Canterbury Westland Standards Committee No. 1 v Kenneth Selwyn Grave

• Jurisdiction: New Zealand
• Judge: Judge D F Clarkson,Mr M Gough,Mr A Lamont,Mr S Maling,Mr S Walker
• Judgment Date: 12 April 2016
• Neutral Citation: [2016] NZLCDT 8
• Docket Number: LCDT 005/15
• Court: Lawyers and Conveyancers’ Disciplinary Tribunal
• Date: 12 April 2016

IN THE MATTER of the Lawyers and Conveyancers Act 2006

BETWEEN

Canterbury Westland Standards Committee No. 1

Applicant

and

Kenneth Selwyn Grave

Practitioner

[2016] NZLCDT 8

Court:

Judge D F Clarkson Mr M Gough Mr A Lamont Mr S Maling Mr S Walker

LCDT 005/15

NEW ZEALAND LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL

Penalty and name suppression decision following an admission of negligence of such a degree as to bring the profession into disrepute pursuant to s241(c) Lawyers and Conveyancers Act 2006-the practitioner had acted for a couple in the purchase of a house and the property was registered in the husband's name alone-the husband's will contained various legacies-when he died, the practitioner formed the view that the title was mistakenly registered in the husband's name and prepared a Deed of Correction-the practitioner did not inform the legatees of their legacies at this stage and continued to act while in a position of potential and actual conflict-whether the breach of the Client Care and Conduct Rules was “wilful or reckless” such as to constitute misconduct-whether a penalty of less than suspension was sufficient-whether name suppression should be granted because practitioners in smaller centres risked greater reputational damage than those in large centres-whether the matter should be referred to the Registrar-General of Land as a matter which might impact on Landonline registration capacity.

Counsel:

Mr J Shaw for the Standards Committee

Mr G Gallaway and Ms S Lester for the Practitioner

DECISION OF THE NEW ZEALAND LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL AS TO PENALTY AND NAME SUPPRESSION

Introduction

1 Mr Grave faced one charge, pleaded with three alternative levels of conduct – misconduct, negligence and unsatisfactory conduct. After negotiations with the Standards Committee, Mr Grave agreed to admit the charge at the level of negligence and this, with an agreed set of facts was put to the Tribunal, along with suggested penalties.

2 The Tribunal accepted the proposed amended particulars but reserved the right to determine for itself the level of culpability and penalty, after hearing the evidence and submissions.

3 The other outstanding matter for the hearing was an application for final name suppression, which was opposed by the Standards Committee.

4 Following the hearing, we indicated we were prepared to accept culpability at the “negligence” level. We also told Mr Grave we would not suspend him from practice. This decision addresses the remaining matters and provides our reasons for the two indications already given.

Background

5 The charges and agreed particulars are attached as Appendix I to this decision.

6 In summary, Mr Grave acted for Mr and Mrs P in the purchase of their home and the making of their wills. Mr and Mrs P paid for the home with a cheque drawn on their joint account, shortly before returning to the United Kingdom to settle their affairs before moving to New Zealand permanently. However, the agreement for sale and purchase was in Mr P's name as agent, and the transfer of the title to the property was ultimately registered in Mr P's sole name alone.

7 Mrs P suffered from dementia and although they had a son living locally, he was busy with work and a young family, and Mr and Mrs P were frequently assisted in their day to day needs by a friend they had made on arrival in New Zealand, Ms X.

8 In his 2008 will Mr P left certain legacies, including $50,000 to Ms X and the residue in the estate to his wife. In 2010 Mr P added to the legacy for Ms X a bequest of “my motor vehicle and the sum of $50,000 to my friend Ms X …”. Mr P predeceased his wife in February 2011. Mr P's son PP was appointed executor of the estate and queried with Mr Grave the registration of the title in his father's sole name.

9 After some consideration and after consultation with one of his senior partners, Mr Grave reached the view the registration of the title had been an error and he determined that he should regard the late Mr P as having held the title as trustee for both he and his wife. Mr Grave determined that he ought to correct the title but before this process was completed Mrs P also died.

10 Again PP was executor of his late mother's will but also the sole residuary beneficiary.

11 It is apparent that by this point there were a number of conflicts of interest. These are most clearly set out in the evidence of Mr Darlow, who provided expert evidence on behalf of the practitioner:

“[5] In my view, Mr Grave should have realised, certainly by the time (Mrs P) had died, that there was likely to be a contest between (PP) on the one hand and (Mr P's) legatees on the other. This presented a conflict for Mr Grave. While it was arguable that the property was beneficially owned jointly by (Mr and Mrs P), this was not certain.

[6] Mr Grave should have advised (PP) that he could not act for him as either executor of (Mr P's) estate and subsequently (Mrs P's) estate or beneficiary under either estate. In other words, at the point Mr Grave identified that the A Street property was registered in the sole name of (Mr P), Mr Grave should have stepped back to let matters take their course rather than arranging for the transfer of the property to (PP).”

12 We also comment that Mr Grave ought to have advised PP that he himself had conflicts of interest between his role as beneficiary and executor.

13 Notwithstanding the situation, Mr Grave proceeded to prepare the Deed of Correction referred to in the particulars attached. 1 Furthermore, Mr Grave did not advise Ms X that she was a legatee in Mr P's estate. Indeed, even when Ms X telephoned Mr Grave in response to a newspaper advertisement about the estate, he did not mention this fact to her. He said he had no instructions to do so.

14 The transmission of the title into PPs name was registered in February 2013 and in April 2013 Mr Grave wrote to Ms X about the provisions made for her in Mr P's will and codicil. Ms X was advised that the bequest of the vehicle had failed because it passed to Mrs P by survivorship and that the $50,000 bequest had abated to $9,410.36 because the A Street property had passed by survivorship to Mrs P, and the remaining assets to the estate were insufficient to pay all of the legacies. The figure was later increased after Mr Grave was advised of a further asset of the estate, but was still substantially below the bequest in Mr P's will.

15 Instead of recommending to Ms X that she obtain independent legal advice in relation to the matter, the letter simply requested her to sign a statement at the base of a copy letter, to be returned to Mr Grave, which acknowledged the payment received would be “in full satisfaction of any claim which I may or maynot have in the estate either now or at any time in the future”.

16 Ms X subsequently entered into a private settlement with the estate.

17 In accepting the amended particulars of fact 2 Mr Grave accepted that he contravened the following Rules of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (“the Rules”):

Rule 11.1 By engaging in conduct that was likely to mislead beneficiary Ms X as to the potential value of the estate;

Rule 5.11 By acting for PP as executor of both estates where by reason of a claimed mistake as to title there was potential for a claim by either estate against Mr Grave;

Rule 6.1 By acting for PP in the administration of both estates where there was a conflict between PPs interests as executor and as beneficiary of

Mrs P's estate such as to pose more than a negligible risk of Mr Grave being unable to discharge his obligations to PP.

Issues

18 The issues for the Tribunal to determine, to assess whether culpability ought to be at the misconduct or negligence level, are as follows:

• 1. Was Mr Grave's breach of the Rules, as acknowledged, “wilful or reckless” such as to constitute misconduct?

• 2. If not, did his actions reflect negligence such as to bring the profession into disrepute?

• 3. Was a penalty of less than suspension sufficient to mark the seriousness of conduct at this level?

• 4. Should name suppression be granted on a final basis?

Issue 1-Level of culpability

19 This is a case with a somewhat complex background and where there was considerable exchange of information between counsel and constructive discussions between counsel in advance of the hearing. As a result of the information provided to the Standards Committee, both through the affidavits filed by Mr Grave and preliminary negotiations, Mr Shaw, for the Standards Committee, was able to clearly state to the Tribunal that there was no question of dishonest intent to be advanced. Mr Shaw did not dispute that, apart from these transactions, the practitioner was a reputable and competent lawyer who acted with integrity.

20 However, Mr Shaw submitted that the extent of the error was not just a simple error of judgment. Rather, this was a series of errors which compounded the problem so that it was objectively negligent to such an extent as to bring the profession into disrepute pursuant to s 241(c). Mr Shaw's submission was that Mr Grave became fixated on the strict legal position in relation to the title and its transmission and thus did not stand back and assess the conflict difficulties.

21 Mr Gallaway submitted on behalf of Mr Grave that it is correct that his client did not recognise a material risk of the conflict of interest and failed to identify the different levels of conflict and the significant number of conflicts which existed.

22 Mr Gallaway referred to Mr Grave's reputation as “… an honest, well intentioned, careful and considered practitioner”. This submission was supported by affidavits from practitioners and other professionals in his region, none of whose evidence was challenged by the Standards Committee.

23 We also had the benefit of...