Auckland Standards Committee No. 3 v Anthony David Banbrook
| Jurisdiction | New Zealand |
| Judge | Judge D F Clarkson,Mr W Chapman,Mr S Maling,Ms C Rowe,Mr W Smith |
| Judgment Date | 22 May 2014 |
| Neutral Citation | [2014] NZLCDT 37 |
| Docket Number | LCDT 007/13 |
| Court | Lawyers and Conveyancers’ Disciplinary Tribunal |
| Date | 22 May 2014 |
IN THE MATTER of the Lawyers and Conveyancers Act 2006
[2014] NZLCDT 37
Judge D F Clarkson Mr W Chapman Mr S Maling Ms C Rowe Mr W Smith
LCDT 007/13
NEW ZEALAND LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL
Liability and penalty decision of the New Zealand Lawyers and Conveyancers Disciplinary Tribunal — barrister was charged under s241(d) Lawyers and Conveyancers Act 2006 (offence punishable by imprisonment) of having brought the profession into disrepute by reason of his conviction of an offence under the Securities Act 1978 in respect of statements in a prospectus, which was punishable by imprisonment — barrister had been a director on the Board of a company which had been subject to fraud by two of its directors — barrister had not been aware of fraud and maintained he had been allowed to rely on independently reviewed accounts and prospectus — barrister had been convicted in the High Court on basis of agreed summary of facts which he now sought to dispute before the Tribunal — Standards Committee relied on the decision in Davidson v Auckland Standards Committee No. 3 — whether the Tribunal should depart from the agreed summary of facts on which a guilty plea was based; and whether there were significant distinctions between this case and Davidson — what penalty should be imposed.
Mr M Hodge for the Auckland Standards Committee No. 3
Mr S Mount for the Practitioner
This case concerns a lawyer of many years experience, held in high regard by his peers, appearing before the Tribunal as the result of his role as a director of one of the many ‘collapsed' finance companies.
Mr Banbrook is charged under s 241(d) that, having been convicted of an offence punishable by imprisonment (that is under s 58(3) of the Securities Act 1978) the conviction tends to bring his profession into disrepute.
Initially the first limb of subs (d) was also pleaded, that is that the conviction reflected on Mr Banbrook's fitness to practice, but that was abandoned by the Standards Committee, having regard to the High Court decision in Davidson. 1
The charge is denied by Mr Banbrook who, of necessity, conceded the fact of the conviction (his appeal to the Court of Appeal having been unsuccessful 2), but argued that in his particular case that a reasonable member of the public, fully informed of the relevant facts leading to his conviction, would not view Mr Banbrook's conduct as tending to bring the profession in disrepute.
The general background facts are not disputed. The key difference between the counsel for the Standards Committee and counsel for the practitioner in this matter relates to whether he is bound by the Summary of Facts in the Securities Act proceedings, to which he agreed, and upon which he was sentenced. In particular Mr Banbrook does not consider that he was guilty of “gross negligence”
“In my assessment, your omissions are properly categorised as omissions that amount to gross negligence.”
Mr Banbrook also challenges those portions of the Summary which revealed deficiencies in the prospectus in a number of areas, including the reporting of related party transactions, the making of proper and adequate provision of bad debts and statements concerning the holding of non-accrual assets (acquired through the enforcement of securities). All of these areas were important matters to investors in the company, namely National Finance Limited (“NFL”) which was a lower tier lending company largely set up to finance the purchase of second hand cars through car dealers. These included car dealerships which had common directorships with NFL itself.
Mr Banbrook was the barrister who had the role of collecting the large debts for NFL. That connection led to an invitation to join the board.
NFL had been preceded by another failed company run by Mr Ludlow who was the Chief Executive of the firm and a co-director, along with Mr Ludlow's partner, Ms Braithwaite, and an accountant Mr Gray.
It is common ground that Mr Ludlow and Mr Gray, were fraudulent in relation to their dealings with the companies and actively concealed this fraud from Mr Banbrook. Understandably, Mr Banbrook feels significantly let down and betrayed by these men, on whom he relied for proper governance of the company and accurate statements in the prospectus.
It is Mr Banbrook's position, when asked about his responsibility for statements in the prospectus, and indeed the company's accounts overall, that such were subject to independent audit, were under the control of an experienced accountant, the prospectus was prepared after independent advice from a large independent law firm and there were the overall regulatory bodies including the Trustee, with whom they met from time to time when concerns arose.
Mr Banbrook stated that he was “merely a litigator” and that this was the principle focus for his appointment as a director. He considered that he ought to have been able to rely upon the various checks and balances, without undertaking independent inquiries given that he himself was not an accountant.
What is clear to us is that Mr Banbrook was aware of Mr Ludlow's history in terms of his previously failed company, which had very similar business to that of NFL. The loan book of the previous company had been poor and therefore that poor quality lending was something about which Mr Banbrook ought to have been particularly alert. Furthermore it was put to him that he was aware for example, of repossessed vehicles existing, which information was specifically counter to that set out in the prospectus. Mr Banbrook said that he considered this information to be “immaterial”.
Mr Banbrook said that he attended over 50 meetings of directors during the period of time that he was a director and diligently prepared for these, read minutes, and to the best of his ability responded urgently to any difficulties arising for the company. He considers that because he carried out what he understood to be his role as a director with diligence and honesty, that he has not by reason of his plea of guilty to a strict liability offence, brought the profession into disrepute.
Furthermore Mr Banbrook contended that the prospectus did not highlight his position as a lawyer (albeit the only lawyer on the board) in any particular way.
In fact the description of Mr Banbrook in the prospectus is as follows:
“Tony Banbrook (Bsc, LL.B.A.A.AMINZ(sic), Barrister) — Director
Tony Banbrook graduated Bsc, LL. B from Auckland University in 1972.
He was employed as a prosecutor in the Crown Prosecutor's Office in the period 1971-1975. He prosecuted for a number of Government Departments regularly including the Police and Inland Revenue Department.
Tony spent 22 years as a litigation partner in the legal practice of Hesketh Henry. He specialised in commercial/civil litigation, acting on behalf of major commercial entities including Auckland City Council, Auckland Regional Council, Auckland Regional Services Trust and The Anglican Church Property Trusts. For 20 years he was the commercial litigation advisor to the National Bank of New Zealand Limited in Auckland.
Tony was legal advisor to the company Instant Finance Limited in the year's following its relocation from Wellington to Auckland and was a director and legal advisor to PSC Group Limited, a forerunner of Baycorp Advantage.
Latterly, Tony has been a consultant to national bodies in the racing industry and public trusts and companies engaged in forestry management.
Tony left Hesketh Henry in 1999 to set up practice as a barrister and since that time, has appeared regularly in the Commercial Court, the High Court in different centres throughout New Zealand and in the Court of Appeal.
He is an associate member of the New Zealand Institute of Arbitrators and Mediators and is committed to the resolution of commercial conflict by means of alternative dispute resolution and to the practical application of the legal process in the commercial context.”
In evidence Mr Banbrook attempted to make the distinction between himself as a commercial litigator and a commercial (transactional) lawyer. We did not consider that the public was likely to make that distinction when reading a prospectus in relation to a lawyer board member.
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1. Is the practitioner entitled to ask the Tribunal to depart from the Summary of Facts upon which a guilty plea has been based in the present circumstances?
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2. Is the practitioner able to distinguish his case from the decision of the Tribunal and the High Court in Davidson 4 as to the issue of what behaviour might tend to bring the profession into disrepute?
Mr Banbrook confirmed that the Agreed Summary at his criminal hearing was accepted by him on the advice of senior counsel then representing him, following some two months of negotiation as to its contents. It was Mr Banbrook's view that he was however, effectively forced to agree to this Summary under threat of reversion to an earlier Summary of Facts which he considered contained huge distortions and posed considerable risks for him.
However, this argument was also made to the Court of Appeal in late 2013 and it was rejected by the Court in these terms: 5
“[25] In light of those concessions there was no prospect of Mr Banbrook making out a defence he had reasonable grounds to believe the statements in the prospectus were true. He had abrogated his responsibility as a director. Mr Banbrook sought to suggest that he only made these concessions in light of the position he found...
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