Auckland Standards Committee 4 v Carole Smith


[2015] NZLCDT 40



Judge D F Clarkson

Ms F Freeman

Ms C Rowe

Ms S Sage

Mr I Williams

LCDT 008/15


IN THE MATTER of the Lawyers and Conveyancers Act 2006

Auckland Standards Committee 4
Carole Smith

Mr R McCoubrey for the Standards Committee

Mr W McCartney for the practitioner

Prosecution on three charges laid in the alternative: misconduct; or negligence; or unsatisfactory conduct –the Committee alleged the practitioner had breached a High Court charging order by means of a share transfer – it was also alleged that the effect of the transfer was to defeat the charging order, which had been made in the course of relationship property proceedings – the practitioner had not acted in those proceedings but was aware of the terms of the order – the charging order applied to the client's beneficial interest in trust property – the client held the shares as bare trustee only – whether the practitioner breached or assisted in the breaching of the order – if so, whether her actions were deliberate or negligent.

The issues were: whether the practitioner breached or assisted in the breaching of the order; if so, whether her conduct constitute was such a deliberate departure from accepted standards or was serious negligence; and whether S wilfully or recklessly breached any of the Rules, amounting to misconduct.

Held: The HC judge recorded the husband's evidence that he held any shares as a bare trustee and was not a beneficiary of any of the relevant trusts. That evidence was corroborated by S. Since S's client was never the beneficial owner, nor even a discretionary beneficiary, and since the owner of the shares was not the debtor, the charging order could not apply to the assets which were transferred. No evidence was ever produced by the wife to challenge the view of ownership. There was still no evidence to contradict the husband's assertions. Thus it would appear his and S's evidence was correct.

There was no information which would suggest S was entitled to ignore her client's clear instructions as to the transaction.

There was no element of subterfuge in the transaction. The unchallenged evidence was that the deed appointing the new trustee stated: “The retiring trustee wishes to retire…because its shares have become subject to a charging order and the Retiring Trustee does not want to put the Trust's assets at risk”.

Nor was this a lawyer “in cahoots” with her client to avoid a responsibility. The husband had waived privilege to inform the Tribunal that S actually urged him to simply pay his wife. Indeed, he did so not long after these events. Thus, there was no negative outcome for the wife, who was the complainant in this matter.

The Standards Committee had nor discharged its onus since it was not possible to see how S could be said to have breached the order at all.

If this was wrong, it was not a deliberate breach, let alone a wilful or reckless one, which could reach the level of misconduct.

The practitioner was not negligent. She diligently carried out her client's instructions. Importantly, she was neither instructing solicitor nor counsel acting in the proceedings in question. There were no grounds which would support a finding of “unsatisfactory conduct”.

The charges were dismissed.



The Auckland Standards Committee 4 have charged Ms Smith with three charges laid in the alternative: misconduct; or negligence; or unsatisfactory conduct.


The particulars pleaded in support allege breach of a High Court Charging Order, by means of a share transfer. It is also alleged that the effect of the transfer was to defeat the Charging Order.


A last minute application to amend the charge to allege breach of the order “or its spirit and intent” was declined by the Tribunal for the reasons given in our Oral Decision of 12 November.


The order in question was made in enforcement proceedings arising out of a relationship property dispute. Ms Smith represented the husband in relation to commercial interests and various trusts, but did not act in the relationship property proceedings, and was only keptinformed of their progress to a limited extent. She was aware of the terms of the Charging Order. The complainant in this matter is the wife in the proceedings.

    What did the order say? 2. Did the practitioner breach or assist in the breaching of that order? 3. If so, does her conduct constitute such a “ …deliberate departure from accepted standards or such serious negligence as, although notdeliberate, to portray indifference and an abuse of the privileges which accompany registrations as a practitioner”1 as to be misconduct? 4. If not, has Ms Smith wilfully or recklessly breached any of the Rules pleaded, such as to constitute misconduct? 5. If not, was she so negligent as to reflect on her fitness to practise or as to bring the profession into disrepute? 6. If not, did her conduct “fall short of the standard of competence and diligence” expected, in terms of s 12(a), as pleaded?

Ms Smith is living overseas, but gave evidence by Skype link. We were impressed by her careful and straightforward answers in cross–examination. Having heard the evidence of Ms Smith, we consider that a number of the particulars pleaded are inaccurate. Indeed, in opening, Mr McCoubrey, for the Standards Committee, properly conceded that particular 10 was plainly wrong, if the...

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