Wellington Standards Committee v Guy William David Manktelow

 
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[2012] NZLCDT 30

NEW ZEALAND LAWYERS AND CONVEYANCERS DISCIPLINARY TRIBUNAL

CHAIR

Judge D F Clarkson

MEMBERS OF TRIBUNAL

Mr W Chapman

Mr J Clarke

Mr P Radich

Ms P Walker

LCDT 011/12

In the Matter of the Lawyers and Conveyancers Act 2006

BETWEEN
Wellington Standards Committee
Applicant
and
Guy William David Manktelow
of Wellington, Lawyer
APPEARANCES

Mr K Johnston for the Law Society

Mr I Millard QC for the Practitioner

Penalty decision following admission of a charge of professional misconduct as defined in s7 Lawyers and Conveyancers Act 2006 (misconduct defined in relation to lawyer and incorporated law firm) — practitioner admitted that he had allowed firm's trust account to be overdrawn on numerous occasions and gave false certificates to New Zealand Law Society — occurred over period of two years — no client had suffered loss — there was no suggestion the practitioner's professional work for clients was not up to standard — appropriate penalty — whether practitioner fit to practice or should be struck off Roll of Barristers and Solicitors of the High Court.

At issue was the appropriate penalty and in particular whether M remained fit and proper person to be a practitioner or should be struck off the Roll of Barristers and Solicitors of the High Court.

Held: Though no client had suffered any loss and it appeared unlikely that any loss would have been suffered, that did not diminish the seriousness of what happened. The expression “fitness to practice” raised two different concepts. One was fitness in the sense of being able to do the tasks associated with the practise of law. The other was fitness in the sense of being a person who could appropriately be allowed to undertake the tasks which he or she was capable of doing in an operational way. There were circumstances where a practitioner might well be able to undertake the tasks in an operational way but because of his or her conduct, was no longer a person who should be permitted to have the standing of a lawyer. It was the second category of fitness that was of concern in this case.

The harms involved in M's conduct were: breach of client's trust; damage to the reputation of the profession when a practitioner did this without authority, even if no loss to client; risk that the line once crossed became easier to cross and the “borrowings” would become larger until actual loss occurred; harm to the integrity of NZLS's Trust Account supervision system.

It was evident that M was very remorseful. The similar case Hawke's Bay Lawyers Standards Committee v Hancock where the practitioner was struck off was marginally distinguishable as employing a more deliberate and manipulative means of concealing the breach and the conduct continued in excess of four years. In this case it was not appropriate to strike M off the roll taking into account his standing as a practitioner; no loss to clients eventuated and no immediate likelihood of loss; M had given an undertaking he would not operate a Trust Account if allowed to continue practice in the future; and there was no appreciable risk in allowing M to practise in the future as M now understood the gravity of his conduct and the reputational damage done to the profession.

M suspended from practice for a period of 12 months; censured; ordered to reimburse costs of $19,600; and required to re-formalise his undertaking not to be involved in the establishment or operation of a Trust Account without the consent of the NZLS.

DECISION OF THE NEW ZEALAND

Introduction
1

The Practitioner, Guy William David Manktelow, has admitted one charge of professional misconduct, as described in the seven supporting particulars to the charge. The charge and particulars are annexed as Appendix 1.

2

The matter proceeded as a penalty hearing during which the practitioner answered questions from the Tribunal, but was in other respects a submissions only hearing. At the conclusion of the hearing the Tribunal suspended the practitioner for 12 months commencing 23 October, censured him and imposed costs orders. We reserved the reasons for our decision. This judgment contains those reasons.

Background
3

The Practitioner Guy William David Manktelow is aged 51 and married with one child aged 11 years. He was admitted as a Barrister and Solicitor of the High Court in New Zealand in 1984 and has practised as such ever since. From 1993 he has practised on his own account. Since 1997 he has been in partnership with his brother Toby George Amos Manktelow. The Practitioner's practice was in Lower Hutt. His brother's practice in the same partnership was in Palmerston North. The two practices were small practices with that of the Practitioner being made up of himself and one longstanding staff member who gave general support. Each of the practices in Lower Hutt and Palmerston North concentrated on civil litigation, often estate type litigation.

4

The practice maintained a Trust Account where at any one time the volume of client funds was relatively small. The Trust Account was operated using a manual handwritten system and this system was operated by the Practitioner. It was he who was responsible for the observance of correct practices in relation to the Trust Account and for the giving of accurate and truthful reports to the New Zealand Law Society (“the Society”) concerning the Trust Account.

The Charges
5

On 15 June 2012 the Practitioner was charged with misconduct pursuant to s 7(1)(a) and (b) of the Lawyers and Conveyances Act 2006 (“the Act”). The essence of the charges was that on numerous occasions the Practitioner allowed the firm's Trust Account to be overdrawn and that on many occasions he gave false certificates to the New Zealand Law Society as to the state of the firm's Trust Account. This occurred for a period of almost two years.

6

The Practitioner readily and promptly admitted all of the charges.

The Trust Account
7

A solicitor's Trust Account is an account in which clients funds are accumulated and held in trust. Careful records need to be kept showing the individual entitlements of clients to funds within the account. Subject to correct procedures being followed, a lawyer is entitled to take his or her fee remuneration or to recover disbursements from client monies held in trust. Those entitlements of the practitioner are assembled in a Costs Account within the Trust Account. Monies can then be taken by the practitioner from the Costs Account for the purpose of meeting the needs of the firm and the needs of the practitioner. In the case of the Practitioner the breach in relation to the overdrawing of the Trust Account was explained in a report by the Society's inspector as follows:

The overdrawn account occurred as fees in excess of the amount deducted from the clients had been transferred to the practice bank account. The effect of the overdrawn Costs Account is that there is insufficient funds in the Trust Account to meet client credit balances.

8

The Society has a system for the supervision of Trust Accounts which relies heavily on the honesty and accuracy of practitioners in relation to their Trust Accounts. Monthly certificates are required to be given to the Society advising whether or not the practitioner's Trust Account has been managed in accordance with the Rules. The Practitioner gave monthly certificates saying that all was in order when in fact it was not.

9

As a further part of the supervision system of the Society, inspectors appointed by the Society visit law firms from time to time and examine their Trust Account practices. On previous occasions from 2007 onwards inspections of the Practitioner's Trust Account had shown that the Trust Account was not being managed properly and these deficiencies were drawn to the attention of the Practitioner orally and in writing. Further visits by the inspector to the practice between 29 February and 6 March 2012 revealed that the practice of overdrawing the Trust Account was continuing and as a result of those visits the charge which is now before us was laid.

10

What has happened is that the Practitioner has taken for the purposes of his firm or himself more money from clients than the costs that he had rendered at that point allowed. The maximum amount overdrawn in the period to which the charge relates was $33,136.02.

11

In this “borrowing” from the Trust Account, clients do not suffer any actual loss unless the monies are not “repaid”. The risk to the clients is that if at any point in time all clients wanted the money out of the Trust Account to which they were entitled there would be a deficit to the extent of the overdrawing by the practitioner.

12

There can be no hiding from the fact that what happened here is that the Practitioner used clients' money which he was not entitled to use. No client has suffered any loss and it appears unlikely that any loss would have been suffered. That however does not diminish the seriousness of what happened. The seriousness of what happened is that the Practitioner crossed a line...

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