Donna Marie Tai Tokerau Durie Hallof Wellington, Solicitor

• Jurisdiction: New Zealand
• Judge: D F Clarkson,Ms S Gill,Mr M Gough,Ms S Hughes,Mr S Walker
• Judgment Date: 03 April 2012
• Neutral Citation: [2012] NZLCDT 7
• Docket Number: LCDT 015/11
• Court: Lawyers and Conveyancers’ Disciplinary Tribunal
• Date: 03 April 2012

In the Matter of the Lawyers and Conveyancers Act 2006 and the Law Practitioners Act 1982

and

In the Matter of Donna Marie Tai Tokerau Durie Hall

of Wellington, Solicitor

[2012] NZLCDT 7

CHAIR

Judge D F Clarkson

Members of Tribunal

Ms S Gill

Mr M Gough

Ms S Hughes QC

Mr S Walker

LCDT 015/11

NEW ZEALAND LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL

Application to dismiss charges of breaching s241(c) Lawyers and Conveyancers Act 2006 (negligence or incompetence in professional capacity), r1.04 (must not act for more than one party) and r1.07 Rules of Professional Conduct for Barristers and Solicitors 2006 (must advise parties of conflict, advise to take independent advice and decline to act further if it would disadvantage one party) — practitioner acted for vendor and purchaser without prior consent — purchaser trust received independent advice but practitioner invited trustees to reject it and gave advice on merits of the transaction — some of trustees were in a position of conflict — whether experience of trustees negated duty to manage conflict

APPEARANCES

Ms G Turkington for the Standards Committee

Ms Cull QC for the Practitioner

DECISION OF THE LAWYERS AND CONVEAYNCERS DISCPLINARY TRIBUNAL

1 The practitioner submits that there is no case to answer to which end she invites the Tribunal to dismiss the charge against her.

2 The practitioner faces a single charge that she:

“…with negligence or incompetence in her professional capacity, and that the negligence or incompetence has been of such a degree as to reflect on her fitness to practice or as to bring her profession into disrepute in that:

• (1) On or about 1 November 2006 until on or about 16 July 2007 she acted for a vendor, Hikuwai Hapu Lands Trust (“Hikuwai”) on the one hand, and a purchaser Tauhara Middle 15 Trust (“Tauhara 15”) and lender Tauhara Middle 4A 2A Trust, on the other, without the prior informed consent of each party and/or;

• (2) She failed to advise each party of the areas of conflict or potential conflict and/or;

• (3) She failed to advise the purchaser and lender that each should take independent advice and arrange such advice and/or;

• (4) She failed to decline to act further for the purchaser and lender where acting would or would be likely to disadvantage one or both of them.”

(Section 241(c) of the Lawyers and Conveyancers Act 2006 and previous R 1.04 and R 1.07 of the Rules of Professional Conduct for Barristers and Solicitors 2006).

Applicable law

3 This is of course not a criminal case, the Tribunal considers it is an application to strike out a case on the basis that it discloses no reasonably arguable cause of action. The principles to be applied in such a case are summarised by the Court of Appeal in Attorney v Prince [1998] 1 NZLR 262 and endorsed by the Supreme Court in Couch v A-G [2008] NZSC. Significantly an application to strike on this basis must proceed only in those cases where the cause of action is clearly untenable and indeed in Couch Elias CJ and Anderson J held at para 33 that:

“It is inappropriate to strike out a claim summarily unless the Court can be certain that it cannot succeed.”

4 The jurisdiction is to be exercised sparingly, and only in clear cases. This requirement reflects the Courts reluctance to terminate a claim short of trial.

What was the practitioners duty?

5 Previous Rule 1.0 provides:

“(1) In the event of a conflict or likely conflict of interest among clients, a practitioner shall forthwith take the following steps:

• (i) Advise all clients involved of the areas of conflict or potential conflict;

• (ii) Advise the clients involved that they should take independent advice, and arrange such advice if required;

• (iii) Decline to act further for any party in the matter where so acting would be likely to disadvantage any of the clients involved”

6 We were referred to the dicta of the Court of Appeal in Farrington v Rowe McBride and Partners [1985] 1 NZLR 83 (CA) at 90 where it was held:

“A solicitors loyalty to his client must be undivided. He cannot properly discharge his duties to one whose interests are in opposition to those of another client. If there is a conflict in his responsibilities to one or both he must ensure that he fully discloses the material facts to both clients and obtains their informed consent to his so acting.

“No agent who is accepted in employment from one principal can in law accept an engagement inconsistent with his duty to the first principal from a second principal, unless the [agent] makes the fullest disclosure to each principal of his interest and obtains the consent of each principal to the double employment…”

And there will be some circumstances in which it is impossible, notwithstanding such disclosure of any solicitor to act fairly and adequately for both.”

7 The Society further referred us to the dicta of Taylor v Schofield Peterson [1999] 3 NZLR 439, Hammond J. it was held:

“It follows in our view, from Clarke Boyce v Mouat that a solicitor must always:

• (1) Recognise a conflict of interest, or a real possibility of one;

• (2) Explain to the client what a conflict is;

• (3) Further explain to the client the ramifications of the conflict (for example, it may be that she could not give advice which ordinarily would have given);

• (4) Ensure that she has a proper appreciation of the conflict, and its implications; and obtain the informed consent of that client…”

Why does the practitioner seek the strike out of the charge?

8 The practitioner says on the one hand, that no conflict existed as she did not act for Tauhara 15 at the material times when it entered into the agreement to purchase the Landcorp property Tauhara North. She has never disputed that she was the solicitor for Hikuwai.

9 By way of alternative argument she says in the event that a conflict existed, that that conflict was met and is not actionable because:

• 9.1 Tauhara 15 received independent legal advice warning of the conflict and Tauhara 15 elected to reject that advice.

• 9.2 The trustees of Tauhara 15 were experienced trustees.

• 9.3 There was no loss occasioned by the transaction.

• 9.4 There is such a commonality of interest as to negate any allegation of conflict.

10 For completeness the Society's response is as follows:

• 10.1 A conflict did exist.

• 10.2 Such conflict was not cured by independent advice, as Ms Hall advised Tauhara 15 that that advice was wrong, she further invited them to reject that advice and gave active advice as to the merits of the transaction purchasing Tauhara North.

• 10.3 That the level of experience of Trustees did not negate the obligation on the Practitioner to manage any conflict in accordance with the Rules.

• 10.4 There was limited evidence before this Tribunal as to the experience of the trustees. Three of the trustees Messrs Clarke, Wall and Tahau are common to Hikuwai, Tauhara 15 and Tauhara 4A 2A. They are and were conflicted in their duties. The only affidavit evidence before the Tribunal from the trustees was from Mr Clarke and given his self evident conflict, his evidence is regarded with some caution. The Tribunal observes that even the most experienced trustees and directors of companies and otherwise seek legal advice on legal matters. The experience of the recipients of that advice does not derogate from the responsibility of the practitioner giving advice.

• 10.5 The Society advanced its case on the basis, that Ms Hall is guilty as a fiduciary, and argues that as a fiduciary, no evidence of actual loss is required. In the alternative the Society relies upon the evidence of Messrs Rameka (see paras 40–54, 56) and Allan (see pages 504–510 Bundle) as to loss occasioned.

• 10.6 As to the claimed commonality of interest, the Society reminded the Tribunal that each is a separate legal entity in any event and dispute the allegation of commonality and ultimately says, that such could not cure a conflict in the circumstances of the case before the Tribunal.

11 The Tribunal has resolved that it will focus its consideration on whether or not, on the face of it, a conflict existed. The other matters raised by the practitioner amount to positive defences and are not appropriately part of a strike out application.

Evidence

12 The practitioner has declined to provide a substantive affidavit responding to the Society's case. She did however swear an affidavit on 5 September 2011 in support of her application for interim name suppression, paragraph 5 thereof contained a blanket denial of the charge.

13 The practitioner advised that she did not require an opportunity to cross examine any of the witnesses relied upon by the Society. Those witnesses included:

• 13.1 A substantial affidavit from Ms Ann Rice (Legal Standards Officer), Ms Rice's affidavit provided copies of correspondence and the enquiry file;

• 13.2 Mr Topia Rameka was appointed in November 2010 by the Maori Land Court to be a trustee in Tauhara 15, he is a beneficial owner in Tauhara 15 and Tauhara Middle 4A 2A; and

• 13.3 Mr Tony Jensen, a director in the Taupo law firm of Jensen Waymouth Lawyers Limited and had acted for Tauhara 15 and Tauhara 4A 2A for some years prior to him being sacked in favour of Ms Hall in March of 2007.

14 For Ms Hall seven affidavits were before the Tribunal, two of which were from Mr Peter Clarke, such were dated 16 December 2011 and 29 March 2012.

15 The Tribunal while assisted by the affidavits, believed that it should look for contemporaneous records of the conduct of the parties. In that regard it is greatly assisted by the bundles of documents prepared by the Society.

16 In this regard particular note is being paid to the minutes of Tauhara 15 dated 26 July 2006:

“…Wasn't this the reason D Hall was going to this meeting and the resolution passed by this Trust was ‘the Trust support the initiative explained...