Muir v Commissioner of Inland Revenue

[2007] NZCA 334

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IN THE COURT OF APPEAL OF NEW ZEALAND

CA46/06

[2007] NZCA 334

BETWEEEN

AND

AND

GARRY ALBERT MUIR Appellant

COMMISSIONER OF INLAND

REVENUE
First Respondent

ACCENT MANAGEMENT LTD Second Respondent

Hearing:          12 June 2007

Court:            William Young P, Hammond and Wilson JJ
Counsel:         N S Gedye for Appellant

D J White QC and J H Coleman for Respondents

Judgment:      7 August 2007 at 10 am

JUDGMENT OF THE COURT

A        The appeal is dismissed.

BIn this Court the Commissioner will have costs of $6,000 and usual disbursements. We certify for second counsel.

REASONS OF THE COURT

(Given by Hammond J)

MUIR V CIR And Anor CA CA46/06 [7 August 2007]

Table of Contents

Para No
Introduction	[1]
Background
The Trinity scheme	[6]
Dr Muir is judicially criticised	[15]
The Commissioner decides to pursue Dr Muir personally
for costs	[20]
The Judge declines to recuse himself	[25]
The law
Introduction	[31]
The necessity for impartiality	[32]
The duty to sit	[35]
One principle or two?	[37]
The test for apparent bias	[44]
Disqualification procedure	[65]
The merits
The fresh evidence applications	[68]
Pre-trial precautions against bias in the Trinity litigation	[69]
A preliminary disclosure	[70]
Presumptive bias	[71]
Apparent bias: association	[88]
Apparent bias: judicial criticism of Dr Muir	[98]
Prudence	[109]
Jurisdiction	[111]
Conclusion	[119]

Introduction

[1] The broad issue on this appeal is whether Venning J should have recused himself - that is, declined to sit - on an application for substantial non-party legal costs against the appellant, Dr Muir, arising out of significant tax litigation.

[2] Dr Muir is a tax lawyer. He maintains that the Judge should stand aside and this costs application should be determined by some other High Court Judge, for two reasons. First, Dr Muir maintains that the Judge has a direct financial interest in the litigation out of which the case arose. Second, he says that the Judge is within the relevant legal test for "apparent bias".

[3] The Judge has seen no reason to step aside on the determination of the costs application, the hearing of which has not yet been held. Indeed the Judge delivered a formal judgment (now reported in (2006) 22 NZTC  19,758) to that effect on

13 February 2006, after hearing counsel. On 19 May 2006 an order was sealed by the High Court which stated, amongst other things, that "[t]he application by Dr Muir for recusal is declined".

[4] Dr Muir has therefore advanced this "appeal" to this Court. We use the term "appeal" advisedly since, as we indicated at the hearing, there may be room for argument as to whether Dr Muir has a right of appeal at all against this decision, at least at this particular juncture of the non-party costs proceeding.

[5] We propose to proceed by outlining briefly, and only so far as is necessary for the purpose of this judgment, the nature of the tax litigation and the outcome of it which in turn brought about the present application for non-party costs. We will then deal with the merits of the recusal application. We will then address the jurisdictional question. It may have been more logical to deal with the jurisdictional point first, but we find it more convenient not to interrupt the flow of the argument on the recusal point. And an appreciation of that argument is necessary to understand the arguments as to whether there is a present right of appeal.

Background

The Trinity scheme

[6] It is not necessary for the purposes of this judgment to go into what has become known as "the Trinity scheme" in any detail. The scheme was the brainchild of Dr Muir. At the heart of the case was the proposition that investors could claim immediate tax deductions for expenses most of which were not payable until 2047 and 2048, thereby effectively granting them a 50 year tax holiday.

[7] Some 300 investors in Trinity bought a 50 year licence to grow Douglas Fir trees on land owned by certain Trinity Foundation companies. This land, which was in Southland, was bought for the forestry scheme for about $600 a hectare. The investors agreed to pay a licence fee of $2 million per hectare in 2047 when the trees were harvested. Investors depreciated the $2 million per hectare fee.

[8] The scheme also involved an insurance policy with a British Virgin Islands based company, the substantial cost of which was also claimed as an up-front deduction.

[9] To illustrate the impact of the scheme, in 1997 investors spent about $5,000 per hectare. Ostensibly they achieved a tax deduction in the order of $37,000 per hectare. In 1998 they paid a $50 annual licence fee and ostensibly achieved deductions of about $40,000 per hectare.

[10] Investments in the scheme were made by Redcliffe Forestry Ventures Ltd, a loss attributing qualifying company (LAQC) associated with Dr Muir. His partner, Mr Bradbury, was also involved in Trinity. He was associated with Bristol Forestry Ltd, another LAQC investing in the scheme.

[11] The High Court found the Trinity scheme was entirely artificial and tax driven. The decision is now reported in (2005) 22 NZTC 19,027. On appeal, this Court agreed ([2007] NZCA 230). It said that the scheme was undoubtedly "clever ... but this cleverness should not be allowed to obscure the reality that this particular Emperor has no clothes" (at [140]). The real purpose of the scheme was not the conduct of a forestry business for profit "but rather [the] generation of spectacular tax benefits" (at [141]). For the 1997 and 1998 years alone, some $140 million in tax deductions were involved. The Commissioner of Inland Revenue maintained that up to $3.7 billion of tax revenue was at risk if Trinity had run for its planned 50 year course. So this was found to be tax avoidance on a grand scale.

[12] As a result, the deductions claimed by Trinity investors who had not settled with the Commissioner prior to trial were disallowed. The High Court also imposed the maximum 100 per cent penalty on each taxpayer who had not settled, and interest was awarded on the tax monies outstanding since the 1990s. The combined tax penalties and interest payments (at 14 per cent per annum) amount to many millions of dollars.

[13] In a collateral issue to the main tax avoidance case, Venning J held that the Commissioner may treat members of the public differently, offering unequal terms to

selected parties to settle tax matters. On appeal, this Court agreed ([2007] NZCA 231). The reality is therefore that - as matters stand - the Commissioner's impost will fall most heavily on the originators and promoters of the scheme, as opposed to those investors who came to terms with the Commissioner.

[14] We record that as at the time of delivery of this judgment, applications for leave to appeal to the Supreme Court of New Zealand have been lodged with that Court, concerning the two judgments of this Court: SC 43/2007 and 44/2007. Those leave applications have not yet been determined.

Dr Muir is judicially criticised

[15] It seems obvious that a scheme of this character and impact was always going to be closely scrutinised by the Commissioner. The promoters and those entering into this investment must always have been aware that there was a distinct degree of risk that, even if the scheme was not held to be a sham, it would be held to be outright tax avoidance.

[16] What Dr Muir might not have expected, and certainly did not welcome, is that in a section of Venning J's judgment, from [226] - [253], the High Court Judge was very critical of his evidence in that Court.

[17] The Judge found Dr Muir's evidence to be "less than satisfactory" (at [226]), in some aspects. The Judge said, "I regret that having seen and heard Dr Muir give evidence over four days I have to say I formed the clear impression that he was less than candid about a number of matters and in relation to some issues, was simply not credible" (at [231]). The Judge found that Dr Muir had set out "from the outset to minimise and downplay" his and Mr Bradbury's involvement in certain related transactions. The Judge continued: "He was not forthright. He made concessions rarely and then only when forced to by clear documentary evidence. On occasions, when faced with documents that caused him particular difficulty, he gave a number of implausible explanations" (at [231]).

[18] The Judge was also critical, in some detail, of "Dr Muir's approach to [his] discovery obligations" in this case (at [231]).

[19] These findings would impact very heavily on any litigant, but here they are of even greater moment, involving as they do in Dr Muir's case an officer of the High Court. The Judge could and should have been able to expect a person in Dr Muir's position to be completely frank with the Court. Instead, on the Judge's findings, he endeavoured to cover his tracks.

The Commissioner decides to pursue Dr Muir personally for costs

[20] In his judgment of 20 December 2004 Venning J had reserved the question of costs. These were to be dealt with, at least initially, by memoranda.

[21] By way of preface, it is now well settled that the general principles which govern the discretionary award of costs in civil cases are equally applicable to tax cases (see Auckland Gas Co Ltd v Commissioner of Inland Revenue [1999] 2 NZLR 409 at 417 (CA)). The Commissioner is entitled to receive a contribution to his costs under the High Court Rules having regard to the principles established by this Court in Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606. By his memorandum the Commissioner sought costs and disbursements of close to $7 million against the nine plaintiffs who had gone to trial in the Trinity hearing and also against Dr Muir who was not a party, as such, to that litigation. There is also no doubt that, in principle, the High Court has a discretion to make an order for costs against a non-party in accordance with the principles laid down by the Judicial Committee of the Privy Council in Dymocks Franchise Systems (NSW) Pty Ltd v Todd (No 2) [2005] 1 NZLR 145.

[22] The Commissioner's memorandum signalled that his case for non-party costs against Dr Muir is that the Trinity scheme was Dr Muir's creation; that he had received tax benefits from the deductions he had claimed personally and through his LAQC; that he had received substantial collateral benefits on a collateral Parentis transaction; and that he had controlled the proceedings.

[23] Not only were "usual" costs sought, but part of the overall sum claimed by the Commissioner includes "indemnity" costs. This is on the basis that, as against Dr Muir, it is said that he contributed unnecessarily to the time and expense of the proceedings, failed to comply with the directions of the Court as to the contents of his brief of evidence, took arguments that lacked merit, failed to comply with discovery obligations without reasonable justification, and failed, without reasonable justification, to accept offers of settlement on the same terms as the other Trinity investors who had settled with the Commissioner prior to the High Court hearing.

[24] A Notice of Opposition was filed. Venning J has not yet determined the Commissioner's application, for reasons to which we now turn.

The Judge declines to recuse himself

[25] On 27 September 2005, on Dr Muir's instructions, Mr Judd QC filed a memorandum stating that Dr Muir objected to Venning J hearing the costs application. Counsel indicated that he was not at that time in a position to provide a fully developed argument as to why Venning J should disqualify himself. But he summarised it thus: "Mr Muir contends that a reasonable person would consider that there is a real likelihood of bias", for two reasons. The first was said to be the adverse comments made about Dr Muir in the judgment to which we have already referred. It was said that apart from evidence concerning two documents, Dr Muir's evidence was irrelevant to the reasons for judgment and that the devotion of five pages of the judgment to "an attack on Mr Muir's credibility and professional integrity would seem to be gratuitous" with the result that a reasonable man would not think that Dr Muir could receive a fair hearing.

[26] The second matter raised was the Judge's "association" with Messrs David Janett and Gregory Hedges who were two of the shareholders and directors of a company Southern Forestry Ltd ("SFL"). In 1995 SFL prepared a Douglas Fir feasibility report into a South Canterbury property. Extracts from that report were described as "important evidence" in relation to the main proceedings. More particularly, Mr Judd said that his instructions were that the Judge was associated with Messrs Janett and Hedges by reason, amongst other things, of being

a shareholder and director of Tahakopa Forest Trust Ltd, of which those gentlemen are also shareholders and directors. It was suggested that there is animosity between on the one hand Messrs Janett and Hedges, and on the other hand Messrs Bradbury and Muir. Counsel suggested:

A reasonable person might think that Your Honour might be influenced by the existence of the dispute and aware of and influenced by adverse views held about Mr Muir by Your Honour's business associates, such that Mr Muir is unable to receive a fair hearing of the application for costs against him as a non-party.

[27] The Judge was invited to consider whether he should recuse himself on the non-party costs application. If the Judge decided not to recuse himself, counsel sought leave to file a much fuller memorandum.

[28] Venning J responded promptly to that memorandum, in a minute dated 30 September 2005. He acknowledged that Dr Muir was an important witness in the case even though he was not a party. The Judge accepted that he had made adverse credibility findings against Dr Muir. He said, "Given that he is a professional person I considered it important to set out the reasons for that in some detail" (at [2]).

1. The Judge then said:

   [3] The next issue is that of my "relationship" with Messrs Janett and Hedges. That issue arises in two respects. First, it is said that they are shareholders and directors of Southern Forestry Limited, (SFL). On Dr Muir's instructions to Mr Judd SFL prepared a feasibility report in 1995 using Groome Poyry letterhead and the report was "important evidence" referred to in the course of the judgment. Next, it is said that there is animosity between Dr Muir and Messrs Janett and Hedges.

   [4] A number of points arise. To my recollection the Groome Poyry report in issue was in the form of a series of tables that did not attribute authorship. The report was relied on by Mrs Muir (who was not called as a witness by the objectors) to support an original stumpage value of $243,880 in 1997. However, the objectors did not choose to support that figure in the hearing before me. The objectors submitted the appropriate figure for stumpage was $185,000 per hectare based largely on MrBelton's evidence (para 48 of the judgment).

   [5] Next, while my interests have a very modest investment in a forest I disclosed that generally to counsel, to my recollection, during the course of a pre-hearing case management conference. It is correct that Messrs Janett and Hedges are also investors in that forest, along with a number of other

parties. Tahakopa Forest Trust Limited is a non trading entity which holds the land on which the forest is planted on trust for all investors.

[6] I have no other relationship or dealing with Messrs Janett and Hedges other than the investment in the one forest. I have no particular knowledge of their other business interests or investments and no interest either commercial or personal in their other business interests or investments. I do not know Messrs Janett and Hedges socially. I have never had any involvement with them other than through the investment that they are, co-incidentally, also investors in. Their relationship with Dr Muir is not known to me and is of no interest to me.

[7] I do not propose to recuse myself from dealing with the application for costs.

[30] Dr Muir was not persuaded by what the Judge had said to abandon his view that the Judge should recuse himself. Affidavits and submissions were filed, a hearing was held on 3 February 2006, and Venning J delivered a formal judgment declining to recuse on 13 February 2006 (see at [3] above).

The law

Introduction

[31] It is convenient now to set out the principles which govern this area of the law.

The necessity for impartiality

[32] From at least the time of John Locke in the late 17^th century, adjudication of legal disputes by impartial and independent judges has been recognised as an essential underpinning of western society. That proposition - which was undoubtedly espoused by the common law - is today also found in specific instruments. For instance, under s 25 of the New Zealand Bill of Rights Act 1990, in matters of criminal law, there is a right to a fair and public hearing by an independent and impartial court (reflecting art 14(1) of the International Covenant on Civil and Political Rights); and in s 27 (the "Right to Justice") of that statute there is a right to the observance of the principles of natural justice in other matters, which

undoubtedly also encompasses the proposition that judges must be independent and impartial.

[33] On appointment to office in New Zealand, a judge takes an oath to "do right to all manner of people after the laws and usages of New Zealand without fear or favour, affection or ill will" (s 18 of the Oaths and Declarations Act 1957). Lord Bingham of Cornhill has said:

If one were to attempt a modern paraphrase [of that oath], it might perhaps be that a judge must free himself of prejudice and partiality and so conduct himself, in court and out of it, as to give no ground for doubting his ability and willingness to decide cases coming before him solely on their legal and factual merits as they appear to him in the exercise of an objective, independent, and impartial judgment.

(Bingham "Judicial Ethics" in The Business of Judging: Selected Essays and Speeches (2000) at 74.)

[34] An equally important function for the judge, in the view of Lord Devlin, is to remove any sense of injustice - something more easily aroused by the apprehension of unequal treatment than by anything else. As his Lordship put it in the fourth Chorley Lecture:

The social service which the judge renders to the community is the removal of a sense of injustice. To perform this service the essential quality which he needs is impartiality and next after that the appearance of impartiality. I put impartiality before the appearance of it simply because without the reality the appearance would not endure. In truth, within the context of service to the community the appearance is the more important of the two. The judge who gives the right judgment while appearing not to do so may be thrice blessed in heaven, but on earth he is no use at all.

("The Judge as Lawmaker" in Devlin The Judge (1979) at 3. See also Allars "Citizenship Theory and the Public Confidence Rationale for the Bias Rule" (2001) 18 Law in Context 12.)

The duty to sit

[35] The requirement of independence and impartiality of a judge is counterbalanced by the judge's duty to sit, at least where grounds for disqualification do not exist in fact or in law. This duty in itself helps protect judicial independence against manoeuvring by parties hoping to improve their chances of having a given

matter determined by a particular judge or to gain forensic or strategic advantages through delay or interruption to the proceeding. As Mason J emphasised in Re JRL; ex parte CJL (1986) 161 CLR 342 at 352:

[I]t is equally important that judicial officers discharge their duty to sit and do not, by acceding too readily to suggestions of appearance of bias, encourage parties to believe that by seeking the disqualification of a judge, they will have their case tried by someone thought to be more likely to decide the case in their favour.

See also Locabail (UK) Ltd v Bayfield Properties Ltd [2000] 1 All ER 65 at [21] -[24] (CA) and President of the Republic of South Africa v South African Rugby Football Union (1999) 4 SA 147 at 177.

[36] As very general propositions, the law may require a judge to sit if there is no other option or the parties expressly or by their conduct waive an objection on the ground of apprehended bias. Both of those propositions are stated only to set matters in their full context, and are subject to considerable qualification in the case law. As to "waiver" see the judgment of the High Court of Australia in Smits v Roach (2006) 228 ALR 262, which also has useful observations on disclosure of interest by Judges.

One principle or two?

[37] As late as the 1990s statements of the rule against bias or partiality by judges were universally put on a bifurcated basis, under two heads.

[38] The first was one of automatic (or presumptive) disqualification where a judge has a direct pecuniary interest in the outcome of the case. Under that limb, the sub-issues turned on what could be considered to be a direct pecuniary interest, and whether there is a "de minimis" exception. In Auckland Casino Ltd v Casino Control Authority [1995] 1 NZLR 142 (CA) Cooke P said at 148:

A firm and realistic rule of pecuniary disqualification is necessary to assist public confidence in the administration of justice and the impartiality of licensing bodies. The existence of an irrebuttable presumption in cases of direct pecuniary interest was assumed in argument. As already mentioned, we think that it may be subject to the de minimis rule.

[39] The second head was a rule against apparent bias - or how things might appear to an external observer - although precisely how that rule was to be formulated was the subject of a great deal of legal dispute.

[40] More recently, in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 the High Court of Australia has held that there is no separate and free-standing rule of automatic disqualification on the basis of a pecuniary interest. The majority in that case preferred to rely exclusively on a unitary test of a "reasonable apprehension" of bias (at [54] - [55]). To put this another way, the rule is the same as that which applies to disqualification for association, namely, whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the case. Dissenting, Kirby J supported continuation of an automatic disqualification for financial interest where it is "direct", and not saved by a de minimis principle. This is functionally akin to the view of this Court in Auckland Casino Ltd v Casino Control Authority.

[41] This is an issue which has not been squarely resolved in New Zealand. There may be something to be said for our attempting to resolve it in this judgment. However, the parties did not argue this issue. As it transpires we think it is not central to the resolution of the case before us, and it would involve a distinct change in the law by conflating the former rules within the one new test.

[42] We do however note that there are powerful arguments for simplicity and straightforwardness in this area of law, which has been somewhat bedevilled by contradictory approaches. If a judge has a direct pecuniary interest of anything more than the most minimal character, it is hard to see how the reasonable observer would not consider that to be "bias". Hence no harm, and a great deal of good, in terms of the understandability of the law, would be done by a unitary principle. However, there are policy arguments the other way too, and they are quite complicated in a small jurisdiction such as New Zealand.

[43] In the result, in the absence of an invitation and the necessity to do so in this case, we do not assay the task.  The net result is that the presumptive bias rule - the

first limb of the traditional bifurcated tests - as stated by Cooke P still obtains in this jurisdiction.

The test for apparent bias

[44] As to the second limb - apparent bias - it has to be said that the law in this area is in a awkward state in New Zealand.

[45] In Auckland Casino Ltd v Casino Control Authority this Court followed the speech of Lord Goff of Chieveley in R v Gough [1993] AC 646 at 670 (HL):

[F]or the avoidance of doubt, I prefer to state the test in terms of real danger rather than real likelihood, to ensure that the court is thinking in terms of possibility rather than probability of bias. Accordingly, having ascertained the relevant circumstances, the court should ask itself whether, having regard to those circumstances, there was a real danger of bias on the part of the relevant member of the tribunal in question, in the sense that he might unfairly regard (or have unfairly regarded) with favour, or disfavour, the case of a party to the issue under consideration by him ....

[46] Subsequently, the High Court of Australia rejected the test in R v Gough because, in its view, it tended to emphasise the court's view of the facts, rather than its estimation of the likely public's perception of what had occurred: Webb v R (1994) 181 CLR 41 at 50 - 53 per Mason CJ and McHugh J, and at 68 per Deane J.

[47] In the House of Lords that conflict of views may well have come to a head in R v Bow Street Metropolitan Stipendiary Magistrate, ex parte Pinochet Ugarte (No 2) [2000] 1 AC 119. But as it transpired their Lordships did not need to address the issue because the rule of automatic disqualification for "financial interest" was expanded to cover the exceptional circumstances of what was then before their Lordships, although no further.

[48] Then, a year later, in Porter v Magill [2002] 2 AC 357 at [102] - [103] per Lord Hope of Craighead, their Lordships said that the question is whether the fair minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased. Undoubtedly what brought about this change were the requirements of an objective test adopted by the

European Court of Human Rights, and which by now was in any event largely finding favour around the common law world.

[49] The difference between the Porter v Magill test and the approach in the High Court of Australia is one of "reasonable apprehension" of bias as opposed to a "real possibility" of bias.

[50] The House of Lords in Porter v Magill said that it was making a "modest adjustment" (at [103]) to the law, rather than changing it. This has been criticised by some. But the fact of the matter is that courts, and particularly appellate courts, are constantly having to make adjustments to the wording of, for instance, jury directions and other legal tests, not to change substance by subterfuge, but in an endeavour to better articulate what it is that lies at the heart of the concern behind the test.

[51] More recently, the England and Wales Court of Appeal has summarised the (now) English approach, as it apprehends it to be, in AWG Group v Morrison [2006] 1 WLR 1163, as follows:

(i) A judge is automatically disqualified from hearing a case on the ground of apparent bias if, on an assessment of all the relevant circumstances, the conclusion was that the principle of judicial impartiality would be breached (at [6]).

(ii) This disqualification is not a discretionary case management decision reached by weighing various relevant factors (such as inconvenience, costs, and delay) since there was either a real possibility of bias or there was not (at [6]).

(iii) The test is, having ascertained all the circumstances bearing on the suggestion that the judge was (or could be) biased, the court must itself decide "whether those circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility ... that the tribunal was biased" (at [7] quoting Taylor v Lawrence [2003] QB 528 at [60] (CA)).

(iv) "An appellate court is well able to assume the vantage point of a fair-minded and informed observer with knowledge of the relevant circumstances. It must itself make an assessment of all the relevant circumstances and then decide whether there is a real possibility of bias" (at [20]).

(v) An example of a real danger of bias is where there was "animosity between the judge and any member of the public involved in the case" (Locabail (UK) Ltd at 480). The categories of such danger are not closed: "if, for any other reason, there were real ground for doubting the ability of the judge to ignore extraneous considerations, prejudices and predilections" then recusal would be necessary (Locabail at 480 and AWG at [8]).

(vi) In most cases, "the answer, one way or the other will be obvious. But if in any case there is real ground for doubt, that doubt should be resolved in favour of recusal" (Locabail at 480 and AWG at [8]).

(vii) "Where the hearing has not yet begun, there is scope for the sensible application of the precautionary principle. ... [P]rudence naturally leans on the side of being safe rather than sorry" (AWG at [9]).

[52] In Man of War Station Ltd v Auckland City Council (No 1) [2002] 3 NZLR 577 the Judicial Committee of the Privy Council was invited by counsel "to adopt for New Zealand the adjustment of the test in Gough" made in Porter v Magill (at [10]). The Privy Council did not think it right to accede to that request without the benefit of the view of this Court on whether the New Zealand law should be so "adjusted". Lord Steyn said that the distinction between the tests was in any event "a fine one" and that in that instance the difference could not arguably have influenced the outcome (at [10]).

[53] Without actually deciding the issue, this Court anticipated the need to make an "adjustment" in Erris Promotions Ltd v The Commissioner of Inland Revenue (2003) 16 PRNZ 1014.

1. It said, at [32]:

   This Court will no doubt need to consider, in due course, whether to discard the Gough test, as England has, and adopt not only a specifically objective approach but also a standard other than "real danger", in terms of the English or other Commonwealth principles. We would certainly have to make a choice if faced with a case where the outcome would be affected differently by different tests. It is reasonably arguable that the Australian approach, which examines reasonable apprehension by a fair-minded and informed observer, gives full weight to public perceptions concerning the impartial administration of justice. Public as well as litigant confidence in the impartial administration of justice is at the heart of the issue we have been discussing. [Reference was then made to Webb.] A revised test, which gives full weight to the requirements of public perception and objectivity, as well as being capable of straightforward application, might be "Would the reasonable informed observer think that the impartiality of the adjudicator might be/might have been affected?" This suggestion is made, not in any declaratory way but as a reference for possible future discussion.

[55] Subsequently, in this Court, it was thought appropriate to apply the suggested test in Erris Promotions to the facts of the case in Ngati Tahinga & Ors v Attorney-General & Anor CA 163/03 24 September 2003. Two other recent decisions dealing with bias are Lamb v Massey University CA 241/04 13 July 2006 (leave to appeal to the Supreme Court denied ((2006) 18 PRNZ 403)) and Siemer v Stiassny [2007] NZSC 53, although the bias discussion in Siemer does not directly engage with the Gough issue.

[56] Academic commentators, particularly in the public law field, have consistently expressed concern about the somewhat messy state of the law in this area in New Zealand. See for instance Beck "Two tests, much confusion" [2006] NZLJ 419 and Joseph "The bias rules in administrative law reconsidered" [1995] NZLJ 110. In his Harkness Henry Lecture, the then President of this Court observed that, whilst the Auckland Casino case has not been overruled "it does seem to have been left behind" (see Hon Justice Anderson "The Appearance of Justice" (2004) 12 Waikato Law Review 1 at 13).

[57] Recently the Council of the Chief Justices of Australia (of which the Chief Justice of New Zealand is a member) published its revised Guide to Judicial Conduct (2 ed 2007), which provides at 11:

[T]he ultimate issue is whether a fair-minded lay-observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the case.

[58] We note that the "reasonable apprehension of bias" test is well established in Canadian law (see Committee for Justice and Liberty v National Energy Board [1978] 1 SCR 369; R v RDS [1997] 3 SCR 484; and Bryden "Legal Principles Governing the Disqualification of Judges" (2003) 82 Can Bar Rev 555).

[59] In 1994 the Supreme Court of the United States held that the test for federal law purposes is:

Disqualification is required if an objective observer would entertain reasonable questions about the judge's impartiality. If a judge's attitude or state of mind leads a detached observer to conclude that a fair and impartial hearing is unlikely, the judge must be disqualified.

(Liteky v United States 510 US 540 at 564 (1994). For a full discussion of United States law see Flamm Judicial Disqualification: Recusal and Disqualification of Judges (1996).)

[60] We think that it is time to extinguish the tenuous hold on existence the Gough test has had in New Zealand. In general, we prefer the approach in Porter v Magill and Webb because of the way in which it confirms the appropriate "window" through which the relevant conduct is to be viewed: that is, it emphasises how something might reasonably be regarded by the public, in the form of the reasonable informed observer. As was said by Kirby J recently in Smits v Roach at [97], such a standard:

[R]eminds [judges], the parties and the community reading their reasons that the standard that is applied is not simply the reaction of the judges, at trial or on appeal, to a particular complaint. It is, as far as it can be, an objective standard: one aimed at emphasising the undesirability of idiosyncratic and personal assessments of such matters. [Even so,] ultimately, [judges] themselves have to shoulder the responsibility of reaching conclusions on the point and giving effect to them.

[61] New Zealand law is now out of line with the jurisprudence of all the other common law countries. The only reason the Privy Council appears not to have intervened was in case there should be some feature of New Zealand or New Zealand law which might make this course not appropriate.   The point was fully argued

before us. No good reason to hold to the Gough line was suggested to us. An adjustment to this test falls within the limits suggested by this Court in R v Chilton [2006] 2 NZLR 341 at [83] - [91].

[62] In our view, the correct enquiry is a two stage one. First, it is necessary to establish the actual circumstances which have a direct bearing on a suggestion that the judge was or may be seen to be biased. This factual inquiry should be rigorous, in the sense that complainants cannot lightly throw the "bias" ball in the air. The second inquiry is to then ask whether those circumstances as established might lead a fair-minded lay-observer to reasonably apprehend that the judge might not bring an impartial mind to the resolution of the instant case. This standard emphasises to the challenged judge that a belief in her own purity will not do; she must consider how others would view her conduct.

[63] We emphasise that the touchstone is the ability to bring an impartial mind to bear on the case for resolution. That does not however mean that a judge needs to be perceived as operating in a sanitised vacuum. As Judge Jerome Frank forcefully put it in In re Linahan 138 F 2d 650 (2d Cir 1943) at 651 - 652:

Democracy must, indeed, fail unless our courts try cases fairly, and there can be no fair trial before a judge lacking in impartiality and disinterestedness. If, however, "bias" and "partiality" be defined to mean the total absence of preconceptions in the mind of the judge, then no one has ever had a fair trial and no one ever will ... [W]ere those pre-judgments which we call habits absent in any person, were he obliged to treat every event as an unprecedented crisis presenting a wholly new problem he would go mad. Interests, points of view, preferences, are the essence of living.

[64] It is not possible or desirable to create a catalogue of disqualifiers for judges in which a reasonable apprehension of bias may arise, but some broad principles can be stated. First, a judge should not decide a case on purely personal considerations. Secondly, there should not reasonably be room for a perception that the judge will decide the case on anything but the evidence in front of him or her. Thirdly, a judge must be in a position to consider all potentially relevant arguments. Fourthly, there may conceivably be a series of events or rulings which reasonably warrant an inference that the challenged judge's perception is warped in some way.

Disqualification procedure

[65] The actual practice to be followed when bias is sought to be raised is important. There is little discussion of this issue in the cases, but there are some real difficulties in this area, particularly in the case of appellate courts.

[66] In case it should be of assistance to practitioners we note that the Guide to Judicial Conduct to which we have previously referred (above at [57]) helpfully articulates a set of principles relating to disqualification procedure (at 15 - 16):

3.5       Disqualification procedure

(a)If a judge considers that disqualification is required, the judge should
so decide. Prior consultation with judicial colleagues is permissible
and may be helpful in reaching such a decision. The decision should
be made at the earliest opportunity.

(b)In cases of uncertainty where the judge is aware of circumstances
that may warrant disqualification, the judge should raise the matter
at the earliest opportunity with:

(i)The head of the jurisdiction;

(ii)The person in charge of listing;

(iii)The parties or their legal advisers;

not necessarily personally, but using the court's usual methods of communication.

(c)Disqualification is for the judge to decide in the light of any
objection, but trivial objections are to be discouraged.

(d)It will generally be appropriate in cases of uncertainty for the judge
to hear submissions on behalf of the parties and that should be done
in open court.

(e)The judge should be mindful of circumstances that might not be
known to the parties but might require the judge not to sit, and of the
possibility of the parties raising relevant matters of which the judge
may not be aware. It is not appropriate for a judge to be questioned
by parties or their advisers.

(f)If the judge decides to sit, the reasons for that decision should be
recorded in open court. So should the disclosure of all relevant
circumstances.

(g)Consent of the parties is relevant but not compelling in reaching a
decision to sit. The judge should avoid putting the parties in a
situation in which it might appear that their consent is sought to cure a ground of disqualification. Even where the parties would consent to the judge sitting, if the judge, on balance, considers that disqualification is the proper course, the judge should so act.

(h) Even if the judge considers no reasonable ground of disqualification exists, it is prudent to disclose any matter that might possibly be the subject of complaint, not to obtain consent to the judge sitting, but to ascertain whether, contrary to the judge's own view, there is any objection.

(i) The judge has a duty to try cases in the judge's list, and should recognise that disqualification places a burden on the judge's colleagues or may occasion delay to the parties if another judge is not available.

There may be cases in which other judges are also disqualified or are not available, and necessity may tilt the balance in favour of sitting even though there may be arguable grounds in favour of disqualification.

1. For our part, we find that advice helpful.

The merits

The fresh evidence applications

[68] Both Dr Muir and the Commissioner made an application to adduce further evidence. In the circumstances in which the applications were made we grant both applications. Where we have considered it necessary to do so, we have referred to those affidavits.

Pre-trial precautions against bias in the Trinity litigation

[69] For several years Mr Lennard was the Director of Litigation for Inland Revenue. He has deposed that Trinity was easily the largest, most complex, time consuming, and expensive litigation ever undertaken by the Commissioner in this country. As Director he was concerned to see that any risks to the litigation were minimised. In the result, with the approval of a case management judge and the knowledge of counsel, a list of all known investors in the Trinity case was made available on a confidential basis to the Auckland High Court Judges, prior to the Trinity case coming on for hearing.   The difficulty was that the majority of Trinity investors were from Auckland, and some of them "were well known in Auckland commercial circles". In the result, Venning J, who had been based in Christchurch as an Associate Judge, and who had just moved to Auckland on his appointment as a High Court Judge, was allocated to the case.

A preliminary disclosure

[70] Thereafter Venning J case-managed the Trinity proceedings, to trial. One conference took place on 14 July 2004. Mr Wallis, an Auckland barrister, was present at that conference. He has deposed that an issue was raised as to whether the prospective trial Judge should view the Trinity forest. Counsel for the Commissioner was opposed to that course. In the context of the possibility of the Judge viewing the forest the Judge stated that "he knew a little bit about forests. He had had an interest in a forest for fifteen years". Mr Wallis has properly disclosed a counsel's note to that effect. It appears to be common ground that the Judge said that he was not sure what the benefits would be from such a view, and that aspect was not thereafter mentioned again.

Presumptive bias

[71] Mr Gedye's submission under this head is that "the Judge's financial interest in the [Trinity] case should lead to automatic disqualification following the reasoning in the Pinochet case".

1. He further said:

   Despite limited information about the Judge's investment, sufficient is known to conclude that it is likely that the Judge's investment will involve similar tax issues to those considered by him in the Trinity case. These will be relevant to the value of his investment.

[73] It is necessary to intrude further facts at this point. Since its time of incorporation on 21 July 1992 the Judge or his interests have been an investor in a forestry investment - Tahakopa Forest Trust Ltd - which owns a 220 hectare forestry block in Southland.   This forest is approximately 15 years old.   The Judge initially held 16 out of 100 shares in the company. That is, about one sixth of the shares. In 1999 his shareholding in Tahakopa increased from 16 to 25 shares, or 25% of the company.

[74] At all times during this 15 year period the Judge has been one of the three directors of Tahakopa. Messrs Janett and Hedges have been the other two directors. The Judge signed the 1994 annual return for Tahakopa, witnessed a mortgage by Messrs Janett and Hedges in favour of the vendor of the land for an amount of vendor finance, and in July 1992 the Judge signed two statutory declarations under the Land Settlement Promotion and Acquisition Act 1952 which stated that Tahakopa had entered into the transaction solely on its own behalf as the person beneficially entitled thereunder. That statute has now been repealed.

[75] Tahakopa is now a bare trustee company which holds the land and forest in trust for a range of beneficiaries.

1. At  [18]  of his judgment, VenningJ said:  "All appropriate records  [for Tahakopa] have been completed with the Commissioner of Inland Revenue ... ."

[77] At the time of their initial co-directorships with the Judge, Messrs Janett and Hedges were forestry consultants and financial advisers in the forestry sector. Until 2002, when the Judge moved to Auckland, he and Messrs Janett and Hedges all lived in Christchurch.

[78] All of the foregoing is quite uncontroversial and unremarkable. But Mr Gedye then invited us to make what can only be described as some "inferences". He said the Judge does not merely hold investment shares in a passive way, as for example in a public company which owns forestry land or assets. He said the detail of Tahakopa's structure is not known, but that it should be seen as what he described as a "structured investment". He said that it had to be assumed that a licence or lease or something similar exists, because Tahakopa holds the land as a bare trustee and does not carry out the forestry business. He submitted:

It is reasonable to assume that a licence or lease which permits the investors to come unto Tahakopa's land and manage the forestry business will involve payment by the Judge and other investors.  Any such payment would be tax deductible.

[79] Mr Gedye argued that tax issues, including the deductibility of expenses, "can be assumed to exist within the Judge's Tahakopa investment structure".

[80] Mr Gedye's line of argument simply will not do on a claim of actual or presumptive bias. We have stressed - and we stress again here - the importance of first getting the facts straight, and what is alleged here is of such a character that very distinct proof would be required. For what is being said, in unadorned terms, is that "[t]he Judge's investment must be very like Dr Muir's and raise similar issues, and therefore the Judge should not be sitting on Dr Muir's case".

[81] We remark at this point that the Judge has said, in a judgment, that all income tax obligations have been complied with by Tahakopa. And as we observed at the hearing, it would be startling if counsel for the Commissioner had stood by in a situation such as this if there had been any suggestion of income tax impropriety in the case of Tahakopa.

[82] What is more significant though, is that it is simply not possible to throw a blanket described as "a structured investment" (by which Mr Gedye seemed to mean structured in an artificial way to be particularly tax effective) over Tahakopa, and say that it puts the Judge's forestry investment into the same category as Trinity. The Trinity scheme was unique, both in its features and its manifest deficiencies. If anything, in the complete absence of evidence to the contrary, the Judge's investment, unlike Trinity, can be assumed to be subject to the normal forestry taxation regime.

[83]  In the result we reject on the facts the complaint as it is made under this head.

[84] A second kind of complaint advanced by Mr Gedye is most conveniently dealt with under this head also. Again assuming that the Judge's investment is some kind of "structured investment", the argument was run that all the decisions the Judge will have to make in relation to Tahakopa will involve the same commercial issues which the Judge had to make findings on in the main Trinity proceeding: stumpage, log price growth, inflation, discount rates, and the deductibility of various payments. It was suggested that the Judge was necessarily embroiled in a consideration of commerciality issues and, in particular, the required rate of return, and that "the same issues will be relevant in any consideration of whether the Judge's investment might be characterised as tax avoidance". It was said that: "The Judge and his co-directors and co-investors could enjoy a benefit by staying above the investment threshold found by him in the Trinity case."

1. The suggestion was then made (which spills over into apparent bias) that:

   The observer would perceive that a structured forestry investment such as is the Judge's is entirely likely to be subject to the tax laws and that the findings could well be useful and financially beneficial to him. The appearance of this is sufficient to disqualify.

[86] Once again we are bound to observe that assumptions are made which are unsupported by the evidence, and where it is impossible to draw the inferences that Dr Muir and Mr Gedye would have us draw.

[87] The suggestion that a judge should not "learn" from things he or she hears in the course of a case is also startling. It must be the experience of all judicial officers (and counsel) that in the course of a case they have to inform, or better inform themselves, on an extraordinary range of matters, some of a highly technical character. Some of this "sticks" and (mercifully) much of it can be, and is, discarded. The suggestion that the Judge was getting a "learning benefit" as it were out of this case, which he could then enhance or apply in his own forestry investment, is fanciful. The learning experience of this case was, and is, that some schemes are hopelessly beyond the pale. There is simply no evidence that the Judge derived any benefit in this respect, nor could it be reasonably seen to involve or potentially involve such an element.

Apparent bias: association

[88] The factual argument here turned on an alleged professional association between the Judge and Messrs Janett and Hedges and the way in which that would (supposedly) have influenced, or could influence, the Judge. Again it is unfortunately necessary to adduce further facts.

[89] We have already indicated the degree of involvement between these three men. It was submitted that, given there was no registered prospectus at the outset of Tahakopa, the Judge and Messrs Janett and Hedges must have been previously known to each other. Certainly they did become associated both as co-investors and co-shareholders. And in the period before Tahakopa became a bare trustee, as directors they must have been closely involved. We do not know what the position was after Tahakopa became a bare trustee.

[90] The argument proceeds on the assumption that as directors and shareholders since 1993, Messrs Janett and Hedges were significant participants in SFL at the same time as their participation in Tahakopa. Messrs Bradbury and Muir engaged certain persons (not Messrs Janett and Hedges) in SFL to find forestry property for the Trinity investment, and in the course of that exercise Messrs Bradbury and Muir made use of an extract from the report furnished to them by SFL, on Groome Poyry letterhead. That report featured, at least in part, in the Trinity trial. A Groome Poyry employee (Mr Liley) suggested that Messrs Bradbury and Muir were not authorised to use an extract from the Groome Poyry report, and that it employed inflated stumpage terms. Essentially it is also said that SFL (including Messrs Janett and Hedges) would have discussed the prospect of a lucrative forestry management contract arising out of a commission by Messrs Bradbury and Muir, and been disappointed when it failed to materialise. It does seem to be the case that there may well have been bad feeling between these men, but the argument then runs that, as Mr Gedye put it:

As shareholders in SFL it would be logical and normal for Messrs Janett and Hedges to personally feel some degree of antipathy towards [Dr Muir]. They in turn were closely connected with the Judge.

[91] In the end, the argument seems to be no more and no less than if Messrs Janett and Hedges had formed a strong view about either Mr Bradbury or Dr Muir, it is a real possibility that the Judge would get to hear of it from them and would then act on that information from his co-investors.

1. It was further said that:

   The world of Christchurch forestry investors is a small one... similarly the world of economics consultants was noted as a small one in [In re Medicaments [2001] 1 WLR 700 (CA)] even though that was in London.

[93] Once again we have to observe that there is nothing worse than the murder of a beautiful theory by a gang of brutal facts. That is why we have been at pains in the reformulated test to emphasise that in these claims of bias cases the facts must first be properly established. The suggestion is little more than that Messrs Janett and Hedges must have voiced (or will possibly voice) their antipathy towards Dr Muir, arising out of the events which we have briefly described, to the Judge and that the Judge must have responded to that assessment (or will so respond). This complaint lacks an evidential foundation. We also dismiss it out of hand, on the facts.

[94] We cannot stress too strongly that the apprehension of bias principle requires the identification of whatever it is which might lead a judge to decide a case other than on its legal and factual merits and, as was said in Ebner at 345, "an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits".

[95] Even so and assuming, solely for the purpose of argument, that the Judge did know these two men well enough that he did in fact hear from them and listened to them as to their views of the supposed deficiencies of Dr Muir, would the reasonable informed observer conclude that the Judge might be influenced by what Messrs Janett and Hedges had put forward? The reasonable observer can be taken to know that the Judge has taken a judicial oath to hearken only unto the evidence. The allegation here to a degree shades back into an allegation of actual bias - that the Judge did "listen to scuttlebutt", out of court. Or that, even if he did not, that is how it would look to a reasonable member of the public.

[96] We reject those propositions. Judges and members of the public alike are bombarded with scuttlebutt but judges and juries are formally required to abjure from having any regard to it in their professional role, and do so. It is probably necessary to experience professionally the weight with which this duty falls on a judicial officer to appreciate fully its force.  The reply, "well, that is what it might look like" fails to give proper weight to the requirement that something must "reasonably" appear to be so to the informed observer. We agree with Kirby J in Johnson v Johnson (2000) 201 CLR 488 at [53] that "a reasonable member of the public is neither complacent nor unduly sensitive or suspicious". That statement was approved of by Lord Steyn (for their Lordships) in Lawal v Northern Spirit Ltd [2004] 1 All ER 187 at 193 (HL). The informed observer will not, for instance, lightly accept that a judge has put aside his or her professional oath, or indeed his or her professional training (for as everybody knows, a vast amount of time in litigation is taken up with sifting and weighing "facts" in evidence).

[97] The proposition that a reasonable member of the community might think that the Judge had acted on, or would act on, scuttlebutt in this instance is untenable. Further, in the context of the case as a whole, this whole argument seems rather trivial. The Judge has already made some severe criticisms of Dr Muir. Against that background, Dr Muir's falling out with SFL and the Judge's rather limited relationship with two people who are associated with that company seems of inconsequential importance.

Apparent bias: judicial criticism of Dr Muir

[98] It has to be accepted that there are occasions when a judge's prior rulings might lead a reasonable person to question whether he would remain impartial in any subsequent proceedings. That said, this could be relevant to the question of judicial bias only in the rarest of circumstances.

[99] The reasons for this are straightforward. It is common sense that people generally hate to lose, and their perception of a judge's perceived tendency to rule against him or her is inevitably suspect. As Kenneth Davis has said, "Almost any intelligent person will initially assert that he wants objectivity, but by that he means biases that coincide with his own biases" (Administrative Law Treatise (2 ed Vol 3 1978) at 378). Every judicial ruling on an arguable point necessarily disfavours someone -judges upset at least half of the people all of the time - and every ruling issued during a proceeding may thus give rise to an appearance of partiality in a broad sense to whoever is disfavoured by the ruling.   But it is elementary that the judge's fundamental task is to judge. Indeed the very essence of the judicial process is that the evidence will instil a judicial "bias" in favour of one party and against the other - that is how a court commonly expresses itself as having been persuaded.

[100] The general approach that judicial disqualification is not warranted on the basis of adverse rulings or decisions is also justified by appropriate concerns about proper judicial administration. There is huge potential for abuse if recusal applications were permitted to be predicated on a party's subjective perceptions regarding a judge's ruling.

[101] We know of no common law jurisdiction which accepts that a judge's adverse rulings are disqualifying per se. The problem is rather whether an aggrieved litigant should be permitted to seek recusal on the basis of rulings that are either so patently erroneous or so disproportionate as to suggest that something untoward must have motivated them. Even a statistical approach cannot obtain here: most judges will be able without any difficulty to recall trials in which regrettably they have had to endorse every single point which has been advanced against a particular party.

[102] Turning now to adverse comments, judges are duty bound to refrain from making unnecessary comments. The various codes of judicial conduct - including the Australasian ones - call on judges to be courteous to the litigant, observe proper decorum, and to be particularly cautious and circumspect in their language. And judges should not issue oral condemnations that are unrelated to the furtherance of the cause to be decided or are simply gratuitous.

[103] Comments as such will ordinarily not suffice to warrant recusal. What is important is that commentary should not however demonstrate that the judge has formed a fixed opinion as to the ultimate merits of the matter pending before him or her. It has to be shown, in short, that the judge does not have an open mind.

[104] In this case the criticism seems to be that comments about Dr Muir's evidence were unnecessary, gratuitous, and unduly severe.

[105] As to relevance, the Judge's findings based on the evidence of Dr Muir were directly relevant to significant issues in the substantive income tax challenge.

[106] The Judge's findings were undoubtedly firm, but they were in measured terms. And as the Judge correctly noted, he was under a duty to give reasons for rejecting Dr Muir's evidence, particularly given the importance of the evidence to issues in the case.

[107] Venning J held that Dr Muir - an experienced officer of the court, called as the principal witness for the plaintiffs in the substantive proceedings and on behalf of his own LAQC, and represented by senior counsel (Mr Stewart QC) - would have been well aware of the possibility and consequences of adverse findings of fact being made against him. We can see no basis for disturbing that view.

1. We reject this appeal point also. Prudence

[109] We referred in our discussion of the law to the relevance of "prudence" for judges making these sensitive decisions.

[110] The issue here however is not whether the Judge might reasonably have recused but whether, given that the Judge has decided to sit, he should be compelled to stand aside, in this instance. We think the answer to that question is "no".

Jurisdiction

[111] In [4] above, we noted that we raised at the hearing before us whether an "appeal" against the refusal of a judge to recuse himself can be appealed, at least prior to the delivery of the substantive judgment.

[112] In Erris Promotions a panel of this Court comprising Blanchard, Tipping and Anderson JJ allowed, without comment on any jurisdictional issues, an appeal against a decision of Wild J not to recuse himself in another pending taxation case. It must be said at once, therefore, that the lodgement of an appeal by counsel for Dr Muir rested squarely upon what was done in another appeal in this Court. There could therefore be no criticism of counsel for advancing this appeal now.

[113] Under s 66 of the Judicature Act 1908 this Court "[has] jurisdiction and power to hear and determine appeals from any judgment, decree, or order". This may well raise issues as to whether the order the Judge actually made in this instance was at that time a cognisable judgment, decree, or order, and if so whether it can be appealed on an interlocutory basis.

[114] As it transpires, because of the view we have taken on the merits of the appeal it is not necessary for us to determine these issues, and we do not do so. We do however note that these issues have caused considerable difficulty in other jurisdictions.

[115] In Australia there is a distinct division of opinion on the issue as to when a recusal decision may be appealed. The relevant statutes are in similar terms to the New Zealand statute. We list, in case the issues should have to be considered elsewhere on some occasion, the following Australian authorities: R v Watson ex parte Armstrong [1976] 136 CLR 248; Barton v Walker [1979] 2 NSWLR 740 (CA); Bainton v Rajski [1992] 29 NSWLR 539 (CA); Brooks v The Upjohn Company (1998) 156 ALR 622 (FCA); and Ebner in the High Court of Australia. In Ebner a majority of the Judges in that Court appear to have confirmed that it is for the judge against whom objection is taken to decide whether to sit and that decision can be reviewed only on appeal from the substantive decision in the matter or in proceedings for a prohibition, certiorari, or similar relief (the New Zealand equivalent would be judicial review).

[116] In the United Kingdom, in a very recent appeal, the English and Wales Court of Appeal allowed an "appeal" against the refusal of a High Court Judge (Peter Smith J) to recuse himself, without any discussion of "jurisdiction": see Howell & Ors v Millais & Ors [2007] EWCA Civ 720. We do not know under what provision (if any) that appeal was advanced.

[117] In the United States of America there have also been significant differences of opinion on the issue of whether the judge to whom the motion to recuse is delivered can and should determine it. There appear to be two lines of thought. One is that a judicial disqualification motion is no different to any other pre-trial request and that it should ordinarily be addressed in the first instance to the personal conscience and sound discretion of the judge whose disqualification is being sought. However, in other United States jurisdictions, once such a disqualification motion has been filed, the challenged judge may not decide the disqualification issue but, rather, must either excuse himself or herself or request that the motion be assigned to another judge for disposition. The challenged judge is then in general prohibited from taking any further action in the case until the motion has been resolved (see Flamm at 514 - 517). The concern on the part of Courts of this latter persuasion is that the judge cannot properly be a "judge" in his or her own cause.

[118] We have noted these authorities in brief only, for the assistance of counsel who might, on some future occasion, need to consider these issues. We have not heard argument on them, or indeed considered argument on the position in New Zealand.

Conclusion

1. The appeal is dismissed.

[120] In this Court the Commissioner will have costs of $6,000 and usual disbursements. We certify for second counsel.

Solicitors:

Bradbury & Muir, Auckland for Appellant
Crown Law Office, Wellington