Auckland 356 Complaints Committee and Auckland No.1 Standards Committee v John Hardwick Sanders of Auckland
| Jurisdiction | New Zealand |
| Judge | Mr D J Mackenzie,Ms S Gill,Mr C Rickit,Ms S Sage,Mr W Smith |
| Judgment Date | 22 July 2010 |
| Neutral Citation | [2010] NZLCDT 21 |
| Docket Number | LCDT 027/09 |
| Court | Lawyers and Conveyancers’ Disciplinary Tribunal |
| Date | 22 July 2010 |
IN THE MATTER of the Lawyers and Conveyancers Act 2006
[2010] NZLCDT 21
Mr D J Mackenzie
MEMBERS OF THE TRIBUNAL
Ms S Gill
Mr C Rickit
Ms S Sage
Mr W Smith
LCDT 027/09
BEFORE THE NEW ZEALAND LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL
Reasons of Tribunal for finding that the practitioner (“S”) was guilty of breaching r5.01 Rules of Professional Conduct for Barristers and Solicitors (practitioners required to observe Solicitors Trust Account Rules 1996) through breaching r5(7)(b) Solicitors Trust Account Rules 1996 (“Trust Account Rules” — solicitors only to disburse client's trust money on instruction of client) — reasons for penalties imposed on that charge and two charges of making false representations as to authority to disburse funds to other practitioners and a Complaints Committee respectively (“misrepresentation charges”) — whether a joint account of two clients in respect of trust monies may be treated as belonging to either client and that the instruction of either client to disburse monies was sufficient under r5 Trust Account Rules — whether misrepresentation charges were acts of innocent mistake — whether suspension from practice for 3 months appropriate penalty for all breaches
Mr R Earwaker and Mr M Treleaven for the New Zealand Law Society
Mr H Fulton for the practitioner
This is the Tribunal's full decision, with reasons, following its earlier oral decisions on the charges and penalty.
Mr Sanders faced five charges of professional misconduct;
-
[a] That on or about 3 November 2006 he breached Rule 5.01 of the Rules of Professional Conduct for Barristers and Solicitors by failing to comply with Section 89 Law Practitioners Act 1982 and/or Rules 3 and/or 5(7)(b) of the Solicitors Trust Account Rules 1996. This charge was laid by the Auckland Section 356 Standards Committee of the New Zealand Law Society. (“the Section 356 Charge”)
-
[b] That on a date unknown but in approximately July 2007 he wrote false details on a form with the title “Authority to Disburse Funds” (“the Authority”) which purported to authorise the payment of funds from his trust account in the name of Mr RV and Mrs SL Prasad to Mrs Ramkali. (“the False Detail Charge”)
-
[c] That on or about 16 August 2007 he made a false representation to Dawsons, solicitors, expressly or by implication, that the Authority was signed by Mr Prasad on 15 November 2006 with Mr Prasad signing on behalf of himself and Mrs Prasad. (“the Dawsons Representation Charge”)
-
[d] That on our about 11 December 2007 he made a false representation to Complaints Committee No.1 of the Auckland District Law Society, expressly or by implication, that the Authority was reduced to writing and/or signed by Mr Prasad on 15 November 2006 with Mr Prasad signing on behalf of himself and Mrs Prasad. (“the Complaints Committee Representation Charge”)
-
[e]That from, on, and after 23 June 2008, in breach of Section 101(6) of the Law Practitioners Act 1982, without lawful justification or excuse he refused or failed, and continued to refuse or fail, to comply with the lawful requirement of Complaints Committee No.1 of the Auckland District Law Society made by resolution dated 26 May 2008 that pursuant to Section 101(3)(d) Law Practitioners Act he produce certain books, documents, papers, accounts and records in his possession. (“the Statutory Charge”) The charges noted at (b) – (e) above were laid by Auckland Standards Committee No.1 of the New Zealand Law Society.
All five charges were set down for hearing in Auckland on 22 July 2010. At the hearing on that day the Standards Committee sought, and was granted, leave to withdraw the False Detail Charge and the Statutory Charge. That left the Section 356 Charge, the Dawsons Representation Charge, and the Complaints Committee Representation Charge to be dealt with at the hearing. Mr Sanders admitted the latter two charges, but denied the Section 356 Charge.
After hearing argument on the Section 356 Charge, and receiving representations on the Dawsons Representation Charge and the Complaints Committee Representation Charge, the Tribunal retired to consider its decision on these matters.
The Tribunal found that Mr Sanders was guilty of misconduct in his professional capacity on the section 356 Charge.
The Tribunal was satisfied that Mrs Prasad had a joint interest in the money in the Prasads' trust account with Mr Sanders. Mr Prasad had instructed Mr Sanders to transfer $174,000 of that money to Mr Prasad's mother. Mr Sanders made the transfer without obtaining instructions from Mrs Prasad. The Tribunal found that Mr Sanders had to have Mrs Prasad's consent or authority to properly make the transfer. In making the transfer without Mrs Prasad's consent or authority Mr Sanders breached both the Law Practitioners Act and the Solicitors Trust Account Rules.
The Dawsons Representation Charge and the Complaints Committee Representation Charge were both admitted by Mr Sanders.
After delivering its substantive decision on the Charges, the Tribunal requested submissions on penalty from the parties, who both indicated a willingness to provide them at that point with a view to finalising the disciplinary process.
After a short adjournment submissions on penalty were made by the parties. After considering those submissions the Tribunal delivered its decision on penalty. The decision of the Tribunal provided that;
-
[a] Pursuant to Section 112(2)(c) Law Practitioners Act 1982 and Section 242(1)(g) Lawyers and Conveyancers Act 2006, Mr Sanders was not to practise as a solicitor on his own account, whether in partnership or otherwise, until authorised by the Tribunal to do so;
-
[b] On each charge Mr Sanders was censured;
-
[c] Mr Sanders was to pay 50% of the New Zealand Law Society's total costs of $14,361;
-
[d] Mr Sanders was to reimburse 50% of the New Zealand Law Society's total costs of $9,333 fixed under Section 257(3) Lawyers and Conveyancers Act 2006.
The Tribunal confirmed at the hearing that it would issue a decision in writing, with its reasons, in due course. This written decision now sets out the reasons for the Tribunal's decisions on the charges and penalty.
This matter arose as the result of a transfer of funds held on trust by Mr Sanders, a sole practitioner, in the names of Mr RV and Mrs SL Prasad. The funds were transferred by Mr Sanders to Mr Prasad's mother, Mrs Ramkali, to assist Mrs Ramkali to purchase a property at Abelia Place, Auckland. The transfer was made on the instruction of Mr Prasad. The Law Society position was that Mrs Prasad's authority had not been obtained, and that no written record had been retained of Mr Prasad's instruction. The first issue we considered was whether Mrs Prasad's authority was necessary and obtained.
The funds held by Mr Sanders on trust represented the proceeds of sale from three properties sold by Mr and Mrs Prasad. Mr Sanders had acted for Mr and Mrs Prasad on those sales. On or about 3 November, Mr Sanders, acting on the verbal instructions of Mr Prasad, transferred approximately $174,000 of the funds held on trust for Mr and Mrs Prasad to Mrs Ramkali's account, to facilitate her purchase of the property at Abelia Place. The sum transferred was said to represent funds held following sales by Mr and Mrs Prasad of properties at Puhinui Road, Elizabeth Street, and Heathbury Close.
It was common ground that Mrs Prasad did not personally give Mr Sanders instructions to make the transfer of the funds to Mr Prasad's mother, Mr Ramkali. Mr Sanders acknowledged that he had relied on Mr Prasad's veracity when he pressed him about Mrs Prasad's agreement to the transfer, and he said he had accepted Mr Prasad's statement that Mrs Prasad approved the transfer.
Mrs Prasad's evidence was that she did not give her approval to the transfer, and that it was not correct for Mr Prasad to advise Mr Sanders that she agreed to the transfer to Mrs Ramkali. As a consequence, Mr Sanders was in a position where he had acted on the instructions of Mr Prasad in making the transfer, relying on his assurance that Mrs Prasad also required the transfer to be made, without any authority (verbal or written) from Mrs Prasad.
For Mr Sanders, it was submitted that the central issue was the manner in which the Solicitors Trust Account Rules should be interpreted.
Rule 3(1) provides that;
“… a solicitor must deal with client assets only in accordance with the instructions of the client (and in particular may not pay, transfer, or charge any client assets except in accordance with such instructions).”
Rule 5(7) provides that;
“ A solicitor may make transfers or payments from a client's trust money only if –
(a) ……………….
(b) the solicitor obtains the client's instructions or authority for the transfer or payment, and retains that instruction or authority (if in writing) or a written record of it;”
The Law Practitioners Act 1982 provides a similar provision to those contained in Rules 3(1) and 5(7)(b). Section 89(1) Law Practitioners Act 1982 provides that;
“ All money received for or on behalf of any person by a solicitor shall be held …exclusively for that person, to be paid to that person or as he directs…”
For Mr Sanders, and relying on Rule 5(1)(c) of the Solicitors Trust Account Rules, it was suggested that a joint account of two clients was to be treated as a single client, and that accordingly the authority of just one joint owner in respect of funds held in a trust account would be a sufficient authority. We do not accept that submission. The Rule provides as follows;
(1) “Every receipt, payment, transfer and balance of trust money...
To continue reading
Request your trial