministry of Business, Innovation and Employment [2016] NZHC 421.
(ii) The articulation of the logical connection
[139] Mr Henderson in his written submissions recorded that the relevance of these matters is that they provide an example of a Star Chamber process.
(iii) Discussion
[140] In issuing my 17 November 2015 ruling, I had focussed on the prohibition of publication contained in s 165 of the Act in making my observations as to the acceptable use of the transcripts. It transpires that the review found the 17
November 2015 observations relating to use were incorrect. Judges make incorrect rulings from time to time. One incorrect ruling in relation to this public examination is not evidence of apparent bias. Furthermore, it has connection only to the use of the s 165 transcript in the District Court proceeding. It has no connection to the material on which I would be deciding the outcome of the public examination.
(h) Discussion as to ways around 30 October 2015 ruling
(i) The matter
[141] In a Chambers conference (by telephone) on 21 November 2015, Mr Henderson raised his concern as to the restrictions placed upon him when interviewing potential witnesses by reason of the condition contained in my October/November rulings. Mr Henderson referred to a comment I made that “any competent litigator would find a way around that”. Mr Henderson refers also to a subsequent comment to similar effect in the Chambers hearing on 17 December
2015. Mr Henderson identifies my comments as “entirely gratuitous”.
[142] Mr Henderson refers to an observation which I made as to the availability of an application to me to rescind the condition. Mr Henderson was of the view that the only procedural recourse was through an application to a Judge for review. Mr Henderson views the discussion as to a possible rescission as being an attempt on my part to tidy up what had been an egregious and inappropriate ruling.
(ii) The articulation of the logical connection
[143] Mr Henderson describes the reference I made to a competent litigator as being entirely gratuitous and more in keeping with a Star Chamber process. He views the rescission discussion as an attempt to tidy up an error.
(iii) Discussion
[144] As I have stated, Judges will not always make correct decisions. Judges may occasionally utter intemperate or even inappropriate remarks, which the discussion as to “competent litigators” clearly was. Such are to be seen not in isolation but in the context of the vast number of interlocutory and case management discussions and arguments which have taken place in the course of this public examination.
[145] Even in the context of the 40 minute conference on 17 December 2015 from which Mr Henderson quotes a short passage, there had been a much more extended discussion of the difficulties which Mr Henderson said he was encountering as he approached the potential witnesses (whose s 165 transcripts he had received). It was Mr Henderson’s advice to me that every time he asked questions of the witnesses he was running foul of the ruling. I had indicated in the course of the conference that there are ways of very clearly telling the witnesses what is available for discussion and what is not. I recognised, however, that Mr Henderson “is a litigant in person” and had to work through those issues.
[146] Neither in the context of the conference alone nor the much more extended interchanges through the public examination as a whole do the brief comments on 21
November 2015 and 17 December 2015 suggest a loss of the impartiality and neutrality required to maintain fair judgement.
(i) Expediency in favour of the Assignee in December 2015 (i) The matter
[147] On 9 December 2015, the Assignee filed an interlocutory application. In relation to all my earlier pre-examination rulings and subsequent rulings I had made an interim order prohibiting publication of the reasons for the rulings.
[148] By my first pre-examination ruling, the Assignee had been found entitled to rely on records which it had obtained from Xero pursuant to a notice the Assignee had issued under s 171 of the Act.60 On 8 December 2015, the Assignee filed an application for an order lifting the prohibition of the publication. The Assignee’s affidavit evidence indicated that Mr Hide had in November published an article in the National Business Review (NBR). The article suggested that Xero may have released client records without a warrant to do so. The Chief Executive of Xero had referred to a “Court judgment which backed Xero’s actions”, being an apparent
reference to my pre-examination ruling. The NBR article went on to state that despite extensive investigation the NBR could find no trace of the judgment.
[149] I treated the application as urgent. An entity was being criticised in the news media without the ability to respond with detail of my judgment because of the non- publication order. The High Court was within a week of entering its vacation. I convened a telephone conference.
[150] At the conference, I directed a hearing to take place on 11 December 2015. I
dispensed with the requirement for Mr Henderson to file a notice of opposition.
[151] Mr Henderson then took legal advice and instructed Mr J. Moss, who filed a memorandum. I made directions for an adjourned hearing to involve Mr Moss the following week. Directions were also made for a notice of opposition.
[152] Mr Henderson records that he does not understand why those opportunities had not been extended to him as a lay-litigant. He regards the short-notice hearing which I initially allocated as an “intemperate decision”.
(ii) The articulation of the logical connection
[153] Mr Henderson did not articulate a logical connection between these matters and a feared deviation that might occur when I came to determine the outcome of the
public examination.
60 Havenleigh Global Services Ltd v Henderson [Ruling No 1] [2015] NZHC 1761.
(iii) Discussion
[154] Mr Henderson ignores the fact that, because I was the Judge charged with the conduct and outcome of the public examination (the evidence for which had been completed), any arguments as to the lifting of the non-publication order would have no impact on the decision I was coming to when final submissions were presented. In relation to the process, the fair-minded lay observer would see that there was a need for urgency by reason of the imminent vacation and that, when counsel was newly instructed, the Court would reasonably have to allow him time to come up to speed with issues which until that point only Mr Henderson had handled himself.
Viewing Mr Henderson’s Issue 2 complaints collectively
[155] The fair-minded lay observer would first consider each of Mr Henderson’s complaints individually. The fair-minded lay observer would then also consider whether the circumstances of the complaints collectively indicate such a pattern of behaviour or conduct on the part of the Judge as to meet the Saxmere (No 1) test. This requires a standing back once the individual complaints have been considered and considering the complaints as a whole.
[156] There is no pattern of prejudicial conduct to be seen. Rather, what Mr Henderson has done after all the evidence of the examination has been heard and the written submissions filed is to cast back through the events of 18 months from the time he allowed public examination to proceed before me without objection. He has then identified some specific aspects of my conduct or decision-making which might be criticised. For the reasons I have identified, there is no legitimate basis for several of Mr Henderson’s criticisms – they reflect his subjective views as the litigant engaged in the process. In the remainder, where there may be room for criticism either as to the invalidity of a particular decision or a departure from appropriate practice, they collectively fall short of establishing a logical connection between the (collective) matters and a feared deviation from the course of determining the outcome of the public examination on its merits.
[157] Throughout the public examination, Mr Henderson was aware that he was to have, by reason of my pre-examination ruling, the right after the Court had
completed its questions in examination to adduce his own additional evidence, both from himself and witnesses, before finally making submissions. The various Court’s decisions and actions have all been part of the evidence-gathering process of the inquisition and investigation. The oral presentation of submissions and the Court’s judgment in relation to the examination are yet to come.
Issue 3 – my receiving a letter from Grahame Thorne
The incident – I receive a letter
[158] On 11 March 2016, a letter addressed to me personally was delivered in my mail to my chambers. It was apparent to me on opening the envelope that it was from one Grahame Thorne, who is not known to me personally. He is, however, a person identified in litigation which has come before me and who has been in conflict with Mr Henderson and his associated entities. I had the letter referred to the Deputy Registrar. She returned the letter to Mr Thorne. I issued a Minute to counsel and Mr Henderson as to what had occurred.
Mr Henderson’s complaint
[159] Mr Henderson states that he can reasonably infer that Mr Thorne’s purpose in writing to me was to make allegations in respect of Mr Henderson which he thought would be relevant to Mr Henderson’s public examination. Mr Henderson states that it is his view that Mr Thorne therefore believes that I would be receptive to receiving a communication with such allegations about me.
Discussion
[160] Whatever may have been Mr Thorne’s aspirations and expectations in writing to a Judge, they could not reasonably lead the lay-observer to conclude that Mr Thorne’s unsolicited and returned mail would cause me to deviate from the course of deciding the outcome of the public examination on its merits. Mr Henderson’s submissions in this regard reflect again the extent to which he has substituted his personal views for the assessment of the “fair-minded lay observer”.
[161] There is something of a parallel between Mr Thorne’s sending me uninvited correspondence and the equally uninvited compliment bestowed on Heath J at an insolvency law conference by the Director of the Serious Fraud Office (SFO) (“we are very fortunate to have Justice Heath as our trial Judge”) before a trial of officers of the failed South Canterbury Finance Ltd.61 Heath J concluded that the independent observer test under Saxmere (No 1) was not met. His Honour added:
[47] If, contrary to my view, any independent observer harbours any residual concerns about my trying this prosecution, they could only be seen (at best) as the type of vague unease or disquiet to which McGrath J referred to in Saxmere. That would not be sufficient to justify recusal.
Issue 4 – my conversation with a District Court Judge
The background
[162] I adjourned the public examination of Mr Henderson in October 2015 and made a number of directions (and subsequently had to amend those directions) as to the filing of closing submissions. Initially, submissions were to have been filed in November 2015 with the hearing of submissions in early December 2015. The Assignee duly filed her synopsis. An application by Mr Henderson for review of an interlocutory ruling caused me to adjourn the hearing of submissions initially to February 2016 after counsel for the Assignee had filed their closing submissions.
[163] On 9 December 2015, the Assignee filed the application concerning the prohibition on publication of reasons contained in one of my pre-examination rulings which I have already discussed. At the point Mr Henderson retained Mr Moss as counsel, my last sitting day was scheduled to be 15 December 2015. I set the hearing down for 17 December 2015 so that the issue could be resolved prior to Christmas.
[164] On 16 December 2015, Mr Henderson filed a memorandum (by email) seeking an adjournment of the hearing date for final submissions on his public examination. In the circumstances, I allocated a conference to take place in
Chambers later on 17 December 2015 (following the interlocutory hearing).
[165] The following morning (17 December 2015) Mr Henderson filed a further memorandum by email “concerning timetabling”. His memorandum referred to two criminal charges alleging breaches of the Act which he was facing in the District Court. He identified an application for review which he had to deal with in the High Court. He referred to time pressures in relation to steps in the public examination. He identified the need for resolution of reviews he had sought of rulings I had recently made. He proposed that I adjourn the public examination. In the memorandum he did not record that he had a case management event in the District Court that same day.
The conversation
[166] Shortly before court that day (17 December 2015) District Court Judge A A Couch called at my Chambers (the High Court occupying the same Christchurch building as the District Court). He had become aware that Mr Henderson had matters to be dealt with in the High Court that day. He stated that he was dealing that day with the case management of the prosecution against Mr Henderson. We discussed a number of case management matters. We agreed that each court would accommodate the other in ensuring that Mr Henderson would be available to finalise that day all matters to be dealt with.
[167] From 2.00 pm I heard the interlocutory application, on which Mr Moss appeared as counsel for Mr Henderson. Mr Henderson was engaged in the District Court for part of the hearing. Later in the day, around 5.00 pm, when Mr Henderson was available, I was able to conduct the conference in relation to Mr Henderson’s adjournment application and to rule on it. Mr Henderson appeared at that conference in person. At the outset of the conference I worked Mr Henderson through the commitments he would have in coming weeks/months in relation to :
(a) the District Court proceedings; (b) the reviews of my rulings; and
(c) the steps he was required to take in the public examination.
I then ruled orally on his timetable for submissions and (conditionally) adjourned the examination.
[168] After the Court vacation commenced, the Registrar received from Mr Henderson a memorandum dated 21 December 2015 in which he asked for details of the discussion which I had had with Judge Couch. The Case Officer emailed a copy of the memorandum to me around 11 January 2016, directed it be referred to Venning J and advised the Case Officer I would deal with it on my return. I issued, upon my return to Court on 1 February 2016, a Minute in which I set out my recollection of the specific content of my discussion with Judge Couch. My Minute dated 1 February 2016 is Schedule B to this Judgment.
[169] When Mr Henderson on 18 April 2016 filed his application for recusal, he exhibited to his affidavit a transcript of the conference which he had attended with Judge Couch on 17 December 2015. The transcript records a discussion as to the future course of the criminal proceeding and directions in relation to it. The transcript indicates that Judge Couch stated to Mr Henderson that he understood that issues involved in the charges against Mr Henderson overlapped with the insolvency matters currently before the High Court. His Honour referred to his discussion with me. He referred to my having told him of the potential conflict between the public examination and the criminal proceedings and the preference which Mr Henderson in 2015 had pursued for the public examination to proceed in the meantime.
[170] After filing his recusal application in April 2016, Mr Henderson subsequently made an application for the recusal application to be transferred to a Judge. At that point, I recorded in a Minute of 13 May 2016 (with an incorrect reference to the date of the discussion):
19 December 2015 – discussion with Judge Couch
[16] At Mr Henderson’s request, I issued my Minute dated 1 February
2016 recording the content of my discussion with Judge Couch on 19
December 2015.
[17] Through the recusal application subsequently filed, I have seen the transcript of the District Court hearing before Judge Couch on 19 December
2015.
[18] I accept that I must have informed Judge Couch of a ruling (Ruling No 3) I had previously given.62 By that ruling, I had refused the Official Assignee’s application to stay the public examination of Mr Henderson in relation to his bankruptcy), pending the resolution of criminal proceedings against Mr Henderson.
Discussion
[171] In his submissions, Mr Henderson identifies a number of concerns arising from my conversation with Judge Couch.
[172] First, Mr Henderson stated that he found unsatisfactory my reference to a need for co-ordination between the two Courts on 17 December 2015. He says that that was because I had been emphatic to him on earlier occasions that I did not have the role of scheduling cases, the task being undertaken by the Registrar. Mr Henderson submitted that the Registrar could have quite easily liaised with him on any issues requiring co-ordination.
[173] The fair-minded lay observer would inform themselves of the needs of co- ordination before drawing a conclusion of bias. Matters of scheduling are the province of the Deputy Registrar when hearings are taking place on a “normal” timetable. The allocation of hearings in this case was abnormally swift, following the Assignee’s application and Mr Henderson’s adjournment request, precisely because of the approach of the Christmas vacation and my accommodating the hearings on a day which would otherwise have been reserved for the writing of judgments in other cases. This Court had not been notified before Judge Couch visited me on the morning of 17 December that the District Court also had scheduled a hearing or conference that day involving Mr Henderson. Co-ordination was required at the last minute.
[174] Mr Henderson’s concern generated by this last-minute co-ordination sits
within the category of “unduly sensitive or suspicious” as recognised and rejected by
Blanchard J in Saxmere (No 1) Ltd.63
62 Havenleigh Global Services Ltd v Henderson (Ruling No 3) [2015] NZHC 1759.
63 Saxmere (No 1), above n 3, at [5].
[175] Secondly, Mr Henderson complains that irrelevant information was provided to Judge Couch. In my Minute of 1 February 2016, I recorded that I had explained the two matters which I was to hear, that Judge Couch explained the matter he was dealing with and that he enquired as to the subject-matter of the public examination matter I was conducting. Mr Henderson views the discussed details as “of no relevance to the District Court Judge”. He also views the discussion of matters involving the District Court as quite inappropriate. He is also concerned that there was an inadequate record of matters which had been discussed.
[176] The fact is that the two judges briefly discussed the matters to be dealt with that day. I benefited in terms of planning my day by gaining an understanding of how much time the District Court matter would take. (It transpired, with my beginning the second conference at 5.00 pm, that there had indeed been a real issue as to the achievability of three hearings/conferences in the day.) In terms of Judge Couch’s enquiry of the subject matter of the public examination and the matters I would have to consider, those were all already matters of record by reason of the rulings which I had delivered before and in the course of the public examination.
[177] The “fair-minded lay observer”, in determining whether there was a reasonable fear that I would deviate from the course of deciding the public examination on its merits would not read into my imparting of such information to Judge Couch any prospect that such disclosure would alter my assessment of matters in the public examination. Mr Henderson may personally doubt their relevance to the hearings of 17 December 2015 but nothing in the discussion could have affected the conclusions I would reach in my judgment after closing submissions in the public examination.
[178] Thirdly, Mr Henderson refers to my explanation of the adjournment ruling to
Judge Couch which is recorded in the transcript of the District Court hearing on 17
December 2015 (which I accept must have occurred but which I had not identified as content of the 17 December 2015 discussion in my 1 February 2016 Minute). In his submissions, Mr Henderson states in that regard:
I considered that the only reason Associate Judge Osborne could have had for raising this significant point with Judge Couch was to influence his
thinking should I raise this matter with him. Again, I was left to infer that Associate Judge Osborne saw it as his prerogative to attempt to influence other Judges in matters concerning me.
[179] The reality is that what Mr Henderson refers to as “the only reason” is simply one inference which he has chosen to draw. To the extent that Mr Henderson seeks to impute to me a motivation to influence another judge in the proceedings he was case managing (as against trying), Mr Henderson moves away from the focus of the second step of the apparent bias enquiry, which is an articulation of the logical connection between the matter and the feared deviation that I would follow from the course of deciding the public examination on its merits. He also ignores the oath I have taken in relation to my decision-making, something a fair-minded lay observer would have regard to.
[180] Fourthly, Mr Henderson expresses his particular concern at the fact that my 1
February 2016 Minute recorded the specific content of the 17 December 2015 discussion as comprising matters set out in four paragraphs, but omitted what Mr Henderson describes as “the most significant aspect” of the discussion. Mr Henderson states that he is now left with the real concern that I find it appropriate to have discussions with another Judge about him, his conduct and my view on Mr Henderson’s affairs. Mr Henderson has deposed to that effect in his affidavit.
[181] Given Mr Henderson’s evidence, I accept the sincerity with which he expresses the concern over the omitted subject-matter. But that concern is consistent with the concerns which he has reached in relation to all the previous concerns discussed in this judgment. As the Supreme Court emphasised in Saxmere (No 1), the fair-minded lay observer’s apprehension is not to be tested by reference to the individual or motivated views of Mr Henderson (the litigant being the least objective
observer of all). And as was recognised by Kirby J in Johnson64 while the lay
observer is not complacent nor is he or she unduly sensitive or suspicious.
[182] The omission of a significant detail from the recollection set out in my 1
February 2016 Minute is of understandable concern to Mr Henderson. He has experienced a very long public examination. In making his complaint as to the 17
64 Johnson v Johnson, above n 10.
December 2015 discussion, he would place the discussion at the culmination of a period of some 18 months during which he perceives there to have been repeated breaches by me of what might be called “fair trial process”. But the fair-minded lay observer, who is able to stand back from the perspectives of the litigant himself, would not see in the 17 December 2015 discussion, a basis for concluding that I might have become prejudiced against Mr Henderson in such a way as to not bring an impartial mind to the outcome of the public examination I was conducting.
[183] The fair-minded observer would have regard to the entirety of my conduct of Mr Henderson’s public examination, including the pre-examination period. He or she would view the entirety of the transcript objectively and reach a view as to whether the degree of (inappropriate) meddling which Mr Henderson would attribute to me from the one incident indicates a real possibility that I might not bring an impartial mind to my completion of the public examination. The fair-minded observer would have regard to the brevity and degree of urgency of the discussion before Court on 17 December 2015, and the need for the Court to ensure the matters before it were dealt with before the Court vacation. I was first alerted to Mr Henderson’s memorandum some three weeks after the discussion took place on 17
December 2015. I recorded my recollection of the discussion in my Minute of 1
February 2016.
[184] Finally, the fair-minded observer would recognise that the discussion between the two Judges was not in relation to the trial or substantive issues in either proceeding. I am not aware of any matter that Judge Couch could have imparted to me of any arguable relevance to the public examination – the District Court proceedings were just commencing their path forward.
Outcome in relation to all complaints
[185] The application for recusal fails when the Saxmere (No 1) test is applied to
Mr Henderson’s complaints.
[186] It is therefore unnecessary to consider whether the Court retains a residual discretion in the event that apparent bias had been established in some respect. As neither Mr Henderson nor counsel for the Assignee addressed submissions in relation
to a discretion, and as my determination is on the primary grounds of the application, I refrain from exploring whether a residual discretion exists.
Order
[187] Mr Henderson’s application dated 20 April 2016 is dismissed.
Solicitors:
Anthony Harper, Christchurch
Brookfields, Auckland
Copy to: Mr D I Henderson, Christchurch
Associate Judge Osborne
SCHEDULE A
SCHEDULE B
SCHEDULE C
- AGLC
- Havenleigh Global Services Limited v Henderson [2016] NZHC 2356
- Case
- [2016] NZHC 2356
- Decision Date
CaseChat Overview and Summary
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