Wellington, Nov 27 NZPA - A judge should not have sat on a case in which he had a conflict of interest, the Supreme Court has ruled, overturning its previous decision.

A small faction of woolgrowers who said their wool should not be lumped in with other merino wools for funding purposes took the Supreme Court case.

Saxon merino growers had applied for recall of a unanimous Supreme Court decision in favour of The Wool Board Disestablishment Company Ltd (DisCo).

In a July 3 decision the Supreme Court cleared a former Court of Appeal judge Bill Wilson over allegations of potential bias in his ruling against the woolgrowers.

Today, the Supreme Court reversed that decision, saying it had reviewed further information provided by the judge and "concluded that its earlier view cannot be sustained".

The farmers had complained that DisCo was represented by Alan Galbraith QC, a co-owner of land on which he and Justice Wilson provided grazing for race horses.

Justice Wilson therefore had a potential conflict of interest in the case.

Today, the Supreme Court found that there was in fact a direct indebtedness at the time of the proceeding, with an imbalance of loan accounts between the judge and Mr Galbraith in a jointly owned company, Rich Hill Ltd.

Arrangements were in train for the company to borrow a "substantial sum" to buy more land for the stud.

"In those circumstances, the Court has now held, the judge should not have sat on the case."

Since the original appeal court decision, Justice Wilson has been appointed a Supreme Court judge.

The July finding -- that a "fair-minded lay observer" would reasonably understand that Justice Wilson brought an impartial mind to his judgment -- left Saxon farmers liable to pay DisCo another $15,000, plus "reasonable disbursements".

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