Davidson v Auckland Standards Committee No 3

JurisdictionNew Zealand
JudgeBrown J
Judgment Date06 September 2013
Neutral Citation[2013] NZHC 2315
Docket NumberCIV-2012-404-7734
CourtHigh Court
Date06 September 2013

In the Matter of the Lawyers and Conveyancers Act 2006

In the Matter of an appeal pursuant to s 253 of the Act

Between
Bruce Nelson Davidson
Appellant
and
Auckland Standards Committee No 3
Respondent

In the Matter of the Lawyers and Conveyancers Act 2006

In the Matter of an appeal pursuant to s 253 of the Act

Between
Auckland Standards Committee No 3
Appellant
and
Bruce Nelson Davidson
Respondent

[2013] NZHC 2315

CIV-2012-404-7734

CIV-2013-404-2215

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

Appeal by appellant (a lawyer) from a decision of the New Zealand Lawyers and Conveyancers Disciplinary Tribunal that his convictions under s58 Securities Act 1978 (“SA”) (misstatement in advertisement or registered prospectus) had brought the legal profession into disrepute under s241(d) LCA (charges before Disciplinary Tribunal — convicted of an offence punishable by imprisonment and that tends to bring profession into disrepute) — cross-appeal by respondent standards committee from the Tribunal's decision not to suspend the lawyer from practice and the finding that his convictions did not reflect on his fitness to practice as a lawyer — appellant was a former director of failed finance company Bridgecorp Ltd — appellant was convicted of ten offences under s58 SA and sentenced to nine months home detention — appellant's practising certificate had lapsed in June 2012 — whether the Tribunal had relied on matters outside of the convictions and their circumstances — whether the Tribunal had failed to apply a standard of conduct for activities outside the appellant's practice — whether there was jurisdiction to make a suspension order against a former practitioner because the charges arose from convictions entered before the amendment to s242(1)(e) LCA allowing for suspension as a penalty for former practitioners.

Counsel:

C R Carruthers QC and D G Hurd for Mr Davidson

P Davey and M Treleavan for the Auckland Standards Committee No 3

C R Carruthers QC, Auckland

P Davey, Auckland

JUDGMENT OF Brown J

Table of Contents

Introduction

[1]

The approach to the appeals

[6]

The factual background

[10]

The Tribunal's decision on the charges

[27]

Appeal against the finding that the convictions tend to bring the profession into disrepute

[34]

The Tribunal's alleged reliance on matters outside of the convictions and their circumstances

[39]

The failure to formulate or apply a standard of conduct for activities outside the practitioner's practice, breach of which would tend to bring the profession into disrepute

[45]

The categorisation of Mr Davidson's conduct as gross negligence

[54]

The insignificance attributed to the lack of any complaint from the public arising from the convictions entered

[61]

The majority's final reasoning

[65]

This Court's assessment

[72]

Cross-appeal against the dismissal of the charge that the convictions did not reflect on Mr Davidson's fitness to practise

[82]

Alleged failure to consider the issue of trustworthiness

[84]

Tribunal was wrong to rely on Ziems

[88]

Alleged error in viewing conduct as a director separately from fitness to practise as a lawyer

[91]

The Tribunal erred in relying on references from people not called as witnesses

[96]

The Tribunal erred in concluding that the ASC3 accepted the public did not require direct protection from Mr Davidson

[100]

This Court's assessment

[102]

Appeal against penalty

[103]

The Tribunal's penalty decision

[105]

The issue of jurisdiction

[108]

Analysis

[115]

This Court's assessment of an appropriate penalty

[135]

Disposition

[146]

Introduction
1

On 13 July 2012 the Auckland Standards Committee No 3 (“ASC3”) served a charge on Mr Davidson which materially read as follows:

“Auckland Standards Committee 3 of the New Zealand Law Society charges that Bruce Nelson Davidson has been convicted of an offence punishable by imprisonment and the conviction reflects on his fitness to practise or tends to bring his profession into disrepute.

Particulars

On or about 2 September 2011 Mr Davidson was convicted of six offences under s 58(3) of the Securities Act 1978 that between 21 December 2006 and 6 July 2007 he signed or had signed on his behalf registered prospectuses for Bridgecorp Limited and Bridgecorp Investments Limited that were distributed and included untrue statements as detailed in the indictment and summary of facts in respect of those offences.

On or about 2 September 2011 Mr Davidson was convicted of four offences under s 58(3) of the Securities Act 1978 that between 21 December 2006 and 6 July 2007 he was a director of Bridgecorp Limited and Bridgecorp Investments Limited that distributed advertisements which included untrue statements as detailed on the indictment and summary of facts in respect of those offences.

2

In a decision dated 28 November 2012 1 the New Zealand Lawyers and Conveyancers Disciplinary Tribunal (“the Tribunal”) found the charge proved on the second limb that the convictions tended to bring the profession into disrepute but dismissed the charge on the first limb finding that the convictions did not reflect on Mr Davidson's fitness to practise.

3

Subsequently at a penalty hearing on 4 April 2013 2 the Tribunal imposed a censure and made costs orders against the practitioner as follows:

  • (a) 75 percent of the Standards Committee costs were awarded against the practitioner pursuant to s 249;

  • (b) Costs of the Tribunal in the sum of $11,800 were ordered to be paid by the New Zealand Law Society pursuant to s 257; and

  • (c) The practitioner was to reimburse the New Zealand Law Society in respect of 75 per cent of the Tribunal's costs pursuant to s 249.

4

On 21 December 2012 Mr Davidson filed a notice of appeal against the Tribunal's decision finding him guilty on the second limb. On 5 February 2013 the ASC3 filed a notice of cross-appeal against that part of the Tribunal's decision that the convictions did not reflect on Mr Davidson's fitness to practise.

5

Then on 1 May 2013 the ASC3 filed an appeal against the Tribunal's decision on penalty. The ASC3 does not seek to appeal against the costs orders but seeks an order for suspension and/or imposing a fine in addition to the censure by the Tribunal. The notice of appeal was framed on the basis that the penalty decision was a discretionary decision: the grounds of appeal were that the penalty was manifestly inadequate or that the Tribunal had failed to take, or to adequately take, into account certain matters.

The approach to the appeals
6

The right of appeal to this Court conferred by s 253(1) of the Act must be by way of rehearing: s 253(3)(a). Consequently, subject to the issue as to the approach to be taken to penalty decisions discussed below, the approach to consideration of a rehearing appeal in Austin, Nichols & Co Inc v Stichting Lodestar applies. 3 On hearing the appeals this Court may confirm, reverse or modify the Tribunal's decision appealed against: s 253(4).

7

I explored with counsel the issue as to the appropriate approach to be taken by the Court in relation to penalty decisions. Ultimately counsel adopted the common position that the approach taken by Wylie J in Auckland Standards Committee 1 v Fendall 4 was appropriate, namely that an appeal against penalty must be determined by reference to the rather stricter criteria discussed in Kacem v Bashir 5 and by the Court of Appeal in May v May. 6 Shortly after the hearing the judgment of the Full Court in Sisson v The Standards Committee (2) of the Canterbury-Westland Branch of the New Zealand Law Society 7

came to my attention. The Full Court there considered the recent divergence of view on this issue:

[14] Recent cases show a divergence of view concerning the correct appellate approach in disciplinary cases. Under both the Law Practitioners Act 1982 and the Lawyers and Conveyancers Act 2006, appeals against any order or decision of a disciplinary tribunal are by way of rehearing; s 118(2) and s 253(3)(a), respectively. In Bhanabhai v Auckland District Law Society, a full Court (Priestley, Heath and Winkelmann JJ) favoured a divided approach whereby professional misconduct findings were to be considered afresh, but penalty decisions by reference to the principles that govern the exercise of a discretion. In Parlane v New Zealand Law Society (Waikato Bay of Plenty Standards Committee (2)), Cooper J concluded that penalty decisions involved an evaluative exercise, were not discretionary in nature, and that the appellate Court should, therefore, form its own view. But, in Auckland Standards Committee (1) v Fendall, Wylie J preferred the approach adopted in Bhanabhai. Most recently, in Hart v Auckland Standards Committee (1) of New Zealand Law Society, a full Court (Winkelmann, Lang JJ) concluded that, credibility determinations and matters involving technical expertise aside, an appellate Court must come to its own view on the merits of misconduct and penalty decisions without deference to the views of the Tribunal.

[15] This division of opinion flows from the difficulty in applying Austin, Nichols & Co Inc v Stichting Lodestar in the present context. We think it unnecessary to record the reasons advanced in support of the various viewpoints. We prefer the view that both misconduct findings, and the resulting penalty decision, require an assessment of fact and degree and entail a value judgment; such that it is incumbent upon the appellate Court to reach its own view on both aspects. We found the decision of the Supreme Court in Kacem v Bashir helpful in arriving at this conclusion.

(citations omitted)

8

Subsequently memoranda dated 21...

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