Standards Committee 3 of the Canterbury-Westland Branch of the New Zealand Law Society v Woulfe

 
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[2017] NZLCDT 5

NEW ZEALAND LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL

CHAIR

Judge D F Clarkson

MEMBERS OF TRIBUNAL

Ms A Callinan

Mr W Chapman

Ms CRowe

Mr PShaw

LCDT 015/16

In The Matter of the Lawyers and Conveyancers Act 2006

Between
Standards Committee 3 of the Canterburyiwestland Branch of the New Zealand Law Society
Applicant
and
Stephen Joseph Woulfe
Respondent
Counsel:

Mr D Webb for the Standards Committee

Ms P Fee and Mr J Cochrane for the Practitioner

Penalty decision following admission by the practitioner, Woulfe (W) of a charge of negligence or incompetence in his professional capacity to such a degree as to reflect on his fitness to practice or as to bring his profession into disrepute — the practitioner gave certifications as to the discharge mortgages and registration of new mortgages over properties in circumstances where he did not witness the signing the Authority and Instruction form and had not sighted the original copy(s) of identification — one of the signatures was forged — the client and its shareholders suffered significant loss as a result of a fraudulent financing transaction — the Standards Committee supported the imposition of a censure and costs — whether suspension should be imposed rather than a censure and costs.

The issue was whether suspension should be imposed rather than a censure and costs.

Held: The starting point for penalty was the seriousness of the conduct. Certified copies of documents and particularly of A & I forms in conveyancing transactions were “central to the proper working of finance and conveyancing transactions, and it was critical that participants in that industry could rely on the accuracy of statements and certifications made by lawyers”.

This negligence, while not at the most serious level, was still of serious concern having regard to the crucial role that such certifications play in a conveyancing practice. It was crucial to the profession's reputation and functioning that lending institutions had full confidence, not only in a lawyer's honesty, but of his other standards of diligence and care.

The catastrophic losses of the complainants were clearly an aggravating feature. While the causative link to this practitioner was not sufficiently clear to make any award as to compensation, his part in the mayhem visited upon the complainants by a fraudster could not be totally minimised.

The arguable conflict of W acting for all of the companies in the transaction, was not the subject of a charge, but it was clearly an aggravating feature.

In terms of mitigating features, W had been in practice since 2003 and had an unblemished disciplinary record. He had to be given significant credit for this. In addition, W had handed in his practising certificate. He had been cooperative with the disciplinary process and agreed to meet the Standards Committee costs to the level of $10,000 together with the Tribunal costs.

The protection of the public was not a significant factor in this case because W was no longer practising although, as stated in Daniels v Complaints Committee of Wellington District Law Society, it would not always follow that a practitioner by disposing of his practice and undertaking not to practise could avoid or pre-empt an order for suspension.

Both general and specific deterrence were required in this case to be given significant weight. The protective purpose of suspension, although noting the practitioner's assurance about his future intentions, had to also encompass the upholding of professional standards generally. The absolutely central nature of this certification process to the land registration system and the role of lawyers meant that a casual approach to it, particularly where such disastrous consequences ensue, had to be marked by a strong response by the Tribunal. Censure was not sufficiently proportionate.

Although there was authority to support the imposition of a monetary penalty or costs order, even on a person who was bankrupt, a fine in these particular circumstances (W being impecunious) would be unduly punitive. Punishment was not the focus of disciplinary proceedings.

The appropriate penalty was a short period of suspension, particularly as a deterrent measure, both in a general and specific sense. Weighing all of the present circumstances including the consequences for the complainants and the degree of carelessness involved in this case a period of suspension of two months was appropriate.

It was important to impose a censure upon W

This was not a proper case for compensation, which in any event would be limited to $25,000. As indicated in similar decisions, where there was some complexity over the nexus between the practitioner's failures and the losses sustained to the complainants, such complexities were better resolved in the civil jurisdiction.

Orders for censure and suspension for a period of two months. W was to contribute to the Standards Committee costs the sum of$10,000. W was to reimburse the New Zealand Law Society $5,000 for costs.

PENALTY DECISION OF THE LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL
Introduction
1

The practitioner, Mr Woulfe, has admitted the charge of negligence or incompetence in his professional capacity to such a degree as to reflect on his fitness to practice or as to bring his profession into disrepute.

2

This charge was admitted after discussions between the parties which resulted in the two alternatives originally pleaded, namely misconduct and unsatisfactory conduct, being withdrawn on the practitioner's indication of a plea. The Tribunal, having considered all the material before it, approved that amendment on the basis that we considered that negligence or incompetence was the appropriate level of liability to reflect this practitioner's conduct. On that basis the hearing proceeded as a penalty hearing only.

3

Counsel prepared an agreed statement of facts, however such did not fully accord with its description in that it contains phrases such as “the complainant alleges” and “the former practitioner says …”.

4

Thus, Mr Woulfe, who appeared by Skype connection because he now lives in Rarotonga, was sworn and answered questions from both counsel and members of the Tribunal. Submissions were then heard from counsel for the Standards Committee, Mr Webb, and Ms Fee and Mr Cochrane respectively for the practitioner.

Background and Context
5

We adopt the brief summary contained in submissions for the Standards Committee as follows:

  • “3. The conduct related to certifications by Mr Woulfe of documents relating to the discharge of certain mortgages and registration of new mortgages over properties owned by Ballarat Limited ( Ballarat) in 2009. The complainants, M & R, were shareholders of Ballarat with a fraudster, Lindsay Smith. They had no knowledge of the secured finance lending which was arranged by Mr Smith and only became aware of this at a later date. The signature of M (as director/shareholder of Ballarat) on the Authority and Instruction form ( A & I) prepared and executed by Mr Woulfe is not that of M and is a forgery. Even so, Mr Woulfe provided the Signatory Identification by executing a certificate stating that he had:

    • (a) witnessed the signatory(s) sign the form;

    • (b) had sighted the original copy(s) of identification; (c) had attached a copy of the ID(s) used; and

  • (d) the photos, names and signatures all match the identification provided.

  • 4. Those documents were used in a financing transaction under which Mr Lindsay Smith (another director/shareholder of Ballarat) defrauded the company of funds for the benefit of a trust related to himself. The overall effect of the fraud was to deprive the other shareholders (the complainant and his wife — M — R) of the value of the shares in the company and cause them considerable loss. The company (which was a property development company) ultimately failed.”

6

The further context which is relevant is that Mr Woulfe had acted for Ballarat from its incorporation in 2005, that he had known Mr Smith, who was an accountant, since 2003. Mr Smith had been the primary point of contact for Ballarat throughout all of the transactions which Mr Woulfe had handled prior to the one which falls to be considered. Mr Woulfe trusted Mr Smith. Furthermore, the 2009 lending facility did not require guarantees from the complainants, as had occurred on at least one previous occasion.

7...

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