Auckland Standards Committee 4 v Donald Bruce Thomas

 
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[2016] NZLCDT 5

NEW ZEALAND LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL

CHAIR

Judge BJ Kendall (retired)

MEMBERS OF TRIBUNAL

Ms S Fitzgerald, Ms F Freeman, Mr W Smith, Mr B Stanaway

LCDT 016/15

BETWEEN
Auckland Standards Committee 4
Applicant
and
Donald Bruce Thomas
Respondent
COUNSEL

Ms C Paterson for the Applicant

Mr G Illingworth QC for the Respondent

Reasons for penalty decision — the respondent admitted that his conduct amounted to a reckless breach of the Rules of Professional Conduct in that he allowed money held in trust to be applied towards the purchase of a property for the trust without first obtaining consent from one of the two trustees — practitioner had been frustrated by refusal of one of trustees to allow settlement to proceed on a property that was being purchased — trust stood to lose its deposit — trustee's motivation was to achieve a global settlement of all relationship property, the majority of which was under his control — whether a period of suspension should be ordered — whether the trustee should be awarded compensation for loss of his bargaining power.

The issues were: whether a period of suspension should be ordered; and whether compensation for loss of bargaining power should be awarded.

Held: In reaching the decision not to impose a period of suspension on T, the following matters were taken into account:

  • (a) It was a single event of misconduct carried out with no dishonesty or personal gain;

  • (b) There were no detrimental consequences to the parties involved;

  • (c) T had admitted guilt from the outset and had accepted that his name should be published so that the profession could be aware of the need to comply with the strict requirements of professional conduct;

  • (d) There was no need for the public to be protected from T;

  • (e) Deterrence to the extent required to uphold the principles and purposes of the Act particularly as to the maintenance of public confidence in the provision of legal services by upholding high professional standards had been accepted by T by ready acknowledgment of fault and remorse for his conduct;

  • (f) His long career without otherwise significant blemish and the standing he had in his community.

Mr P's claim for compensation for loss of bargaining power was strongly resisted by T saying that this would reward Mr P for acting in breach of his most fundamental obligation as a trustee and for failing to comply with his disclosure obligations in respect of relationship property. Given that the claim was contentious and speculative, it was inappropriate to make an order.

Mr P should be refunded $2,898, which was the total of costs and disbursements incurred for legal fees after becoming aware that funds had been released without his authority.

Summary of orders

  • •T was censured;

  • •T was to pay compensation to the complainant totalling $2,898;

  • •T was to pay the costs of the Standards Committee which were fixed at $10,907;

  • •T was to refund to the New Zealand Law Society the costs of the Tribunal payable by it pursuant to s257 LCA and fixed in the sum of $2,101.

A formal censure was recorded, recognising T had allowed his judgment to be clouded by his frustration at the stance being taken by the co-trustee, even though he was aware that the funds could not be paid out on the instructions of one trustee only, and his conduct amounted to a serious failing

REASONS FOR THE DECISION OF THE NEW ZEALAND LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL CONCERNING PENALTY
1

The respondent was charged by the applicant with one charge (and three alternative charges) under the Lawyers and Conveyancers Act 2006 (the Act).

2

The respondent admitted that his conduct amounted to a reckless breach of the Rules of Professional Conduct in that he allowed money held in trust for a client known as the Jeannine Patterson Family Trust (“JPFT”) to be applied towards the purchase of a property for the JPFT.

3

He admitted that, in doing so, he acted on the instructions of only one of the two trustees of the JPFT.

4

The applicant sought and was granted leave to withdraw the remaining three charges.

5

A penalty hearing occurred on 26 February 2016 at which the Tribunal imposed the following orders:

  • (a) Censure;

  • (b) Payment of compensation to the complainant of $2,898.20;

  • (c) Payment of the costs of the New Zealand Law Society of $10,907.03;

  • (d) Refund to the Law Society the Tribunals Costs which are fixed at $2,101.

6

It reserved its reasons for the penalty imposed. This decision now records those reasons.

Background
7

Mr and Mrs Patterson were the two trustees of the JPFT. They had separated and were negotiating division and settlement of relationship property through their respective solicitors. The home in which Mrs Patterson and the children were living following separation was sold. Mr Patterson agreed to half of the sale proceeds being held in trust for the JPFT. The other half was paid to the Mark Patterson Family Trust for whom Simpson Western were the solicitors acting.

8

Mrs Patterson then found a property for the family to move into and entered into an unconditional agreement to purchase it. Mr Patterson then refused to join in the authorisation required to use a portion of the funds in the JPFT trust account with the respondent's firm to complete the purchase. His refusal put the JPFT at risk of forfeiting the deposit on the property and other consequences for not proceeding with the purchase.

9

An application was made to the Family Court seeking an order for the release of the funds. The Court held that it did not have jurisdiction in respect of trusts and that the matter would have to be the subject of an application to the High Court. It accordingly dismissed the application and made an award of costs of $1,500 in favour of Mr Patterson. The presiding judge observed that Mr Patterson was “playing hardball”.

10

Mrs Patterson gave instructions to the respondent to use the funds held for the JPFT to complete the purchase of the home, the agreement for which had become unconditional and with settlement due imminently.

11

The respondent then did so without obtaining the consent of the other trustee Mark Patterson.

Submissions
12

Mr Patterson claims to have suffered loss as the result of the respondent's conduct and seeks compensation in excess of $200,000.00 the greatest part of which is said to be for loss of bargaining power. His refusal to authorise the release of the funds in the JPFT was motivated by his desire to achieve a global settlement of all relationship property the majority of which was under his control.

13

Counsel for the Committee submitted that the appropriate orders to make were:

  • (a) Censure; 1

  • (b) A short period of suspension; 2

  • (c) Compensation; 3

  • (d) Payment of the Committees costs; and

  • (e) Reimbursement of the Tribunal's costs.

14

Counsel submitted that the...

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