Auckland Standards Committee 4 v Carole Smith

• Jurisdiction: New Zealand
• Judge: Judge D F Clarkson,Ms F Freeman,Ms C Rowe,Ms S Sage,Mr I Williams
• Judgment Date: 19 November 2015
• Neutral Citation: [2015] NZLCDT 40
• Docket Number: LCDT 008/15
• Court: Lawyers and Conveyancers’ Disciplinary Tribunal
• Date: 19 November 2015

BETWEEN

IN THE MATTER of the Lawyers and Conveyancers Act 2006

Auckland Standards Committee 4

Applicant

and

Carole Smith

Practitioner

[2015] NZLCDT 40

CHAIR

Judge D F Clarkson

Ms F Freeman

Ms C Rowe

Ms S Sage

Mr I Williams

LCDT 008/15

NEW ZEALAND LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL

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.

APPEARANCES

Mr R McCoubrey for the Standards Committee

Mr W McCartney for the practitioner

DECISION OF THE TRIBUNAL ON CHARGES

Introduction

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

2 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.

3 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.

4 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.

Issues

• 1. 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 not deliberate, 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?

Background

5 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 correspondence relied on was examined.

6 More importantly, particular 9, which reads: “On 22 November 2012, (the wife) via her solicitor obtained charging orders over (the husband's) company Chaylor Investments Limited and all the shares held by Chaylor Investments Ltd including the Chaylor subsidiaries” is misleading.

7 The Charging Order, which was an interim one, made by a Registrar on an ex parte application, charged the beneficial interests of the husband in various entities, which were then set out in Schedule 2 of the order.

8 The wife applied for the order to be made final and the husband applied for a stay, having appealed the original award. Neither were successful when these applications were considered by Her Honour, Justice Ellis on 12 March 2013. In the course of that judgment Her Honour 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

which owned the shares in the 2nd Schedule. That evidence was corroborated by Ms Smith, who was not cross–examined. The Judge said: “While the supporting documentation may be lacking, a good deal of what he says has, as I have said, been confirmed on oath by his lawyer. In the absence of any cross–examination or firm evidence to the contrary I am simply not prepared to discount what she says.”

9 There then followed a chain of events where it appears that, on an application for final orders and to sell the shares charged, having declined it previously, and before the allowed time for the husband's counsel to respond had expired, a Final Charging Order was made...