Auckland Standards Committee No. 3 v Anthony David Banbrook


[2014] NZLCDT 37



Judge D F Clarkson Mr W Chapman Mr S Maling Ms C Rowe Mr W Smith

LCDT 007/13

IN THE MATTER of the Lawyers and Conveyancers Act 2006

Auckland Standards Committee No. 3
Anthony David Banbrook

Mr M Hodge for the Auckland Standards Committee No. 3

Mr S Mount for the Practitioner

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.

The issues were: 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; and what penalty should be imposed.

Held: In evidence B attempted to make a distinction between himself as a commercial litigator and a commercial (transactional) lawyer. The public was not likely to make to that distinction when reading a prospectus in relation to a lawyer board member.

There would be instances when it was proper to allow a practitioner to flesh out details in relation to criminal offending on which a charge was based. This was likely to be more relevant at penalty stage. However on occasions, particularly if the summary of facts was somewhat sparse in details it might also be considered in a liability determination.

In this instance, given the process which led to the agreed summary and given that it had already been the subject of a determination by the Court of Appeal, The Tribunal should not go behind it in respect of the central issues of the finding of “gross negligence” or as to the deficits in governance set out in the summary.

The summary of facts in this case was relied on for sentencing and since that sentence formed a considerable basis for the determination of both liability and penalty, if relevant, in disciplinary proceedings, the practitioner should not be allowed to resile from its core contents.

B's attempt to go behind the summary was part of a wider problem of B's complete failure to accept any responsibility whatsoever for his part in the NFL collapse.

There were distinctions between Davidson and this case, as Davidson (D) was chairman of the Board whereas B was simply a director with no additional responsibilities. Further the scale of the losses in the BridgeCorp collapse (in which D was involved) was vastly greater.

However it was significant that B was the only lawyer on the Board. The promotion of D and B respectively as commercial lawyers did not have such significant differences that they created a clear distinction for penalty purposes and there was no sufficiently different element in the manner in which D and B were misled, given that had either made proper independent inquiries such deceptions would have been uncovered. This formed part of the “gross negligence” finding in relation to their respective directorships.

D's mitigating circumstances were notable, the weight of his references and previous service to the legal community and community at large would more than tip the balance of this factor against B. While B had a solid and respected career, it was not comparable to that of D from which he was able to draw considerable credit.

Overall the rather minor distinguishing features were not sufficient to set them apart from the liability finding in Davidson. The distinctions were more relevant to penalty.

In Davidson the High Court made it clear that nothing short of suspension would properly reflect the profession's disapproval of a conviction and its flow on effects to the profession where a lawyer director was found to be seriously deficient. B's culpability was not so different from D as to avoid suspension entirely, but it could be imposed at a lower level. Credit was given for payment of reparation and for the positive references provided on B's behalf and for his long unblemished career as a lawyer.

The submission that a short period of suspension would end B's career was not accepted. The Tribunal was disappointed at B's adoption of a role as a victim, both before the Tribunal and before the High Court in seeking release from the reparation payment. A suspension period of seven months was warranted.

Orders censuring practitioner and suspending him from practice for 7 months.


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”

notwithstanding the remarks of the sentencing judge, His Honour Justice Collins at [26]: 3

“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...

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