A lawyer is accused of misconduct over unauthorised payments he made from a family trust, and from his late parents' bank accounts. Photo / File
A lawyer is accused of misconduct for making more than half a million dollars in unauthorised transfers from a family trust and his late parents’ bank accounts.
However, the lawyer, who has interim name suppression, denied that the payments had been “self-serving”.
In a Lawyers and Conveyancers Disciplinary Tribunal hearing this week, he said they were primarily made to retain a “family property”, for which he is the sole director and shareholder.
They were also to reimburse expenses he incurred in the upkeep of that property, and his ongoing care of his elderly parents.
He faces an allegation of misconduct, brought by the Standards Committee, on behalf of the New Zealand Law Society.
Committee prosecutor Sam McMullan said the transactions from the family trust and from his mother and parents’ accounts, were for the lawyer’s own benefit and in breach of his obligations as a fiduciary.
He was a trustee and beneficiary of the family trust, with his sister the other beneficiary.
To prove the charge, the committee needed to show that the lawyer’s conduct reached a level where, at the time that he engaged in it, he was not a fit and proper person to be a lawyer.
It is not alleged that he was not entitled to access the money from the trust, as the trust deed did allow for such transactions.
However, he needed to have sought proper authority from the other trustee.
He also accepted that with the settlement of the estate, there hadn’t been any actual loss to the other beneficiaries.
The lawyer’s explanations for his actions focused on 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 said he had a “very close” and loving relationship with his parents, spoke of give and take, and money moving around as he tried to do his best to meet their needs.
It’s alleged he made three payments from the family trust account some months after his mother’s death – one of $97,280, and two of $100,000.
A further payment was made about a month later, of $34,736.
The standards committee’s case includes that the first two payments involved the man breaking a term deposit, contrary to the financial strategy outlined in minutes of an earlier trust meeting.
The lawyer said at that stage he was acting without consulting the strategy, as there was a “significant asset at risk” that the family had invested in.
He said he was a “man on a mission” operating in a day-to-day “pragmatic way”, trying to do his best.
McMullan questioned this assertion, clarifying with the lawyer that the property he was referring to was the lawyer’s property, not owned by a family trust, and protecting it did not protect the financial interests of the other beneficiary, his sister.
The lawyer said there were still sufficient assets for his sister, which she could take in “due course” but accepted he hadn’t been “thinking straight”.
The lawyer claimed that because he didn’t practise in the area of estate law, he had no more knowledge of his obligations as a trustee than a lay person.
He said his emotional state and grief at the time meant he hadn’t been able to carry out his duties properly.
At one point, he said he had not read the trust deed when he was appointed as a trustee. He later clarified he “must have” read it, but didn’t specifically recall reading it.
McMullan pushed back on his claim that he was lacking in the skills to carry out his trustee obligations.
“You’re a lawyer,” McMullan said, before suggesting the lawyer held himself out as being involved in large-scale “criminal and civil litigation cases”.
The lawyer said his practice involved complex matters, but his role was more in the “co-ordination and strategy” – enlisting other experts and practitioners to carry out the work, particularly in civil matters.
McMullan said the lawyer had known he was not allowed to make unilateral decisions without the input of other trustees, however.
The lawyer agreed, but later told the panel that he had not thought his actions had “anything to do with the [legal] profession” at the time, considering it a “family matter”, and that the administration related to the authorisation of payments could be tidied up later.
As well as the trust account payments, it’s alleged he used his enduring power of attorney for his parents to make six payments from his parents’ accounts.
There were some made from his parents’ joint account – some after his father had died but while his mother was still an account holder – and two from his mother’s account after she died.
The transactions the prosecution was particularly concerned with were the two after his mother’s death – one, made two days after his mother died, of just over $72,000, which was repaid, and another about a week later of $50,000.
Again, the lawyer pointed to the stress he was under, and the money that needed to be paid for funeral expenses, as well as reimbursements for previous costs he’d incurred in providing care and support.
He accepted that his record-keeping had been lacking.
Clarkson questioned the sums, as by her calculation it seemed the lawyer was suggesting he’d spent around $250,000 on his parents’ care and expenses, over the years he was providing support.
She said it seemed an “awfully large sum of money to have expended, because we know that as you age, you don’t actually spend as much money”.
The lawyer said; “All I can say to that is that it does seem on the high side, but as we were going through what had been purchased, what had been recovered, where we were in terms of the care, I think that covered her care as well ... the care in the rest home which I was paying. It does seem a bit high, I don’t have the numbers”.
He then said there had been money expended “probably for 10 years or so”, which he hadn’t recovered.
But McMullan questioned how he knew what he was reimbursing, given that he hadn’t kept any receipts or records, and how he knew he hadn’t “paid himself twice”.
McMullan told the tribunal it was “significant that [the lawyer] didn’t maintain at least receipts for amounts that he was reimbursing himself ... primarily from his mother’s account”.
However, there had been what McMullan termed “created documents” – an invoice, a resolution and an acknowledgment of debt – which “poured cold water” on a suggestion that the lawyer was “an honest muddler, finding it difficult to operate in the wake of his mother’s death and the difficult relationship he had with his sister”.
McMullan said in the many years this matter had been before the committee and then before the tribunal, the lawyer had “taken no real steps to really explain, I suggest, has only taken steps to confuse”.
Before the lawyer gave evidence, the prosecution called the lawyer’s sister as a witness.
She had made the complaint to the Law Society that led to the prosecution.
Because the lawyer was self-represented, he was tasked with cross-examining his own sister, and at times the hearing seemed to venture into “family court” territory, with both the prosecutor and the tribunal interjecting, raising issues of relevance.
Some of the heated exchanges related to what his sister knew about the North Island property, which related primarily to the two payments of $100,000, which the lawyer allegedly made to carry out refinancing.
The lawyer asked if his sister knew it was a place their late parents had visited on many occasions, taking part in “working bees”, suggesting she knew it had been important to them, and had been used for family gatherings.
“I know nothing about what went on at your property or how it was perceived,” his sister replied.
The lawyer’s most persistent questioning focused on whether she had taken documentation, including about finances, from their late mother’s house.
She said she had never taken things without permission, at which point the lawyer accused her of being “a chronic thief”.
The tribunal chair interjected.
“This is going way too far ... We don’t even have an evidential basis for how such documents, if they existed, would assist us,” tribunal chairperson Dale Clarkson said.
The lawyer moved on to ask his sister if and when she had taken a picture that had belonged to their late father.
“What has the taking of a picture got to do with whether payments taken by you were authorised by another trustee or not?” Clarkson interjected, having pointed out, “This is not the Family Court”.
The lawyer replied that it was relevant to what was going on in the family dynamics at the time.
“I think we’ve got a very clear view of the family dynamics,” Clarkson said.
At the conclusion of the hearing, the prosecutor said that even taking into account the lawyer’s grief and difficult family circumstances, at the time he “fell short of the basic standards and qualities of integrity expected of lawyers and members of our profession”.
But the lawyer said in closing that nothing had been taken for his own benefit or dishonestly.
“It’s really around reimbursement and asset protection,” he said.
He “never turned his mind to the legal authorities attached to that action” and told the tribunal it was “the absolute worst time in my life”.
Taking into account his personal circumstances, he said the prosecution’s case “fell short” on the character test.
The tribunal has reserved its decision.
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.