Lawyers acting for the three defendants in the South Canterbury Finance fraud case have renewed their bid to force Justice Paul Heath off the case.
Tomorrow's proceedings have been postponed at the High Court at Timaru, as Justice Heath ruled the matter should be dealt with urgently.
The Crown has completed its opening in the fraud trial of a former chief executive and two directors of South Canterbury Finance, which collapsed in 2010.
Former SCF chief executive Lachie McLeod and two former directors, Timaru lawyer Edward Sullivan and accountant Robert White, have pleaded not guilty to the 18 individual and combined fraud charges.
Read had said at an insolvency conference in Auckland last week that she was "fortunate" to have Justice Heath running the case.
Counsel spent the early afternoon cloistered in meetings, emerging just before 4pm to signal to Justice Heath that an early challenge to his appearance of partiality would be relaunched.
Bruce Squire, QC, acting for former SCF director Robert White, told the High Court at Timaru: "We need to put the matter on a more formal footing."
Squire said he would be urgently filing two affidavits, including one from Wellington lawyer Scott Barker who attended the conference, to support renewing application.
The application to have Justice Heath recuse himself would be heard on Monday afternoon.
Justice Heath said before the lunchbreak he would entertain the application only if new evidence was bought before the court.
"I've expressed a clear view," Justice Heath said.
"If it was to be pursued I will need to identify evidence that will advance [the argument] further. If nothing falls into this category I will make my interim decision final and you will have the right of appeal."
Lawyers acting for Sullivan, White and McLeod submitted yesterday that the trial should be delayed while additional evidence was gathered to determine whether Justice Heath was able to hear the case.
Justice Heath said then he had not faced prior allegations of bias from counsel. While Read's comment had been "unfortunate", it was merely complimentary of his abilities.
"The clear impression I formed was that the comment indicated no more than Read was pleased that a person with some experience in the [insolvency] area was presiding over the trial," he said.
'LESS THAN THE TRUTH'
The court was told this morning that SCF hid the ownership of the Hyatt Hotel in Auckland by putting in a family member as director.
Prosecutor Colin Carruthers, QC, said that on December 4, 2008, Sullivan wrote to his brother-in-law, Peter Symes, and said he was required in name to own the Hyatt Hotel in Auckland. The Crown said this was to avoid declaring it as a related-party loan.
"We need to appoint you, in my view, as a (sole) director of regency Auckland. Please note that it owns the Hyatt Hotel in Auckland. South Canterbury Finance does not wish to be direct owner and neither does Southbury Group (SCF parent company). It is for that reason we formed Quadrant Holdings which is the end owner of the hotel," Sullivan wrote.
He finished the letter with "Your ever-loving brother-in-law".
The Crown today began looking at how SCF was accepted into the Crown retail deposit guarantee scheme in 2008.
The scheme paid out $1.58 billion of taxpayers' money to investors when SCF collapsed two years later.
Carruthers outlined the application SCF made in October 2008 to enter the scheme. Issues came up around the Crown's policy on related-party loans.
White emailed Sullivan and outlined his reservations.
"We have been telling less than the truth regarding our asset quality for some time now," White wrote.
White and Sullivan asked the Crown to amend its arm's-length transactions policy, but it would not.
On November 19, 2008, the company was allowed into the scheme based on information from SCF prospectuses.
Carruthers said the company did not disclose related-party loans to Hilltop Holdings and Woolpak, concluding White and Sullivan had got into the scheme by deception.
The Crown yesterday outlined a lot of "round the mulberry bush" related-party transactions by SCF directors.
The Crown will call 41 witnesses and canvass nine key transactions undertaken by the company, including deals to finance farming empire Dairy Holdings and the buying and selling of the Hyatt Hotel.
The case will draw in members of Sullivan's family, including his nephew, Geoffrey Sullivan, and Symes.
Symes' evidence will be in writing, as he died in August last year. His evidence related to his role as director of Quadrant Holdings and Shark Wholesalers.
Carruthers said Symes acted as a proxy of Sullivan in these companies.
Geoffrey Sullivan was the general manager of Specialised Sales and Marketing (SSM), who noticed the company faced funding issues.
It is the second day of the trial before Justice Paul Heath which is expected to take four months.
- Fairfax Media