Donna Marie Tai Tokerau Durie Hallof Wellington, Solicitor
 NZLCDT 7
NEW ZEALAND LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL
Judge D F Clarkson
Members of Tribunal
Ms S Gill
Mr M Gough
Ms S Hughes QC
Mr S Walker
In the Matter of the Lawyers and Conveyancers Act 2006 and the Law Practitioners Act 1982
Ms G Turkington for the Standards Committee
Ms Cull QC for the Practitioner
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
The issue was whether there was prima facie evidence to support the existence of a conflict.
Held: There was evidence that could potentially support a finding that H had given advice to Tauhara 15 on the advisability on entering into the transaction, the role of the conflicted trustees and her own role. It was open to NZLS to argue the involvement of the other solicitors for Tauhara 15 had not excluded H from acting for Tauhara 15 at the relevant times. This appeared to be the case, given that Tauhara 15 only executed the Agreement for Sale and Purchase after H became its solicitor.
The expectation on the practitioner regarding the need to obtain an informed consent in the face of an ostensible conflict required a high level of action on the part of the practitioner. The Tribunal had not considered whether the engagement of the other solicitors met that requirement as all it needed to do when facing an application of strike out was to satisfy itself that there was prima facie evidence of a conflict.
The prima facie evidence of a conflict was:
• H's part in various talks with Tauhara 15 when she had arguably given advice as to the advisability of entering the transaction;
• H had written to Tauhara 15 disagreeing with the independent advice it had received;
• H was the solicitor on record at the time of the sale and there was an absence of any other solicitor advising Tauhara 15 on the agreement.
The Tribunal's role at this stage was not to reach a final decision on a finding of guilt. All the Tribunal was required to do at this stage was decide whether there was evidence which prima facie could support the charge brought by NZLS. Application to have the charge dismissed on the basis there was no case to answer failed.
The practitioner submits that there is no case to answer to which end she invites the Tribunal to dismiss the charge against her.
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).
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 and endorsed by the Supreme Court in . 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 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.”
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.
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”
We were referred to the dicta of the Court of Appeal in 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.”
The Society further referred us to the dicta of , Hammond J. it was held:
“It follows in our view, from 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…”
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.
By way of alternative argument she says in the event that a conflict existed, that that conflict was met and is not actionable because:
- 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.
For completeness the Society's response is as follows:
- 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...
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