SORENSEN v NEW ZEALAND LAW SOCIETY (AUCKLAND STANDARDS COMMITTEE NUMBER 2) [2013] NZHC 1630

SORENSEN v NEW ZEALAND LAW SOCIETY (AUCKLAND STANDARDS COMMITTEE NUMBER 2) [2013] NZHC 1630 [1 July 2013]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2012-404-5634[2013] NZHC 1630UNDER the Lawyers and Conveyancers Act 2006IN THE MATTER OF an appeal pursuant to Part 20 Subpart 3High Court Rules 2008BETWEEN HANS TIMOTHY SORENSENAppellantAND NEW ZEALAND LAW SOCIETY(AUCKLAND STANDARDSCOMMITTEE NUMBER 2)RespondentHearing: 14 February 2013Appearances: R J Katz QC for AppellantM J McCartney SC for RespondentJudgment: 1 July 2013JUDGMENT OF PETERS JThis judgment was delivered by Justice Peters on 1 July 2013 at 4 pmpursuant to r 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate: .................................Solicitors: Edwards Clark Dickie, AucklandCounsel: R J Katz QC, AucklandM J McCartney SC, AucklandIntroduction[1] This is an appeal against orders made by the New Zealand Lawyers andConveyancers Disciplinary Tribunal ("Tribunal") on 24 August 2012 ("decision"), including an order striking off the Appellant's name from the roll of barristers and solicitors.[2] The Appellant's case on appeal is that an order striking off the Appellant'sname was disproportionate and that the Tribunal ought instead to have made an order suspending the Appellant from practise for a period.1[3] The proceedings before the Tribunal were conducted under the provisions ofthe Lawyers and Conveyancers Act 2006 ("Act"). In May 2011 the Tribunal found acharge of misconduct had been proved. The Appellant appealed that decision to the High Court but was unsuccessful.2[4] Following the appeal, the Tribunal heard submissions as to penalty. Inaddition to the order striking off the Appellant's name, the Tribunal ordered the Appellant:3(a) to pay $35,000 (in total) to several people who suffered loss by reasonof the Appellant's acts or omissions, such sum to be paid by 31 December 2012 or such later date as might be allowed by each recipient. This order was made pursuant to s 156(1)(d) of the Act and reflected arrangements that the Appellant had made previously with the persons concerned;4 and(b) to pay costs of $8,212 to the New Zealand Law Society (AucklandStandards Committee Number 2) ("Standards Committee"); and1 Lawyers and Conveyancers Act 2006, s 242(1)(e).2 S v New Zealand Law Society (Auckland Standards Committee Number 2) HC Auckland CIV-2011- 404-3044, 1 June 2012.3 Auckland Standards Committee 2 v Sorensen [2012] NZLCDT 23 at [47].4 Ibid, at [40] – [43].(c) to reimburse the New Zealand Law Society ("Society") the sum of$17,200, being the sum the Society was required to pay the Crown pursuant to s 257 of the Act.[5] The Appellant now appeals against the order striking his name off the roll and the costs orders referred to in [4](b) and [4](c) above.Approach to appeal[6] This is a general appeal by way of rehearing pursuant to s 253 of the Act. It proceeds on the basis set out in Austin, Nichols & Co Inc v Stichting Lodestar.5 Afuller account of the Court's approach is at [12] of Hart v Auckland Standards Committee 1 of New Zealand Law Society.6 On hearing an appeal, the High Court may confirm, reverse or modify the order appealed against.7Background[7] The Appellant was a sole practitioner in Auckland of some 25 years'standing. The Appellant prepared a will for a client testatrix which she executed in February 2008. The testatrix died in July 2009 and the High Court granted probate of the will in August 2009. The testatrix appointed two of her brothers as her executors.[8] The estate available for distribution was approximately $265,000. The will provided for the payment of seven legacies totalling $210,000, with the residue of the estate to be paid to the testatrix's three brothers (including the executors) in equal shares.[9] The brothers were dissatisfied with the share of the estate that they were to receive. The executors resolved that they would not pay four legacies totalling $120,000 and they instructed the Appellant accordingly. The Appellant's evidencewas that he advised the executors they would be acting unlawfully if they failed to execute the terms of the will and pay the legacies.5 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.6 Hart v Auckland Standards Committee 1 of New Zealand Law Society [2013] NZHC 83.7 Lawyers and Conveyancers Act 2006, s 253(4).[10] It appears that most of the estate was in cash and held by the Appellant in his trust account. The executors instructed the Appellant to pay to them the sum that was due to the four legatees to whom I have referred. The Appellant did as he was instructed but in the knowledge that the executors would not pay the legatees the sum to which they were entitled under the will. The executors had agreed that each of the deprived legatees would receive $200 cash, as if it came from the family rather than from the estate, and to this end the Appellant added $800 to the payment to oneof the executors. Also, on the executors' instructions, the Appellant did notcommunicate with the affected legatees or send them a copy of the will.[11] The Appellant's distribution of the funds in this way came to light during anaudit of his trust account. Subsequently the Appellant was charged with misconduct.[12] The Appellant's case before the Tribunal was that he had believed he was obliged to act in accordance with the executors' instructions, they being his clients,and that his doing so was not dishonest. The Tribunal did not accept this account and was satisfied that the Appellant had assisted the executors knowing that they had an improper and dishonest purpose, and that his participation had an element of dishonesty. The Tribunal found the Appellant guilty of professional misconduct.8Winkelmann J upheld those findings on appeal.9[13] The matter then went back to the Tribunal to determine penalties. TheTribunal determined that it should strike off the Appellant's name and make the other orders referred to in [4] above.Grounds of appeal[14] For the reasons give below, it is only necessary for me to consider the first ground of appeal which is that the order to strike off the Appellant's name wasmanifestly excessive and largely punitive. Essentially this ground is that the orderstriking off the Appellant's name was disproportionate. For the reasons given belowI am satisfied that the Appellant should succeed on this ground of appeal.8 Auckland Standards Committee 2 v Sorensen [2011] NZLCDT 10.9 S v New Zealand Law Society (Auckland Standards Committee Number 2), above n 2.[15] For the sake of completeness I note that the other grounds of appeal are as follows.[16] The second ground is that the Tribunal failed to consider adequately the extent to which the determination of an appropriate penalty is to be assessed having regard to the principles set out in English case law; The New Zealand Bill of Rights Act 1990 and principles of parity in sentencing/penalties; the approach of Australian Courts and Tribunals to similar disciplinary issues concerning legal practitioners; and that a striking off should not be punitive or largely punitive in all the circumstances.[17] The third ground is that the Tribunal failed to consider adequately or at all the correct approach to penalty, namely whether or not at the time the penalty is imposed the lawyer is permanently unfit to practise.[18] The fourth ground is that the Tribunal failed to have adequate regard to references in support of the Appellant and his service to his community and the public over a period of many years. I have taken the references into account in reaching my decision in relation to the first ground of appeal.[19] The fifth ground is that the Tribunal failed to take into account that the Appellant obtained no benefit in the matters giving rise to the finding of misconductand that his culpability should be seen as being "at the lower end of the scale" and inthat small category of cases where dishonesty did not warrant a striking off.[20] Lastly, counsel for the Appellant submitted that the Tribunal should have moderated the orders referred to in [4](b) and [4](c) above and he sought such moderation, particularly if I upheld the order to strike off.Discussion[21] If the Tribunal determines that a charge has been proved, it may make the orders listed in s 242 of the Act. These include an order that the lawyer's name bestruck off the roll of barristers and solicitors; an order that the lawyer be suspended from practise for such period as the Tribunal thinks fit, that period not to be morethan three years; and an order prohibiting the lawyer from practising on his or her own account, whether in partnership or otherwise, until authorised by the Tribunal to do so.[22] The Tribunal may only make an order striking off a practitioner's name if:(a) it is satisfied that the practitioner "is by reason of his or her conduct, not a fit and proper person to be a practitioner".10 I accept the submission of counsel for the Appellant that that is an assessment to be made as at the time the order is made; and(b) at least five members of the Tribunal "are present and vote in favour of the order" and the said five members are the only members presentand voting or they are a majority of the members present and voting.11[23] I have proceeded on the basis of this Court's decision in Hart v Auckland Standards Committee 1 of New Zealand Law Society, which was delivered shortly before this appeal was heard and with which counsel were familiar. As the Court said in Hart, "the ultimate issue in this context is whether the practitioner is not a fitand proper person to practise as a lawyer".12 The Court said that, when assessing the matter of fitness to practice:13(a) "The nature and gravity of those charges that have been found provedwill generally be important". These matters may point to the fitnessof the practitioner to remain in practice and, in some cases, the nature and gravity of the charges is determinative because they demonstrate conclusively that the practitioner is unfit to practise as a lawyer. The Court said that charges involving proven or admitted dishonesty will generally fall within this category.10 Lawyers and Conveyancers Act 2006, s 244(1).11 Ibid, s 244(2).12 Hart v Auckland Standards Committee 1 of New Zealand Law Society, above n 6 at [185].13 Ibid, at [186] – [190].(b) "In cases involving lesser forms of misconduct, the manner in whichthe practitioner has responded to the charges may also be a significantfactor". Co-operation, acknowledgement of error or wrongdoing, and acceptance of responsibility may indicate that a lesser penalty than striking off is sufficient to protect the public in the future.(c) The "practitioner's previous disciplinary history may also assumeconsiderable importance". In some cases the fact that a practitionerhas not been guilty of wrongdoing in the past may suggest that the conduct giving rise to the charge is unlikely to be repeated and that too might indicate that a lesser penalty would be sufficient to protect the public.[24] I turn to address each of those factors.Nature and gravity of the charge[25] There is no dispute that the nature of the charge found proved against the Appellant was serious. The Appellant had lent his assistance to a scheme that he knew would lead to a departure from the terms of the will admitted to probate and that the purpose of that scheme was to deprive several legatees of the sum due to them under the will.[26] It is clear from the earlier judgments in this case that the Standards Committee has always considered the Appellant knew he was acting dishonestly by assisting the executors as he did. There is no doubt that the Appellant knew the executors intended to act dishonestly but, in the first instance at least, the Appellantsought to defend the charge on the basis that he believed he was "acting properly andcorrectly because [he] was acting strictly in accordance with the instructions of myclients, the executors".1414 Affidavit of Appellant sworn 25 February 2011 at [69].[27] The Appellant also said "undoubtedly this was wrong and I accept this now. Ialso accept that my error was obvious (as I now appreciate) and I am astounded thatI did not realise it at the time".15[28] Despite that, and against the background of the evidence, the Tribunal considered it "implausible" that the Appellant did not at the time understand the fullimplications of his actions.16[29] Even on the Appellant's explanation, the facts involved serious misconduct. To the extent that it is material, I also take into account that the misconduct resulted in substantially adverse consequences for the affected legatees.Co-operation, acknowledgement and responsibility[30] I am satisfied that the Appellant has co-operated sufficiently, has acknowledged his error or wrongdoing, and has accepted responsibility for that wrongdoing. In his affidavit sworn 16 August 2012, the Appellant describes himselfas "devastated" by the finding that he had been guilty of misconduct. He said he hadnot gained from the misconduct and in fact the fee he earned for his work for the estate was modest, being $1,600 excluding GST and disbursements. The Appellant has not renewed his practising certificate and has not practised law since 30 June 2012. He has sold his practice to another firm, such sale involving no payment of a lump sum but rather the payment to him of some modest percentage of future fees paid by former clients.[31] As I have said, the order that the Appellant should compensate several legatees for all or some of their loss is also relevant. There is evidence that some of the legatees have forgiven all or part of the debt due to them.Prior disciplinary history[32] The Appellant has no prior disciplinary history.15 Ibid, at [70].16 Auckland Standards Committee 2 v Sorensen, above n 8, at [38].[33] In support of his position before the Tribunal, the Appellant produced 20 references from third parties. All of the referees express astonishment (or similar) that the Appellant conducted himself in this manner. Many of the referees are practitioners who have been on opposite sides of transactions with the Appellant and say that, without exception, they have found him honest and reliable. Many of the referees speak of the contribution that the Appellant has made to his local community and to the Samoan community in particular. They suggest that the fact the Appellant has not been in a position to pay the legatees in full immediately is a reflection of his considerable pro bono work and otherwise modest fees he has charged clients. The referees include Mr Matenga and Mr Shortland (both coroners), Judge Rota (now retired), chartered accountants, a retired financier and numerous practitioners, including Mr Godinet, the President of the Auckland District Law Society, and a member of a different Standards Committee, who has been on opposite sides of transactions to the Appellant. One of the referees, Mr Christopher Dickie, of Auckland, solicitor, said he has previously invited the Appellant to join him in partnership.[34] This evidence assists in determining whether the Appellant's misconduct might be considered a "one off" aberrant incident or part of a wider pattern ofconduct. Given the content of the references, I am satisfied as far as I can be thatthis incident was a "one off".Whether a lesser penalty than an order to strike off would suffice[35] On the evidence available to me, and despite the seriousness of the charge, I am not satisfied that the Appellant, by reason of his conduct, is not a fit and proper person to be a practitioner.[36] In each of Daniels v Complaints Committee 2 of the Wellington District Law Society,17 Dorbu v New Zealand Law Society,18 and Hart,19 the Court referred to the need to consider whether some penalty less than an order to strike off the17 Daniels v Complaints Committee 2 of the Wellington District Law Society [2011] 3 NZLR 850 (HC) at [22]. This case was decided under the Law Practitioners Act 1982.18 Dorbu v New Zealand Law Society [2012] NZAR 481 at [35]..19 Hart v Auckland Standards Committee 1 of New Zealand Law Society, above n 6, at [181].practitioner's name from the roll of barristers and solicitors would suffice. If a lesser order would suffice, then that lesser order is to be preferred.[37] In Daniels, the misconduct was an inappropriate personal and sexual relationship with a client. The practitioner unsuccessfully appealed a suspension order. In Dorbu and Hart, each practitioner's name had been struck off and thoseorders were upheld on appeal.[38] In contrast to those cases, counsel for the Appellant referred me to two cases where the Tribunal did not make an order striking off the name of practitioners found guilty of misconduct as a result of dishonesty.[39] Detailed comparisons between the orders made in one case as against another are not likely to be of great assistance to the Tribunal, or to the Court on appeal. Nevertheless, the Tribunal itself said (in the decision presently under appeal) that it was necessary to consider penalties applied in a comparable context to ensure that the sanction imposed was not disproportionately severe.20 Counsel for the Respondent accepted in her submissions that some parity of response is to be expected.[40] In Davidson,21 being the first case to which counsel for the Appellant referred me, the practitioner inserted a false date of execution in a will, in the belief that by doing so she was limiting scope for questions to be raised as to the testamentary capacity of the testatrix. The insertion was deliberate and made with the intention of misleading, amongst others, The Public Trust. The Tribunal suspended the practitioner for six months. It also ordered her to pay the costs of the Society'sOtago Standards Committee and to reimburse the Society for the sum it was required to pay to the Crown pursuant to s 257 of the Act.[41] The second case, Waikato Bay of Plenty 356 Standards Committee v Fletcher,22 was decided after I heard the appeal. Subsequently I received submissions from both counsel on the decision. In that case, the Court found the20 Auckland Standards Committee 2 v Sorensen, above n 3, at [30].21 Otago Standards Committee v Davidson [2012] NZLCDT 39.22 Waikato Bay of Plenty 356 Standards Committee v Fletcher [2013] NZLCDT 16.practitioner liable, confirmed on appeal, of dishonestly assisting a trustee to breach the terms of a trust. The trustee concerned was the sole trustee and, with thepractitioner's assistance, he had defrauded the trust of more than $250,000. The civilproceedings took more than seven years to resolve, following which the practitioner was ordered to reimburse the trust funds and to pay interest and costs. Ultimately, the practitioner paid some $1.3 million to comply with the terms of the various Court orders made against him and to meet his own legal costs.23[42] It is apparent from the decision in Fletcher that the Tribunal could not reach aunanimous view that the practitioner's name should be struck off the roll. TheTribunal suspended the practitioner from practise for two years and imposed orders as to reporting thereafter.24 The Tribunal seems to have been influenced particularly by the sum that the practitioner had paid, including his reimbursement of the trust fund. Of course, the sum the practitioner was required to pay would have been substantially less had he acknowledged liability. Fletcher was not a case in which the practitioner voluntarily made arrangements to reimburse. He contested his liability and only reimbursed the loss when ordered to do so.Result[43] Despite the seriousness of the Appellant's misconduct, I am satisfied that alesser penalty than an order to strike off is sufficient to protect the public in thefuture. The Appellant's lack of disciplinary history and the evidence contained in the references indicate that this was a "one off" incident.[44] Counsel for the Appellant proposed that, instead of striking off theAppellant's name, I suspend him from practise for a period. I agree that theAppellant ought to be suspended for a period. My concern is that, after the period of suspension has elapsed, the Appellant would be free to resume practise as a sole practitioner. In my view, the appropriate course is to restrain the Appellant from resuming practise on his own account following the period of suspension. I make an order pursuant to s 242(1)(g) of the Act, prohibiting the Appellant from practising23 Ibid, at [8], [31] and [41].24 Ibid, at [41] – [44]. It also imposed an order censuring the practitioner and an order that he pay theSociety's costs.on his own account, whether in partnership or otherwise, until authorised by the Tribunal to do so.Orders[45] I quash the order striking off the Appellant's name from the roll of barristersand solicitors kept under the Act and order that:(a) pursuant to s 242(1)(e) of the Act, the Appellant be suspended from practice as a barrister or solicitor for a period of two years, from 24 August 2012; and(b) pursuant to s 242(1)(g) of the Act, the Appellant is prohibited from practising on his own account, whether in partnership or otherwise, until authorised by the Tribunal to do so.[46] In so far as concerns the other orders made by the Tribunal, counsel for the Appellant submitted that it simply is not possible for the Appellant to pay all of the amounts ordered within the time allowed by the Tribunal. I have considered the relevant affidavit evidence and accept counsel's submission. The order made by the Tribunal referred to in [4](a) above stands. The sums referred to in [4](b) and [4](c)above are to be paid by no later than 31 March 2014. Each party has had a measure of success in this appeal and, accordingly, each is to bear their own costs...................................................................M Peters J