Auckland Standards Committee 4 v Donald Bruce Thomas
| Jurisdiction | New Zealand |
| Judge | BJ Kendall,Ms S Fitzgerald,Ms F Freeman,Mr W Smith,Mr B Stanaway |
| Judgment Date | 16 March 2016 |
| Neutral Citation | [2016] NZLCDT 5 |
| Docket Number | LCDT 016/15 |
| Court | Lawyers and Conveyancers’ Disciplinary Tribunal |
| Date | 16 March 2016 |
[2016] NZLCDT 5
Judge BJ Kendall (retired)
MEMBERS OF TRIBUNAL
Ms S Fitzgerald, Ms F Freeman, Mr W Smith, Mr B Stanaway
LCDT 016/15
NEW ZEALAND LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL
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.
Ms C Paterson for the Applicant
Mr G Illingworth QC for the Respondent
The respondent was charged by the applicant with one charge (and three alternative charges) under the Lawyers and Conveyancers Act 2006 (the Act).
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.
He admitted that, in doing so, he acted on the instructions of only one of the two trustees of the JPFT.
The applicant sought and was granted leave to withdraw the remaining three charges.
A penalty hearing occurred on 26 February 2016 at which the Tribunal imposed the following orders:
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(a) Censure;
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(b) Payment of compensation to the complainant of $2,898.20;
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(c) Payment of the costs of the New Zealand Law Society of $10,907.03;
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(d) Refund to the Law Society the Tribunals Costs which are fixed at $2,101.
It reserved its reasons for the penalty imposed. This decision now records those reasons.
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.
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.
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”.
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.
The respondent then did so without obtaining the consent of the other trustee Mark Patterson.
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.
Counsel for the Committee submitted that the appropriate orders to make were:
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(a) Censure; 1
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(b) A short period of suspension; 2
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(c) Compensation; 3
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(d) Payment of the Committees costs; and
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(e) Reimbursement of the Tribunal's costs.
Counsel submitted that the following factors were relevant to the making of the orders that were asked for:
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(a) The respondent allowed trust money to be released from the JPFT and in doing so was aware that he risked being in breach of s 110 of the Act and reg 12(6) of the Lawyers and Conveyancers Act (Trust Account) Regulations 2006;
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(b) He knew of the lack of the consent of one of the trustees;
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(c) Had failed in an application to the Family Court to have the funds released and;
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(d) Released the funds knowing that Mr Patterson wanted a global settlement of relationship property and was not going to change his attitude;
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(e) His misconduct called for a deterrent penalty of a period of suspension having regard to a focus on consumer protection and regard for the public interest.
The Committee noted that the respondent had a finding against him in 2001 of conduct unbecoming. It submitted that there should not therefore be a reduction of penalty on the ground of previous good character or for having an unblemished disciplinary history.
The Committee accepted that the period of suspension which it asked for should be reduced in light of the respondent having acknowledged his wrongdoing and accepting responsibility for it.
Counsel for the respondent submitted that the respondent had acted with the best of motives but with a flawed methodology. He had convinced himself that where a trustee was acting in flagrant breach of his obligation as a trustee, for his own personal...
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