Lawyer censured for releasing trust money

The lawyer was ordered to pay almost $16,000 in compensation and costs. Photo / File
The lawyer was ordered to pay almost $16,000 in compensation and costs. Photo / File

An Auckland lawyer has been censured and ordered to pay compensation for releasing money that was held in a family trust during a separation negotiation without informing one of the trustees.

In an decision announced this month by the New Zealand Lawyers and Conveyancers Disciplinary Tribunal, Donald Bruce Thomas was strongly censured and told to pay almost $16,000 in compensation and costs.

Thomas allowed money held in a family trust to be used in the purchase of a property, but acted on the instructions of only one of the two trustees.

The co-trustees were a husband and wife who had separated and were negotiating division and settlement of relationship property through their respective solicitors.

The tribunal said Thomas' "reckless conduct" merited censure and ordered him to pay compensation to the complainant totalling $2898.20.

Thomas also had to refund the New Zealand Law Society the costs of the tribunal totalling $2101 and pay the costs of the Standards Committee totalling $10,907.03.

In its censure, the tribunal said it was by "a fine margin" that a period of suspension from practice was not imposed on Thomas.

"You have significantly let yourself and the profession down. It is critical that in times of stress and pressure a practitioner remembers and acts in accordance with his duties and role. Your duty and role was clear, as you have properly acknowledged by your approach to the charges."

It said Thomas allowed his judgment to be clouded by his frustration at the stance being taken by the husband.

"You were aware that the funds could not be paid out on the instructions of one trustee only, and sought orders from the Family Court in order for that to occur."

The application made to the Family Court by Thomas sought an order for the release of the funds, but the court said it did not have jurisdiction in respect of trusts and that the matter would have to be the subject of an application to the High Court.

The Family Court dismissed the application and awarded costs of $1500 in favour of the husband.

The judge did note, however, that the husband was "playing hardball".

Despite the Family Court decision, the wife co-trustee still gave instructions to use the funds held in the trust to complete the purchase of a home.

Thomas did so without obtaining the consent of the husband.

The Tribunal said in light of the jurisdictional issues noted by the Family Court, Thomas was aware that High Court orders would be required to enable payment.

"You chose not to go there. Instead you convinced yourself that you could legitimately proceed without the co-trustee's authorisation. It was the tribunal's concern that you may have applied some ex post facto reasoning to justify the actions taken."

The tribunal said in all circumstances, Thomas' conduct amounted to a "serious failing".

However, it said it did not impose a suspension on Thomas because it was a single event of misconduct carried out with no dishonesty or personal gain, Thomas' long career was without significant blemishes, and because of the standing he had in his community.

It also said there were no detrimental consequences of his actions, he had admitted guilt from the start, and that Thomas accepted his name should be published so that the profession could be aware of the need to comply with the strict requirements of professional conduct.

- NZ Herald

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