Waikato Bay of Plenty 356 Standards Committee v Charles Fletcher

• Jurisdiction: New Zealand
• Judge: Judge D F Clarkson,Mr W Chapman,Ms S Hughes,Ms C Rowe,Mr W Smith
• Judgment Date: 04 April 2013
• Neutral Citation: [2013] NZLCDT 16
• Docket Number: LCDT 020/12
• Court: Lawyers and Conveyancers’ Disciplinary Tribunal
• Date: 04 April 2013

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

BETWEEN

Waikato Bay of Plenty 356 Standards Committee

Applicant

and

Charles Fletcher, of Hamilton, Barrister and Solicitor

Respondent

[2013] NZLCDT 16

CHAIR

Judge D F Clarkson,

Members of Tribunal

Mr W Chapman, Ms S Hughes QC, Ms C Rowe, Mr W Smith,

LCDT 020/12

NEW ZEALAND LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL

Penalty decision following a guilty plea by law practitioner to a charge of professional misconduct — transitional provisions of the Lawyers and Conveyancers Act 2006 applied — High Court found practitioner had facilitated a sole trustee of trust in misappropriating over $250,000 of trust property — upheld by Court of Appeal — practitioner had to meet liability ofapproximately $1.3 million as a result of his actions — at all times practitioner denied any intentionto behave, or assist a client to behave, in an intentionally dishonest manner — whether practitioner's conduct, occurring over 10 years ago, was so serious as to require strike off because it rendered him unfit to practice, or whether some less restrictive intervention would properly reflect the seriousness of this matter.

APPEARANCES:

Mr B Brown QC and Mr M Treleaven for the Standards Committee

Mr G Illingworth QC Mr D Wood for the Practitioner

DECISION OF NEW ZEALAND LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL

Charge

1 The practitioner, Mr Fletcher, has pleaded guilty to one (amended) charge of professional misconduct as follows:

“The Waikato Bay of Plenty Section 356 Standards Committee of the New Zealand Law Society HEREBY CHARGES CHARLES FLETCHER of Hamilton, Barrister and Solicitor, with misconduct in his professional capacity in which the misconduct took place as specified in the judgment of the High Court in Eden Refuge Trust v Hohepa, 1 and the judgment of the Court of Appeal in that case.

Background

2 This is a matter which comes to be dealt with under the transitional provisions of the Lawyers and Conveyancers Act 2006 (“ LCA”) and involves events which occurred between November 2002 and March 2003.

3 Pursuant to s 358 of the LCA this Tribunal exercises the role previously exercised bythe New Zealand Law Practitioners Disciplinary Tribunal and has all of the duties and powers of that Tribunal under the LawPractitioners Act 1982.

4 The reason for the significant delay in this matter being brought before the Tribunalwas because these proceedings followed the conduct of litigation in the case referred to in the charge. The High Court decision in that matter was appealed to the Court of Appeal and that decision was not delivered until 30 March 2012. Followingthe release of that decision the charge was laid in this Tribunal in August 2012.

5 The background which led to the civil litigation is relatively complicated and we do not propose to repeat the history, which is set out in paragraphs [7] to [34] in the judgment of the Court of Appeal, reported as Fletcher v Refuge Trust. 2

6 At the beginning of the Court of Appeal judgment it is recorded that the High Court had found against the practitioner as follows:

• “…

• (b) Breach of fiduciary duty, knowing receipt and dishonest assistance against Charles Fletcher, a lawyer practising as Fletcher Law in Hamilton, who acted for Mr Hohepa and the PWFM Trust.”

Mr Hohepa and the PWFM Trust are former clients of the practitioner.

7 In summary it was found in the High Court, and upheld in the Court of Appeal, that MrFletcher had facilitated a sole trustee of the PWFM Trust, Mr Hohepa, in misappropriating over $250,000 of Trust property.

8 During the time that Mr Fletcher represented Mr Hohepa and the Trust, Mr Hohepa was resident in Spain and he did not subsequently return to New Zealand to face the consequences of the proceedings. Mr Hohepa and Mr Fletcher were found jointly and severally liable for a principal sum of $253,441.21 together with interest and scale costs. Taking account of his own legal costs in pursuing this matter to the Court of Appeal Mr Fletcher has in fact had to meet liability of approximately $1.3 million dollars as a result of his actions.

ISSUES

9 To a large extent the argument to the Court of Appeal, and repeated before this Tribunal, focused on the nature of the dishonesty involved on Mr Fletcher's part, specifically, whether this was ‘subjective’ or ‘objective’ dishonesty.

10 It was submitted by the Standards Committee of the Law Society that Mr Fletcher ought to be struck off even if the dishonesty in question could not be described as ‘wilful and calculated’. They submitted that:

“Striking off may still be appropriate especially where there has been a serious breach of a solicitor's fundamental duty to the solicitor's client.”

11 Counsel for the Standards Committee Mr Brown QC set out a number of areas where it was contended that Mr Fletcher's behaviour led to the conclusion that strike off was the only proper response.

12 It was accepted that Mr Fletcher held himself out as an expert in the law of Trusts. Thus this situation where his behaviour facilitated the misappropriation of Trust funds by a sole trustee, by a series oftransactions in which the practitioner acted, is inexplicable. Indeed Mr Fletcher himself contends that he has no idea how he managed to be so “wrong headed”. His counsel submitted that his behaviour represented an “enigma”, whereby in 37 years of otherwise proper practice these events occurred.

13 At all times Mr Fletcher has denied any intention to behave, or assist a client to behave, in an intentionally dishonest manner. He submits that this is a crucial distinction when considering whether the public needs to be protected from him and whether the ultimate sanction of striking off the roll of Barristers and Solicitors needs to be imposed.

14 For his part Mr Fletcher submitted that there had been “ a temporary lack of focus on his part”. In a lengthy affidavit filed only a day prior to the hearing Mr Fletcher had this to say: 3

“… Over a period of no more than a few weeks from December 2002 to February 2003, I lost my objectivity in the way I handled Mr Hohepa and his express instructions.”

15 He goes on to accept that the steps he took during that period “… have rightly been the subject of criticism.” He explains that he has had difficulty in accepting that he was taken in by Mr Hohepa and ought not to have trusted him, and expresses deep remorse. He says: 4

“It should not have happened and could not possibly happen again.

And 5:

“I genuinely acknowledge my mistake.”

16 Against these statements the Standards Committee asks to take account of the strongcomments made about Mr Fletcher's behaviour and knowledge in the decisions of both the High Court and the Court of Appeal.

17 At this point, we record that counsel agree that the Tribunal is entitled to rely on the findings of these two Courts because this is a decision quite different from that discussed in the decision of Dorbu 6 in which His Honour Brewer J found that s 50 of the Evidence Act prevented the Tribunal from accepting as evidence of facts, the civil judgment of another Court. In that matter, His Honour pointed out that the Tribunal has an independent obligation to determine the facts. This case is distinguishable from that situation because the findings of fact have been pleaded as part of the charge and accepted as such by Mr Fletcher's plea of guilty to this Tribunal. It was accepted by Mr Fletcher's counsel that in this situation Mr Fletcher was bound by the findings of the two respective Courts. Indeed, the reframed charge as it stands was initially suggested by senior counsel representing Mr Fletcher.

18 The Tribunal has difficulty with the “brief lack of focus” argument for a number of reasons. Firstly it is not consistent with a number of other parts of Mr Fletcher's evidence where he attempts to make sense of his actions in acting for Mr Hohepa. He has made much of being taken in by Mr Hohepa, and of taking a number of years to come to that realisation. For example he gave evidence to the Tribunal, that he visited Mr Hohepa in Spain in 2005, which was some time after the proceedings against him and Mr Hohepa were issued. Mr Fletcher and his family spent some time with Mr Hohepa and his family and Mr Fletcher said that part of his purpose in visiting him was “to assess his bona fides”.

19 Mr Fletcher also put arguments both to the Law Society in 2006 and to the High Court in 2008 in relation to a deed of acknowledgement of debt he had drafted between Mr Hohepa and the Trust, relating to how he viewed Mr Hohepa. These arguments were described by Her Honour Duffy J as “untenable”.

20 Mr Fletcher also advanced his arguments in both Courts on the basis that even if hehad knowledge that Mr Hohepa was misappropriating the funds such knowledge did not give rise to liability on his part. Thisargument, and its timing, would not seem to accord with a “brief lack of focus”.

Findings of High Court as to Mr Fletcher's knowledge

21 In commenting on the final element of the issue of liability for Mr Fletcher, Her Honour Duffy J began by referring to the decision of Royal Brunei 7 which has been followed by the Supreme Court in this country. In discussing that “dishonesty” meant “ simply not acting as an honest person would in the circumstances”, as an objective standard the Court in Royal Brunei went on to say this:

“At first sight this may seem surprising. Honesty has a connotation of subjectivity, as distinct from the objectivity of negligence. Honesty, indeed, does have a strong subjective element in that it is a description of a type of conduct assessed in the light of what a person actually knew at the time, as distinct from what a reasonable person would have known or appreciated Further, honesty and its counterpart dishonesty are mostly concerned with...