Senior lawyer was unfit when he made family trust unauthorised transactions, tribunal finds
A lawyer’s explanations for his unauthorised transfers from a family trust have been described as “self-justification – almost to the point of self-delusion”.
The Lawyers and Conveyancers Disciplinary Tribunal has found that when the senior lawyer transferred more than half a million dollars from the family trust, and his late parents’ bank accounts, he fell “well short of the standards of integrity required of a lawyer, even in conducting personal, rather than professional affairs”.
The tribunal has just issued its decision, following a liability hearing in April, where the lawyer gave evidence about his state of mind and circumstances at the time of the transactions.
He denied the payments had been “self-serving” and spoke of his stress, mental health, and emotional turmoil as he tried to manage his parents’ care in the context of a breakdown in a relationship with his sister.
He told the tribunal he was a “man on a mission” operating in a day-to-day “pragmatic way”, and only took from what he knew he would ultimately be entitled to.
The tribunal appears to have rejected his explanations, however.
“We do not consider that the stresses upon him at the time – even if accepted as described by [the lawyer], provide justification or excuse for his repeated and long-lasting failures.”
The tribunal said at the time of the conduct, the lawyer was “not a fit and proper person to be a lawyer”.
“He acknowledged, in a more lucid part of his evidence, that he was unfit to be a trustee. We think his unfitness went well beyond that.”
Lawyer ‘took no steps to verify spending for which he later claimed reimbursement’
The lawyer, who has interim name suppression, operates a law firm in the North Island, which takes on large-scale “criminal and civil litigation cases”.
At the time of the misconduct, he was involved in the care of his elderly parents and was a trustee for their family trust.
The Standards Committee brought a charge of misconduct in his personal capacity, unconnected with his provision of legal services, which meant the tribunal had to be satisfied that at the time of the conduct, his actions demonstrated he was not a fit and proper person to be a lawyer.
The tribunal found that the lawyer took $522,482, over eight transactions – excluding a sum of $72,773.20 which was repaid – over a period of 18 months.
During this time, he owed fiduciary duties to his mother, as her enduring power of attorney, and his sister as a beneficiary under the trust, and later as a co-executor.
The unauthorised funds were eventually recovered from the lawyer in a family settlement reached in 2023.
The tribunal said that although the lawyer had, at times during the proceedings, “strongly resisted the admission of certain evidence”, in the end, he had not challenged the accuracy of the payments paid to himself, or that he had made them without authority.
The tribunal noted the transactions occurred during “a period when he knew he was under scrutiny because of the legal proceedings in which he was a respondent. Without consultation or authority, he broke a large term deposit of the trust causing it significant loss”.
He claimed that the transactions were to reimburse him for expenses incurred in the care of his parents, and the upkeep of a sentimental family property, for which he was the sole shareholder.
However, the tribunal said he “took no steps to verify spending for which he later claimed reimbursement. So there is no means of knowing whether reimbursement was justified or proper”.
The tribunal noted that on the lawyer’s evidence, it seemed that from May 2017 to November 2018, combining the parents’ accounts and the family trust withdrawals claimed as reimbursements, he had spent “$269,714 on two elderly and seriously infirm parents who were largely housebound and one of whom died in May 2017″.
“Even accepting that some reimbursements might have been carried forward from earlier years, this seems an extraordinary amount, particularly in the absence of supporting documentation,” the decision said.
The lawyer claimed that he only took what he was already entitled to, thinking that everything would be squared up later.
However, the tribunal found that he’d presumably made that calculation when it was just him and his sister named as beneficiaries.
“Later, when the foster daughter of the family was ‘added in’ to the beneficiary category, those calculations would not have been correct,” the decision said.
“In any event, he cannot have been under any illusion that his sister would not have acceded to the payments that he made to himself.”
The tribunal said when his sister and others sought information, he “prevaricated, obfuscated and repeatedly accused his sister of vindictiveness”.
“He is still unable to produce any satisfactory written records, to justify the large sums he says he spent on his parents (despite at the time being in strained financial circumstances himself).”
Ultimately, the tribunal applied the “language used by the courts” for the ethical and moral standards required of anyone to be certified to the public as a lawyer with whom they can entrust their affairs – a person who could be described as “honest, trustworthy, and a person of integrity”.
They asked if the lawyer was a person who could be “trusted to the ends of the earth”, and was a “person of unquestionable integrity, probity and trustworthiness”.
“We consider that the answer to these questions must be a definite ‘No’”, the decision said.
The tribunal panel was also concerned about the lawyer’s “self-justification”, which they felt went “almost to the point of self-delusion”.
“Even at the hearing, having had this complaint looming over him for almost seven years, if taken at his word, he displays almost zero insight into his wrongdoing. He certainly was totally without insight at the time of the misconduct.”
The tribunal’s decision said that it did the lawyer no credit that he “conducted these proceedings using obfuscation with pages of irrelevant and self-focused descriptions of his relationship with his parents and other descriptions of family events and relationships which in no way assisted the Tribunal in its inquiry into the transactions at issue”.
He had done this “while purporting to assist the process to the best of his ability”.
They also found that his characterisation of the complaint against him, and subsequent charge against him, as being based on vindictiveness, had not assisted him.
The tribunal said this would be for “consideration at the penalty phase”.
The lawyer will next appear before the tribunal for a half-day penalty hearing, but this has yet to be scheduled.
Hannah Bartlett is a Tauranga-based Open Justice reporter at NZME. She previously covered court and local government for the Nelson Mail, and before that was a radio reporter at Newstalk ZB.