Morahan v Wellington Standards Committee 2
[2018] NZHC 1229
•29 May 2018
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-Ā-TARA ROHE
CIV-2017-485-981
[2018] NZHC 1229
IN THE MATTER of an appeal under s 253 of the Lawyers and Conveyancers Act 2006 BETWEEN
PETER JAMES MORAHAN
Appellant
AND
WELLINGTON STANDARDS COMMITTEE 2
Respondent
Hearing: 22 March 2018 Counsel:
A C Beck for Appellant
D R La Hood for Respondent
Judgment:
29 May 2018
JUDGMENT OF CHURCHMAN J
Table of Contents
Mr Morahan’s involvement with the complainant........................................... [4]
Procedural history [23]
General grounds of appeal against both charges............................................ [29]
Pre-1 August 2002 conduct – factual background or substantive
consideration? [29]
The framing of Charge 1 [42]
Duplicity of charges [51]
Charge 1.............................................................................................................. [63]
[52(a)-(c)] pre-1 August 2002 events [63]
[52(d)] the 2004 $60,000 advance [65]
[52(e)] 2004 Golf Road property transactions [73][52(f)] the Trust’s 2000-2005 borrowing [77] [52(g)] the sale of the Rosetta Road property and Ms B’s advance [94] [52(h)] Mr Morahan’s records of advice [102]
Finding of negligence or incompetence [112]
MORAHAN v WELLINGTON STANDARDS COMMITTEE 2 [2018] NZHC 1229 [29 May 2018]
Charge 2............................................................................................................ [124]
[53]Mr Morahan acting for the Trust and Mr J [126]
[54]Mr Morahan’s dual roles in the Family Court proceedings [130]
[55]Mr Morahan’s pleadings and evidence in the Family
Court Proceedings [143]
[56]breach of discovery orders [154]
Finding of negligence or incompetence [162]
Penalty decision – 22 November 2017............................................................ [172]
Historical nature of the conduct [176]
Pre-1 August 2002 conduct [179]No deliberate conduct [183]
Consequences for Ms B [186]
Likelihood of repetition [190]
Suspension [201]
Costs [206]
Conclusion........................................................................................................ [215]
Costs.................................................................................................................. [220]
[1] Mr Morahan was a lawyer who allowed his loyalty to one of his clients to compromise the obligations he owed to another. He appeals against two decisions of the New Zealand Lawyers and Conveyancers Disciplinary Tribunal (“the Tribunal”). The first decision is the Tribunal decision dated 22 September 2017,1 in which the Tribunal found him guilty of professional misconduct and imposed penalties on him. The second decision was given by the Tribunal on 22 November 2017 and relates to further sanctions and costs imposed on him.2 The two appeals were consolidated and heard together before me.
[2] The appeals were bought pursuant to s 253 of the Lawyers and Conveyancers Act 2006 (“the 2006 Act”). An appeal under this section is by way of rehearing.
[3] The issues that arise in this appeal include whether reference to events that occurred prior to 1 August 2002 invalidated the charges or the Tribunal’s findings in respect of the charges; whether the charges were bad for duplicity; what the effect was of the Tribunal not making express findings in respect of some of the components of the charges; whether the findings made by the Tribunal were consistent with the matters Mr Morahan had been charged with; whether Mr Morahan’s conduct actually
1 Wellington Standards Committee 2 v Morahan [2017] NZLCDT 24 [Tribunal Substantive Decision].
2 Wellington Standards Committee 2 v Morahan [2017] NZLCDT 34 [Tribunal Penalty Decision].
amounted to breaches of provisions relied on; whether suspension was an appropriate penalty; and whether the Tribunal had approached the question of costs correctly. The real question is whether the shortcomings that I have identified in the Tribunal’s processes invalidate all or part of their decision.
Mr Morahan’s involvement with the complainant
[4] There was little dispute about the facts. The relevant parties, who I will refer to as Mr J and Ms B as they were in the Tribunal decision, commenced a de-facto relationship in July 1998. At that date, Mr Morahan had acted as a solicitor for Mr J for many years. Mr Morahan had also acted for his family trust and was a trustee of that Trust (“the Trust”).
[5] As at the date the relationship commenced, Ms B had owned her own freehold home in Johnsonville. In January 1999, Mr J and Ms B together purchased a property at Rosetta Road, Raumati. Mr Morahan acted for both of them in relation to the purchase of this property.
[6] Ms B borrowed $150,000 from TSB bank to fund the purchase of the Rosetta Road property and secured this borrowing by way of mortgage over her Johnsonville property. Mr Morahan acted for her in arranging the loan and registering the mortgage.
[7] In April 1999, Mr J and Ms B were married. On 28 April 1999, Ms B was appointed a trustee in Mr J’s Trust and, on 6 May 1999, Ms B and her children were added as beneficiaries. Mr Morahan acted for all parties in relation to the changes to the Trust.
[8] In October 1999, the Rosetta Road property was subdivided with Mr Morahan acting for Mr J and Ms B on the subdivision. Ownership of the Rosetta Road property was transferred from Mr J and Ms B to the Trust on 29 February 2000 with Mr Morahan again acting for all parties in respect of the transaction.
[9] On 1 March 2002, acting on the instructions of Mr J, Mr Morahan removed Ms B as a trustee of the Trust.
[10] In December 2004, Ms B sold her Johnsonville property and loaned the net proceeds of sale ($60,000) to the Trust to assist with the purchase by the Trust of a property at Golf Road, Paraparaumu. Mr Morahan acted for the Trust, Mr J and Ms B in relation to the purchase of the Golf Road property.
[11] At various dates between February 2000 and July 2005, the Trust borrowed sums from different financial institutions and provided security over the Rosetta Road property for those loans. Mr Morahan acted for the Trust in respect of obtaining the loans and arranging the security.
[12] In July 2005, the loans were restructured resulting in Rosetta Road becoming subject to a single mortgage in favour of TSB bank. Mr Morahan acted in respect of that transaction as well.
[13] The Trust sold Rosetta Road for $680,000 in July 2005, with the net sale proceeds of $34,071 credited to the Trust. Mr Morahan acted on the sale.
[14] On 11 July 2009, Ms B and Mr J separated. On 27 August 2009, Mr Morahan prepared and executed a deed which removed Ms B and her adult children as beneficiaries of the Trust. On 16 September 2009, Mr Morahan acted for the Trust in the eviction of Ms B from the Trust’s Golf Road property. On 22 May 2012, he also wrote to Ms B’s then lawyer requiring her to give possession of a BMW car to Mr J by delivering it to Mr Morahan’s offices.
[15] In December 2012, Ms B brought proceedings in the Family Court against Mr J and the trustees of the family trust.3 Mr Morahan acted as solicitor on the record for Mr J and the trustees of the Trust (which included himself).
[16] Mr Morahan filed a statement of defence to the proceedings on behalf of Mr J and the trustees which denied that the Rosetta Road property was purchased by Mr J and Ms B. He gave evidence in the Family Court during which he said that the Trust had purchased the Rosetta Road property.
3 RJ v PGJ [2014] NZFC 6010 [Family Court Decision].
[17] Orders for discovery were made in the Family Court proceedings. Mr Morahan acting on behalf of Mr J failed to discover documents relating to the purchase of the Rosetta Road property.
[18] During the course of the Family Court proceedings, Mr Morahan filed an affidavit of documents made by Mr J stating that full discovery of documents had been made, and that diligent inquiries had been made for the search and retrieval of all documents sought. Mr Morahan’s electronic Trust account records were not disclosed.
[19] Following a direction to produce all electronic Trust account records relating to the transactions, on 27 January 2012 Mr Morahan filed an affidavit from Mr J that produced the electronic Trust account records for the purchase of the Rosetta Road property. This disclosed that his clients were Ms B and Mr J. Pages were missing from the document.
[20] A further discovery application was made and on 24 July 2012 Mr Morahan filed a further affidavit of Mr J. This deposed that there were more Trust account and settlement account records for eight other property purchases. The affidavit said that Ms B could obtain those documents if she paid the cost of retrieval.
[21] On 17 September 2012, Mr Morahan filed a further affidavit sworn by Mr J attaching the missing second page of his electronic Trust account records which provided details of the funds received from the sale of the section that had been subdivided from the Rosetta Road property.
[22] On the second day of the Family Court hearing in May 2013, Mr Morahan said that he had found his conveyancing file. He produced a copy of the agreement for sale and purchase which showed that the Rosetta Road property had indeed been purchased by Mr J and Ms B.
Procedural history
[23] Mr Beck, counsel for Mr Morahan, challenged the way in which the charges were originally formulated. That challenge was heard on the papers and a decision
issued by Judge D F Clarkson on 9 March 2017.4 The Judge noted that the two main complaints advanced at that time on behalf of Mr Morahan were:5
1.The two charges encompass[ed] matters for the wholly discrete, (sic) and include conduct which apparently took place at different times and is quite unconnected.
2.The two charges contain[ed] no details as to particular conduct that [was] alleged to amount to a disciplinary offence, and no details as to the dates on which such conduct [was] alleged to have taken place.
[24] Judge Clarkson held that a number of the particulars pleaded failed to sufficiently identify the failures or breaches of obligations alleged and further particulars were ordered. That is how the amended notice of charges dated 17 March 2017 came to be filed.
[25] On 17 March 2017, the Wellington Standards Committee 2 filed an amended notice of charges. The charges each covered several different aspects of Mr Morahan’s conduct and were what are sometimes called “course of conduct” or “omnibus” charges. The legislation regulating the conduct of legal practitioners changed during the relevant period, and therefore the charges referred to two different Acts and to the specific time periods covered by each Act.
[26] Charge 1 alleged misconduct in Mr Morahan’s professional capacity pursuant to s 112(1)(a) of the Law Practitioners Act 1982 (1982 Act); or alternatively conduct unbecoming pursuant to s 112(1)(b) of the 1982 Act; or alternatively negligence or incompetence in his professional capacity of such a degree or frequency as to reflect on his fitness to practice or as to tend to bring the profession into disrepute pursuant to s 112(1)(c) of the 1982 Act. Charge 1 related to conduct that occurred between 1 August 2002 and 1 August 2008.6
[27] Charge 2 was brought under s 241 of the 2006 Act, and related to conduct alleged to have occurred on or after 1 August 2008 that constituted:
4 Wellington Standards Committee 2 v Morahan [2017] NZLCDT 3 [Tribunal Charge Decision].
5 At [5].
6 The reference to those dates was not accidental. Section 351 of the 2006 Act commenced on 1 August 2008. Section 351(1) of the 2006 Act permitted complaints to be made in relation to conduct occurring prior to 1 August 2008 but s 351(2)(b)(i) excluded “…conduct that occurred more than six years before the commencement of this section.”
Misconduct pursuant to s 241(a) of the 2006 Act:
(i)would reasonably be regarded by lawyers of good standing as disgraceful or dishonourable: s 7(1)(a)(i) of the Act; and/or
(ii)consisted a wilful or reckless contravention of the Act and/or practice rules or regulations made under the Act: s 7(1)(a)(ii) of the 2006 Act, or alternatively;
(iii)unsatisfactory conduct that is not so gross, wilful, or reckless as to amount to misconduct pursuant to s 241(b) of the 2006 Act or alternatively negligence or incompetence in Mr Morahan’s professional capacity and the negligence or incompetence being of such a degree as to reflect on his fitness to practice or as to bring his profession into disrepute pursuant to s 241(c) of the 2006 Act.
[28] The amended notice of charges set out what was said to be “particulars of the charges” or “facts and matters relied upon”. The particulars set out in [1]-[3] related to events which were said to have existed “at all material times” and are not matters of dispute. However, the factual matters set out in [4]-[24] (both inclusive), clearly particularise events which occurred before 1 August 2008. That fact gives rise to one of the challenges raised by Mr Morahan. The particulars in [25]-[51] relate to events that occurred after 1 August 2002 up until 2013.
General grounds of appeal against both charges
Pre-1 August 2002 conduct – factual background or substantive consideration?
[29] It was argued that a charge cannot be laid in respect of conduct that occurred before 1 August 2002. Therefore, because some of the “particulars” upon which Charge 1 was based referred to conduct that occurred before 1 August 2002, the whole of Charge 1 must fail. The submission was made notwithstanding that a number of the facts Charge 1 relied on occurred between the period 1 August 2002 and 1 August 2008.
[30] In relation to the conduct that occurred before 1 August 2002, the submission of Mr La Hood, for the Committee, was that this conduct was only referred to by the Tribunal to establish context. He referred to the Tribunal’s decision where it said:7
7 Tribunal Substantive Decision, above n 1 at [13].
The Tribunal reminds itself that the charge can be proved only on findings made in respect of conduct alleged to have occurred after 1 August 2002. It finds that a consideration of related conduct prior to that date is relevant in establishing context. To decline to consider that relevant conduct would create artificiality of the kind contended for by counsel for the applicant.
[31]Mr La Hood’s submissions go on to say:
In this case, in order to understand the factual background relevant to the charges it was necessary for the Tribunal to consider events occurring prior to 1 August 2002.
[32] It is therefore necessary to check whether all that the Tribunal actually did with the pre-1 August 2002 matters was merely to use them to “establish context” or to “understand the factual background”.
[33] Immediately prior to [16] of the Tribunal’s decision, there is a heading “Background to Charge 1”. The following paragraphs go on to detail a number of facts that occurred prior to 1 August 2002. This material could reasonably be described as being “context” or “factual background”. If that was as far as the Tribunal had gone, there would have been no problem.8
[34] Notwithstanding that the Tribunal properly reminded itself that the charges against Mr Morahan could be proved only on findings made in respect of conduct alleged to have occurred after 1 August 2002,9 the Tribunal went on to make what appear to be findings in relation to the matters which it originally said were only to be considered as “context”.
[35] In relation to the February 2000 transfer of the Rosetta Road property from Mr J and Ms B to the Trust, the Tribunal said:10
Absent any direct evidence on the point or any file notes from the respondent to substantiate this, we cannot conclude that Ms B was adequately advised in a way which would have put her in a position to understand the implications of the transfer and thus give an informed consent.
8 There is authority for conduct occurring prior to a specified time limit being relevant to demonstrating the commencement of a course of conduct: Telecom Corporation of New Zealand Ltd v Commerce Commission [2012] NZCA 278, or to provide a full understanding of the background: National Standards Committee v Denham [2017] NZLCDT 10 at [43].
9 Tribunal Substantive Decision, above n 1, at [13].
10 At [38].
[36]The Tribunal also said:11
Whilst we make no finding against the respondent in respect to any of his conduct prior to 1 August 2002, we are satisfied that his actions fell well short of his duty to his client at that time, but more importantly, had ongoing implications for what was to follow.
The Tribunal clearly made a factual finding that Mr Morahan’s actions “fell well short of his duty to his client”. That was unfortunate and unnecessary. It went further than simply using this material as context or background.
[37] Although the Tribunal was careful to record that its disciplinary findings specifically related to events that occurred after 1 August 2002, the casual reader of the decision could easily be confused into thinking that the findings it made in respect of the pre-1 August 2002 conduct were somehow relevant. It is understandable that Mr Morahan may have formed that view.
[38] However, wrong as it was for the Tribunal to express any view that the pre- 1 August 2002 conduct by Mr Morahan was in breach of his professional obligations to Ms B, the Tribunal has formally only related its disciplinary findings to post-August 2002 conduct. The Tribunal said:12
The Tribunal finds that the conduct of the respondent in the period from August 2002 to August 2008 is in breach of rr 1.05 and 1.07 of the relevant Rules of Professional Conduct for Barristers and Solicitors.
[39] The question, therefore, is whether or not, by limiting its finding in this way, the Tribunal had avoided the consequences of appearing to have made a finding about pre-2002 conduct.
[40] One way that the Tribunal could have avoided this issue was to specify exactly what post-August 2002 matters it found had been established. It has not done that in any comprehensive way. The reader of the decision has been left to infer that the absence of any finding on some of the allegations means that the Tribunal did not take them into account in reaching its overall conclusions. That is unsatisfactory.
11 At [43].
12 At [53].
[41] However, overall I conclude is that there were sufficient matters established to justify the Tribunal’s finding that Mr Morahan was negligent or incompetent and that they were identified clearly enough in the decision for Mr Morahan to understand its basis. The shortcomings in respect of the decision-making process were not such as to invalidate the decision.
The framing of Charge 1
[42] As well as the Tribunal expressing a judgmental opinion on conduct which occurred prior to 1 August 2002, there is a further problem with the way Charge 1 was framed. After setting out what was said to be the particulars of the charge in the charging document, the Tribunal said:13
Therefore, the practitioner committed Charge 1 referred to above as follows:
The practitioner failed to discharge his professional obligations to Ms B as follows:
(a)The Standards Committee refers to paragraphs 20 and 21 above. In acting for Mr J, Ms B and the Trust in respect of the transfer of the Rosetta Road property from Mr J and Ms B to the Trust, without obtaining the prior informed consent of Ms B, advising her of the conflict of interest or advising her to obtain independent legal advice, the practitioner breached rr 1.04 and 1.07 of the Rules of Professional Conduct for Barristers and Solicitors; and/or
(b)The Standards Committee refers to paragraphs 22 above. In acting for Mr J in respect of the removal of Ms B as a trustee of the Trust, without obtaining the prior informed consent of Ms B, the practitioner breached rr 1.05 and 1.07 of the Rules of Professional Conduct for Barristers and Solicitors; and/or
(c)The Standards Committee refers to paragraphs 22 to 25 above. In continuing to act for the Trust, and Mr J, without obtaining the prior informed consent of Ms B, the practitioner breached rr 105 and 107 of the Rules of Professional Conduct for Barristers and Solicitors; and/or
[43] This clearly goes further than merely referring to the historical matters as context or background. The charge is alleging that a component of Charge 1 is events that occurred prior to 1 August 2002. That was not a course open to the Committee.
13 At [52].
[44] Mr Morahan submitted “[t]he problems caused by charging in relation to historical conduct were apparent to the appellant, and he attempted to address this by requiring discrete matters to be dealt with separately.”.
[45] It seems from the decision of the Tribunal dated 9 March 2017 that the attack made at the preliminary stage was not so much that the matters in Charge1 that related to events occurring before 1 August 2002 should be struck out, but that the charge was defective because it had been bundled up and covered a number of different actions/inactions.14 It is hardly surprising that the Tribunal declined the application to separate out the various components of the charge.15 However, if the application had been to strike-out those parts of the charge that related to events before 1 August 2002, the application should have been successful because they simply should not have been there.
[46] The next submission made by Mr Beck was that, the consequence of the Tribunal rejecting the application to require discrete matters to be dealt with separately was:
… that the whole of Charge 1 must stand or fall together. It is not permissible for the Committee at this stage to attempt to rescue part of the charge by claiming that it should be separated out.
[47]The Committee replied to this submission by saying:
The Tribunal did not have to be satisfied of every breach alleged to find the charges proved, but those it did find proved – when looked at as a course of conduct over several years – amounted to the requisite degree of negligence or incompetence.
[48] This Committee’s submission is undoubtedly correct. The fact that the allegations relating to pre-1 August 2002 events should not have been included in the charge does not automatically invalidate the charge itself. That would only be the result of the Tribunal had specifically relied on pre-1 August 2002 as constituent components of the negligence or incompetence it found established. What the Tribunal was required to do was to evaluate those aspects of the charge which it had found established to see whether or not, either in relation to the various alternative
14 Tribunal Charge Decision, above n 4, at [5]-[9].
15 See Duncan v Medical Practitioners Disciplinary Committee [1986] 1 NZLR 537.
charges, or cumulatively, what has been established justified a finding of some form of professional misconduct.
[49] Here, despite the confusion generated by the way the pre-1 August 2002 matters were referred to, it cannot be said that Mr Morahan was unclear as to the balance of the conduct that was being relied on or the findings that the Tribunal made in respect of it. At best, his case is that he was required to waste time addressing those matters when he should not have been. Even so, given that those were matters that were relevant as background or context, even without the allegations contained in Charge 1, it is likely that he would have wished to address them and provide his own perspective. Mr Beck submitted that by referring to the pre-1 August 2002 matters “[t]he Committee wished to tar the appellant with the pre-2002 brush in order to bolster its case.”.
[50] While it is a matter of speculation as to exactly why the particulars of Charge 1 included references to events before 1 August 2002, the reality is that they did not ultimately “bolster” the Committee’s case because no disciplinary findings were made in respect of them.16
Duplicity of charges
[51] Mr Beck submitted on behalf of Mr Morahan that “[c]ompletely separate disciplinary offences [had] all been lumped together in one charge and charged as a single breach of discipline.”. He noted that Charge 1 included allegations of acting for both parties to a transaction, acting against a former client, and failing to keep a proper record.
[52] Further, he noted that Charge 2 included allegations of breaches of duties regarding confidentiality, acting in proceedings in breach of rules, misleading pleadings and evidence, and breaches of discovery rules.
16 In this context, I use “disciplinary finding” to identify a finding which formed the basis of the decision of a disciplinary sanction, as opposed to a factual finding which was not relied on as constituting any form of misconduct leading to the imposition of penalty.
[53] Mr Beck argued “[t]his is simply not a proper way of addressing disciplinary complaints.”
[54]This submission is effectively an attack on the Court of Appeal’s decision in
Duncan v Medical Practitioners Disciplinary Committee.17
[55] Mr Beck acknowledged that in its decision of 9 March 2017 in response to his challenge on this very point, the Tribunal referred to Duncan and said:18
With those comments in mind, I am reluctant to adopt in any way a prescriptive approach to the manner in which the Standards Committee frames its charges.
[56] In response, Mr Beck submits “[i]t was wrong for the Tribunal to sidestep the issue. It ought to have considered whether the charge could clearly have been dealt with as a global allegation of misconduct.”. Mr Beck went on to try and distinguish the present circumstances from Duncan by saying that:
This was not a situation where there was a “course of conduct”, such as repeatedly over-prescribing or overcharging. The alleged conduct related to wholly different issues, at completely different times.
[57] I begin by noting that the Tribunal did not “sidestep” this issue. It relied on the Court of Appeal’s approach in Duncan as authorising the charge which covered a number of different components; a so-called “course of conduct” charge. Further, Duncan involved a course of conduct including quite disparate incidents involving different people, different dates and different actions. This is not dissimilar from the case before me.
[58]In Duncan, the Court of Appeal found:19
It is also clear that a number of complaints from the same or different sources may overlap or relate to the same subject matter. In that situation, an appropriate charge might well reflect more than one complaint. … It cannot be right that every complaint, if to be taken further, must be represented by a separate charge.
17 Duncan v Medical Practitioners Disciplinary Committee, above n 15.
18 Tribunal Substantive Decision, above n 1, at [19].
19 Duncan v Medical Practitioners Disciplinary Committee, above n 15 at 545.
[59]The Court of Appeal also concluded:20
But we can see nothing in the Act or in natural justice to prevent the Committee, after investigating a range of complaints, from regarding a comprehensive charge as appropriate as well as separate ones.
[60] Duncan has consistently been applied in New Zealand in relation to disciplinary investigations by professional bodies for over 30 years.
[61] In the legal setting, the concept of having an “omnibus” charge involving a number of separate incidents is well established. A recent example is Orlov v New Zealand Law Society.21 In Orlov, Heath J noted “The charge of serial negligence or incompetence is based on some 10 different cases.”.22
[62] To accept Mr Morahan’s contention that structuring charges in this nature renders them bad for duplicity, would be to depart from what the settled law in New Zealand is presently. I am not prepared to do that.
Charge 1
[52(a)-(c)] pre-1 August 2002 events
[63] Mr Morahan attacked the Tribunal’s findings in respect of the particulars for Charge 1 contained in the amended notice of charges at [52(a)-(c)]. The particulars relevant to this charge involved pre-1 August 2002 conduct.
[64] Given the Tribunal disclaimed relying on the pre-1 August 2002 particulars of Charge 1, it is not necessary to further address Mr Morahan’s complaints in respect of that issue.
[52(d)] the 2004 $60,000 advance
[65] [52(d)] of the amended notice of charges related to the advance of $60,000 from Ms B to the Trust in December 2004. The Tribunal said:23
20 At 546.
21 Orlov v New Zealand Law Society [2002] NZHC 2154.
22 At [151].
23 Tribunal Substantive Decision, above n 1, at [46].
The respondent said in his evidence that he did not know about the advance of $60,000 made by Ms B to the Trust in 2004. That advance appears to have been made to assist with the purchase of the Golf Road property. And he repeated his claim that he was not acting for her and owed her no duty. But this rather overlooks the fact that as solicitor for the Trust and as a trustee he would be expected to understand just how the transaction was to be financed and it was most relevant for him to know the source of funds coming through. Had he enquired, it may well have been made plain that Ms B was advancing money and she was confused about her position as a trustee of the Trust.
[66]The conclusion the Tribunal reached was that they took:24
… the view that [Mr Morahan] would have been aware that no-one else was acting for [Ms B] on this transaction and it should have been plain to him then that he had an irreconcilable conflict on his hands because his former client was now exposed to risk on the transaction and that needed to be disclosed and explained. Absent her informed consent, it was inappropriate for him to act for any of the parties involved.
[67] Mr Morahan submitted that this finding addressed a different issue from the subject matter of the charge. Mr Morahan faced charges under r 1.04 of the Rules of Professional Conduct for Barristers and Solicitors which provides that “A practitioner shall not act for more than one party in the same transaction or matter without the prior informed consent of both or all parties.” He argued the obligation in r 1.04 is different to the obligation identified by the Tribunal at [46] and [47] of its decision.
[68] Counsel for the Committee argued that the Tribunal did not make a finding that r 1.04 was breached. The only rules the Tribunal found breached in respect of Charge 1 were rr 1.05 and 1.07. This submission correctly records the conclusion reached by the Tribunal.25 I accept the Committee’s submission on this point, and therefore this matter is moot.
[69] Perhaps anticipating that the Committee would point out that the Tribunal did not find that r 1.04 had been breached, Mr Morahan further submitted that “… r 1.07 could only come into play if the requirement of r 1.04 had been satisfied.”
[70] That submission is not correct. The two rules are discrete. Rule 1.04 focuses on the practitioner acting for more than one party in the same transaction. Rule 1.07
24 At [47].
25 At [53].
is not limited in this way and encompasses the much broader concept of “likely conflict of interest among clients”. It is possible that such a conflict might arise in circumstances other than when the practitioner was acting for more than one party in the same transaction.
[71] Finally, Mr Morahan complained that “[t]here was no possible basis in the evidence on which the Tribunal could have found this charge proved.” The Tribunal did not find any charge in relation to breach of r 1.04 proved. It found breach of r 1.07 proved. The specific finding was:26
Those breaches involved his failure to recognise that he had conflicting obligations to Ms B either as an existing or former client into the Trust and his client Mr J in a situation where he was not free to act without proper informed consents and in circumstances where, had the position been fully explained to Ms B, to so act could reasonably be expected to be objectionable.
[72] This is a finding of conflict of interest, not of acting for more than one party to a transaction.
[52(e)] 2004 Golf Road property transactions
[73] [52(e)] of the amended notice of charges related to events that occurred in December 2004 when the Trust purchased the Golf Road property and Mr Morahan acted for the Trust, Mr J and Ms B on the transaction. It was alleged that this was a breach of rr 1.04 and 1.07. Specifically, the allegation was that Mr Morahan:27
… did not advise Ms B of the potential conflict of interest or advise her to seek independent legal advice concerning the purchase of the Golf Road property. The practitioner did not obtain informed consent from Ms B, to act for the Trust and Mr J also, in circumstances where Ms B was no longer a trustee of the Trust.
Mr Morahan argued that the finding by the Tribunal that he was acting for Ms B in respect of this transaction was incorrect.
[74]The respondent replied to this allegation by saying:
26 At [50].
27 At appendix A and [31].
The Tribunal did not make findings in respect of this particular and did not find r 1.04 had been breached. Therefore, it can be taken that the Tribunal did not consider it necessary to make a finding on this point in order to find Charge 1 proved.
[75] While the logic of that statement is correct, the problem with the Tribunal’s approach is that, having made a specific allegation, it was obliged to say whether it found the allegation had been proved or not. While counsel for the Tribunal relied heavily on the Court of Appeal’s decision in Duncan as authorising “course of conduct” or omnibus charges, the Tribunal seems to have lost sight of the caution issued by the Court of Appeal:28
… But we can see nothing in the Act or in natural justice to prevent the Committee, having investigated a range of complaints, from regarding a comprehensive charge as appropriate as well as separate ones.
… But in the consideration of the evidence and the findings, the separate charges must normally be kept completely separate. Any penal orders must clearly identify the particular findings on which they are imposed.
[76] Given that there is no finding that r 1.04 was breached, Mr Morahan is correct that this particular charge should have been dismissed. However, that does not mean that the overall “course of conduct” charge also fails. The Tribunal was entitled to consider whether, notwithstanding the failure of this particular charge, the other allegations had been sufficiently established as to justify a finding that Mr Morahan had breached his professional obligations. It seems to have done that.
[52(f)] the Trust’s 2000-2005 borrowing
[77] [52(f)] of the amended notice of charges relied on allegations that at times between February 2000 and July 2005 the Trust borrowed by way of loans various amounts from financial institutions, provided security over the Rosetta Road property for those loans and that Mr Morahan acted for the Trust in respect of obtaining these loans and arranging the security. The only date particularised was July 2005 in relation to a TSB bank mortgage.
[78] The allegation against Mr Morahan arising from these events was, firstly, that Mr Morahan failed to take appropriate steps to acknowledge and safeguard Ms B’s
28 Duncan v Medical Practitioners Disciplinary Committee, above n 15, at 546 and 547.
interests in the Rosetta Road property and, secondly, did not advise her to seek independent legal advice concerning the effects of the securities on her interests in the property knowing that the securities would have a negative impact on her interests. Specifically, that by arranging the securities without obtaining the prior informed consent of Ms B, Mr Morahan breached rr 1.05 and 1.07 of the Rules of Professional Conduct for Barristers and Solicitors.
[79] Mr Morahan submitted that r 1.05 prohibits a practitioner acting for a client against a former client:
… when, through prior knowledge of the former client or of his or her affairs which may be relevant to the matter, to so act would be, or would have the potential to be to the detriment of the former client or could reasonably be expected to be objectionable to the former client.
[80] Therefore, he argued that although the Tribunal said it was concerned that there was prior knowledge, it did not make any finding as to what knowledge Mr Morahan had acquired or how such knowledge could impact on arranging securities.
[81] Mr Morahan also said he had no confidential information from Ms B. It is not clear the basis upon which Mr Morahan was using the word “confidential”. The word confidential does not appear in r 1.05. What is referred to in r 105 is “prior knowledge of a former client of his or her affairs which may be relevant to the matter” (emphasis added). Mr Morahan also argued he was not acting “against” Ms B.
[82] Mr Morahan submitted that this case was similar to Morris v Morris.29 The Court in Morris acknowledged that the sort of relevant information that may become known during the course of acting for a party included that party’s “personality traits, fears and foibles”.30 The Court held that such information was unlikely to be of any relevance in that case given that the issue before the Court would be resolved by expert accounting evidence.
[83] However, a distinguishing feature appears to be that the Court in Morris was dealing with an application that a solicitor be disqualified from acting for the plaintiff’s
29 Morris v Morris [2015] NZHC 2315.
30 At [26].
former wife and her partner. The lawyer had not acted for the husband or the prior business partnership between the husband and wife for some 12 years. The case did not involve a disciplinary process alleging that r 1.05 (or its subsequent equivalent r 8.7.1 of the Conduct and Client Care Rules 2008)31 had been breached, but was a claim that the solicitor should be restrained from acting because he was in possession of information which was confidential and relevant to the new matter he was acting in.
[84] Further, in this case, Mr Morahan’s involvement in the litigation as both solicitor and a witness included a direct challenge to the important issue of whether the parties had acquired Rosetta Road themselves or through the Trust. The knowledge of how the property had been acquired had come to Mr Morahan in his capacity as Ms B’s lawyer. That information was confidential in the sense that, without Ms B’s consent, Mr Morahan would not have been free to divulge it.
[85] Counsel for the Committee pointed out that Mr Morahan had accepted that he had acted for Ms B in arranging the initial $150,000 loan to purchase Rosetta Road and the mortgage of her Johnsonville property, as well as on the purchase of the Rosetta Road property, the borrowing from Guardian Assurance secured over the Rosetta Road property and the subsequent transfer of that property to the Trust. Therefore, Mr Morahan obtained not only confidential information about Ms B’s financial affairs but also a knowledge of her personality, character and relationships.
[86] Mr La Hood, for the Committee, put particular emphasis on Mr Morahan’s knowledge of Ms B’s interest in the Rosetta Road property and his knowledge that her interest was vulnerable due to her no longer being a trustee. He also referred to the evidence given by Ms B that she was not aware that the Trust was taking out loans and securing them against the Rosetta Road property. He said that this borrowing was adverse to the equitable interest Ms B had in the Rosetta Road property and ultimately reduced the amount she could recover on the sale of the property.
[87] In relation to Mr Morahan’s claim that he had no prior knowledge relevant to the securities, Mr La Hood referred to the fact that Mr Morahan was aware Ms B had
31 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, Sch 1.
provided a substantial sum of money towards the purchase of the Rosetta Road property and was therefore aware that she had an interest in it. It was submitted that he was also aware that the money advanced by Ms B to the Trust was not protected by any loan documentation and said that because Mr Morahan was aware (and Ms B was not) that Ms B was no longer a trustee, this meant he knew that the money she had advanced to the Trust was at risk.
[88] In the findings relevant to this point, the Tribunal noted that the equity in Rosetta Road was substantially eroded as a result of the securities which Mr Morahan registered on behalf of the Trust and that it must have been apparent to Mr Morahan that no-one was protecting Ms B’s interests which were at risk as a result of those transactions.32 It further noted that Ms B’s evidence that she was unaware, until some years later, that she had been removed as a trustee.33 The Tribunal acknowledged Mr Morahan’s contrary contention but said:34
… The evidence contradicting her is equivocal and at best invites a conclusion that she may well have been confused about aspects of both property ownership and her position as a trustee …
[89]The overall conclusion reached by the Tribunal was that Mr Morahan:35
… had prior knowledge of [Ms B’s] affairs relevant to the matters in issue which if he continued to act had the potential to be to her detriment or could reasonably be expected to be objectionable.
[90] The conflict of interest arose from the fact that Mr Morahan had clearly acted for Ms B in the past and she had, therefore, become his client. He knew that Ms B had at least an equitable interest in Rosetta Road. He therefore must have known that registering the mortgage interests against Rosetta Road had at least the potential to be to her detriment, or could reasonably be expected to be objectionable exactly as the Tribunal found. Mr Morahan did have “prior knowledge” and that “prior knowledge” was relevant.
32 Tribunal Substantive Decision, above n 1, at [33], [34] and [51(e)].
33 At [51(e)].
34 At [51(c)].
35 At [51(e)].
[91] Mr Morahan also submitted that he was not acting “against” his former client so as to engage r 1.05. However, the registration of the mortgages clearly had the potential to affect her interest in the property. Therefore, registering those mortgages was “acting against” her interests or could reasonably be expected to be objectionable. The Tribunal’s conclusion to this effect is also justified.
[92] Mr Morahan also argued that it was not correct to say that Ms B was “exposed to risk” on the transaction because “[s]he had no property right or interest in the property. She had made a personal, unsecured, loan to the Trust. Her rights were unaffected by the sale of the property.”.
[93] Dealing with the first component of that, Ms B clearly had an equitable interest in the property. Mr Morahan knew that. Secondly, whether Ms B’s rights were “unaffected by the sale of the property” is irrelevant to this particular charge. [52(f)] of the amended notice of charges refers to the arranging securities over the Rosetta Road property. It is the charge contained in [51(g)] that relates to the sale of the property.
[52(g)] the sale of the Rosetta Road property and Ms B’s advance
[94] [52(g)] of the amended notice of charges referred to allegations that “[t]he practitioner acted for the Trust in relation to the sale of the Rosetta Road property.” Specifically that:
In acting for the Trust in respect of the sale of the Rosetta Road property without obtaining prior informed consent of Ms B, the practitioner breached rr 1.05 and 1.07 …
[95]The Tribunal’s conclusion on this point was that:36
[Mr Morahan accepted] that, when he acted for the Trust on the sale of Rosetta Road, Ms B’s interest was unprotected in respect of her advance of $150,000. We take the view that he would have been aware that no-one else was acting for her on this transaction and it should have been plain to him then that he had an irreconcilable conflict on his hands because his former client was now exposed to risk on the transaction and that needed to be disclosed and explained. Absent her informed consent, it was inappropriate for him to continue to act for any of the parties involved.
36 Tribunal Substantive Decision, above n 1, at [47].
[96] Mr Morahan argued that he had no “prior knowledge”. He also submitted the Tribunal did not make any findings as to what knowledge Mr Morahan had acquired or how it was related to the sale of the property.
[97] Mr Beck, for Mr Morahan, adopted a very narrow view of how prior knowledge needed to be relevant. He started by saying that no “confidential” information had been acquired by Mr Morahan. But that is not correct. The fact that Ms B had borrowed $150,000 secured against her Johnsonville property, that she had advanced those funds for the express purpose of the purchase of the Rosetta Road property, and that no loan documentation had ever been prepared securing her advance was confidential information that Mr Morahan had learned about his client in the course of providing legal services to her.
[98] The second argument advanced by Mr Beck was that “… the sale of the property could not have involved any confidential information provided by Ms B or knowledge of her affairs.”
[99] Obviously, the conveyancing in relation to the sale transaction did not involve confidential information. It was the fact that the sale was occurring at all that raised a conflict of interest in relation to Mr Morahan’s knowledge that the sale would effectively deprive Ms B of whatever equitable rights she then held in relation to the property. In that sense, the transaction was clearly “against” her interests.
[100] Mr Beck’s final submission on this charge was that “[Ms B] was not a party to the transaction”. There is some irony in this given that she was removed as a trustee without her knowledge with the involvement of Mr Morahan and, but for that removal, she would still have been a trustee and would have been required to execute the transfer.
[101]There was no error by the Tribunal in relation to their finding on this point.
[52(h)] Mr Morahan’s records of advice
[102]Charge [52(h)] of the amended notice of charges relies on facts set out in [32]-
[37] of that document. These paragraphs relate to two different matters. [32] alleges Mr Morahan:
… did not maintain appropriate records of the advice he provided to Mr J, Ms B and/or the Trust when acting for them in relation to the purchase of the Golf Road property.
[103] [33]-[37] refer to Mr Morahan’s role in acting for the Trust on various occasions between February 2000 and July 2005 in relation to sums it borrowed from various financial institutions which was secured against the Rosetta Road property.
[104] The obvious defect in [33] of the amended notice of charges is that, without particularising the specific financial transactions involved that pre-dated 1 August 2002, it refers to transactions going back as far as February 2000. It should not have done so and the Committee was only permitted to base a disciplinary allegation on events occurring after 1 August 2002.
[105] The one instance that is particularised in [33] relates to a restructuring of mortgages that occurred in July 2005 resulting in the Rosetta Road property becoming subject to a single mortgage in favour of TSB bank.
[106][34] of the amended notice of charges makes the allegation that:
[Mr Morahan] failed to take appropriate steps to acknowledge and safeguard Ms B’s interest in the Rosetta Road property. [Mr Morahan] did not advise Ms B to seek independent legal advice concerning the effect of the securities on her interest in the Rosetta Road property when he knew, or should have known that the securities would have a negative impact on her interests.
[107] Finally, at [35] the amended notice of charges refers to the fact that the Trust sold the Rosetta Road property in July 2005 with a net sale proceeds being $34,071. At [36] it alleges that Mr Morahan acted for the Trust in relation to the sale. And at
[37] it says:
[Mr Morahan] did not maintain appropriate records of the advice he provided to Mr J, Ms B and/or the Trust when acting for them in relation to the sale of the Rosetta Road property.
[108] Mr Morahan’s challenge to this charge is based on his denial that he provided advice in relation to these transactions, that the Tribunal did not make any finding that advice was provided, and that none of its findings relating to the recording of that advice. It was submitted that in the absence of such findings, this charge should have been dismissed.
[109] Mr La Hood, for the Committee, acknowledges that the Tribunal did not make any finding that advice was provided by Mr Morahan in relation to these transactions, nor did it make findings about recording that advice. However, he argued that this was just one particular of a charge and that the Tribunal did not appear to rely on it in coming to the conclusion that Charge 1 was proved. It was submitted that “it was not necessary for the Tribunal to make any findings in respect of this particular to reach that conclusion.”
[110] This approach once again ignores the guidance given by the Court of Appeal in Duncan.37 Having made the specific allegation, the Tribunal was obliged to identify whether it found that allegation proved or not. When such an allegation is included as part of a course of conduct or omnibus charge, a failure by the Tribunal to indicate whether it finds the allegation proven or not gives rise to the problem that it is not clear from the decision itself exactly what matters the Tribunal relied on to find the “course of conduct” charge was established.
[111] While the failure of the Committee to establish some components of the course of conduct charge does not result in the failure of the charge itself (assuming that the components of the charge found established were in themselves sufficient to justify the overall conclusion reached), the Tribunal had an obligation to identify which components of that course of conduct charge it was relying on in reaching its conclusion that it had been established. The Tribunal’s reasoning therefore needs to be scrutinised.
37 Duncan v Medical Practitioners Disciplinary Tribunal, above n 15, at 546 and 547.
Finding of negligence or incompetence
[112]The Tribunal said:38
… that the respondent’s conduct reaches a threshold of negligence or incompetence in his professional capacity, to such a degree that it reflects on his fitness to practice as a barrister or a solicitor or tends to bring the profession into disrepute (s 112(1)(c)) of the 1982 Act).
It found Charge 1 proved accordingly.
[113] Mr Morahan complains that this conclusion was unsupported by any reasoning process in that it was not specified:
(a)whether the finding was negligence or incompetence;
(b)what yardstick was applied to reach the conclusion; and
(c)whether Mr Morahan was unfit to practice, or the profession had been brought into disrepute.
[114] He also argues that there was no expert evidence before the Tribunal and no evidentiary basis upon which the Tribunal could conclude that there was conduct such as to amount to professional negligence, to reflect on Mr Morahan’s fitness to practice or to bring the profession into disrepute.
[115] The Committee correctly submitted that a finding of negligence does not require expert evidence. It referred to a passage from Ethics, Professional Responsibility and the Lawyer:39
Although the Act sets out a test (or tests) for misconduct and established incidents of misconduct exist at common law, “misconduct” is an essentially vague term. It depends for its definition on the opinion of those members of the profession who are given the task of determining whether a breach had occurred.
38 Tribunal Substantive Decision, above n 1, at [55].
39 D Webb, K Dalziel and K Cook Ethics, Professional Responsibility and the Lawyer (3rd Ed, LexisNexis, Wellington, 2016) at 109.
[116] There are a number of cases in both a medical and legal context where the Court has said that the Tribunal is a representative body and it is not necessary for it to hear expert evidence from other members of the profession.40
[117] In relation to the submission that it was not clear whether the finding was negligent or incompetent or what yardstick was applied, whether Mr Morahan was unfit to practice or the profession had been bought into disrepute, the Committee accepts that the Tribunal did not delineate between these matters but submitted that it was not necessary to do so. It says that the Tribunal’s conclusion “… must be taken as having been satisfied either one or both of the grounds applied.”. The Committee refers to the observations of Toogood J in Lim v Medical Council of New Zealand where he said:41
The wording of a decision should not be interpreted in an unduly technical way and “it is the substance of a decision which is to be considered”.
[118] Mr Morahan replied that “… it is not possible for a finding of negligence to stand, even if there are found to have been some breaches of the rules.”.
[119] The Committee responded by arguing when a decision was read as a whole, it was clear what conduct was held to be a breach of which rule.
[120] There is no doubt that the Tribunal did not feel it necessary to explain precisely whether their finding was one of negligence, incompetence reflecting on fitness to practice or conduct which tended to bring the profession into disrepute. Its conclusion refers to each one of these thresholds having been reached.42 The reaching of any one of the thresholds would have been sufficient to support the finding under s 112(1)(c) of the 1982 Act.
40 W v Auckland Standards Committee 3 [2002] NZCA 401; Collier v Nursing Council of New Zealand [2001] NZAR 74 at [22]; C v Professional Conduct Committee of the Nursing Council of New Zealand [2017] NZHC 1178.
41 Lim v Medical Council of New Zealand [2016] NZHC 485.
42 Tribunal Substantive Decision, above n 1, at [55].
[121] The Tribunal’s finding must be seen in context of the surrounding paragraphs of its decision. In these paragraphs, the Tribunal refers to some of the concessions that Mr Morahan made before them. This includes where they say that Mr Morahan:43
… also accepted that he had an obligation to a former client which might go as far as having to say that he could no longer act for any of the parties involved.
Its decision also records Mr Morahan’s agreement that the fact that no-one had objected to him acting for Mr J and the Trust did not absolve him from his professional obligations.44 The decision further identifies that it was rr 1.05 and 1.07 that had been breached.45 The Tribunal then sets out what seems to be an important conclusion:46
… the respondent allowed himself to be drawn into a situation where he ignored the rights of the complainant because of the longstanding client relationship he had with Mr J. He further overlooked that he had obligations to his fellow trustees and in that context particularly Ms B.
[122] The finding that there had been breaches of the rules is a finding that was open to the Tribunal. Indeed, in submitting that the finding of negligence should not stand, even if there were breaches of the rules, Mr Beck seems to almost concede that there may have been a basis for finding the rules had been breached.
[123] The Tribunal has clearly concluded that the conduct that breached the rules amounted to either negligence or incompetence in Mr Morahan’s professional capacity to such a degree that it reflected on his fitness to practice, or amounted to conduct bringing the profession into disrepute had been established. That conclusion was open to it. It would have been more helpful if the Tribunal had discussed some of the matters that it did not find established, instead of simply not mentioning them, but that does not invalidate the decision.
Charge 2
[124]This charge relates to events that broadly covers two separate topics:
43 At [45].
44 At [49].
45 At [53].
46 At [54].
(a)Firstly, actions taken by Mr Morahan on behalf of Mr J/the Trust, following the separation of Mr J and Ms B in July 2009 (the preparation and execution of a deed removing Ms B and her children as beneficiaries of the Trust on 27 August 2009, the eviction of Ms B from the Golf Road property on 16 September 2009 and correspondence on 22 May 2012 by Mr Morahan, on behalf of Mr J, requiring Ms B to give possession of her BMW motor vehicle over to Mr J by delivering it to Mr Morahan’s offices.)
(b)Secondly, Mr Morahan’s involvement in Family Court proceedings instituted by Ms B against Mr J and the trustees of the Trust (including himself).
[125] There were a number of specific complaints in relation to Mr Morahan’s involvement in the proceedings.
[53] Mr Morahan acting for the Trust and Mr J
[126] The first component of Charge 2 is contained in [53] of the amended notice of charges. This charge related to allegations that:
(a)confidential information which Mr Morahan was said to have held about Ms B was at a more than negligible risk of disclosure and such disclosure would undermine the fiduciary obligations Mr Morahan owed to Ms B in a way contrary to r 8.7 of the Rules of Conduct and Client Care;47 and
(b)Mr Morahan’s actions in acting for Mr J and the Trust against the interests of Ms B fell short of the standard of competence and diligence the public is entitled to expect a reasonably competent lawyer contrary to r 12(a) of the Lawyers and Conveyancers Act 2006.
47 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, Sch 1.
[127] In relation to the charge under r 8.7 (Use of confidential information), the Tribunal noted that the four requirements of r 8.7.1 were cumulative, namely that:
(a)that the lawyer holds information confidential to the former client; and
(b)disclosure of that confidential information will be likely to affect the interests of the former client adversely; and
(c)there is more than negligible risk of disclosure of the confidential information; and
(d)the fiduciary obligation owed to the former client would be undermined.
[128] The Tribunal held that the information that Mr Morahan knew about Ms B met the test of being confidential information,48 but failed to meet the test of affecting Ms B adversely in the sense that “… disclosure of the information assisted her positively by confirming that she personally, not the Trust, was an original purchaser of 4 (sic) Rosetta Road…”.49 The Tribunal then concluded “Absent the element of adverse effect, the Tribunal finds that the respondent has not breached r 8.7 of the Rules of 2008.”50
[129] Mr Beck, on behalf of Mr Morahan, challenged the way in which the Tribunal had dealt with the allegation of breach of r 8.7 submitting “That should have led to a clear statement that this charge was not proved and was therefore dismissed.” That is exactly what the Tribunal said.51
[54] Mr Morahan’s dual roles in the Family Court proceedings
[130] [54] of the amended notice of charges alleged that Mr Morahan acted in the Family Court proceedings when he knew he might be required to give evidence of a contentious nature, or where his conduct and/or advice was an issue in the matter
48 At [76].
49 At [77].
50 At [78].
51 At [78].
before the Court contrary to any or all of rr 13.5.1 and 13.5.3 of the Rules of Conduct and Client Care.52 In relation to the charges under these rules, the Tribunal found that Mr Morahan had breached both of these provisions.53
[131] Mr Morahan, in his defence before the Tribunal, claimed that there was no indication at the time of the commencement of the proceedings that he would be required to give evidence of a contentious nature. He said that the evidence relating to the purchase of the Rosetta Road property was not a contentious matter because it could have been established from the certificate of title, and that it was not necessary for him to give evidence on this point. To this effect, Mr Beck’s written submissions said:
There was no indication at the time of commencement of the proceedings that the appellant would be required to give evidence at all, let alone evidence to a contentious nature. The appellant had not provided an affidavit and therefore did not anticipate that he will be required to give evidence.
[132]The Tribunal rejected these assertions. It said:54
[85] … The issue of who purchased the Rosetta Road property was put in contention at the commencement of the proceedings. The statement of defence not only denied that Mr J and Ms B purchased the property but went on to say that the Trust had purchased the property thus raising a positive defence.
[133] In coming to that conclusion, the Tribunal specifically adopted the finding of Judge Grace in the Family Court.55 Judge Grace had said:56
[18] This case involved a situation where the solicitor acting for the respondent husband, and who was a trustee in the Trust, also purportedly acted for the applicant on the sale of her property and on the purchase of a new property by the parties jointly. It was he who claimed that the property had been purchased by the Trust where in fact it had not been. It was his Trust account which, when disclosed, established that funds flowed through to the respondent husband’s Trust account and not through the Trust account in the name of the Trust. That much (sic) must have been known to that solicitor.
52 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, Sch 1.
53 Tribunal Substantive Decision, above n 1, at [85].
54 At [85].
55 At [86].
56 Family Court Decision, above n 3, at [18].
[134] Mr Morahan also advanced in the Tribunal claims which were repeated before me. He claimed that the pleadings were settled by Mr Delaney (counsel for the defendants) and asserted that as solicitor on the record, he had little part in settling the pleadings. Further, he argued the pleadings were not evidence and that a statement can be denied in order to put a party to the proof of it, and said there is no case for disciplinary action on the basis of an allegation denied in the pleadings which later turns out to be correct.
[135] These submissions are untenable. The issue of whether or not Rosetta Road was acquired by Mr J and Ms B personally, or by the Trust, was a significant issue in the Family Court proceedings. The denial in the statement of defence that it had been acquired by the parties personally, coupled with the positive assertion that it was the Trust that had acquired the property, ensured that this was going to be a major point of contention and one in respect of which Mr Morahan would be likely to be required to give evidence.
[136] The findings made by Judge Grace in the Family Court costs decision are helpful in indicating the importance of this issue and the significance of the actions of Mr Morahan in persisting in denying the true position. Judge Grace said:57
[19] The trustees persisted in denying a factual situation which they either knew to be incorrect, or at the very least, had documentation which clearly established the correct position, but which documentation they either refused to disclose or acknowledge, until well into the hearing of this matter. Had they disclosed that information or acknowledged the correct factual position, then a substantial portion of this hearing may well have been avoided. That stance increased both the time involved in the hearing, and added to the overall cost of the hearing.
[20] This matter was further exacerbated by the respondent’s continual persistence throughout his evidence in maintaining that the Trust had purchased the property at Rosetta Road. That was factually incorrect …
[21] These factors go to the conduct of the respondent husband, and solicitor [Mr Morahan] as a trustee, and the accountant, who is also a trustee. It is their behaviour which is relevant when assessing whether or not there should be an upward movement in the amount of cost to be awarded.
57 Family Court Decision, above n 3.
[137] Any suggestion that this was just a case where a pleading which had been denied later turned out to be correct grossly understates the nature and extent of what Mr Morahan did.
[138]Mr Beck also submitted that:
In the Family Court proceedings, the issue was who had purchased the property as a matter of law. This was a legal issue the Court had to resolve. The appellant’s evidence on the point was not of a contentious nature such as to engage the rule. He accepted unreservedly the proposition put to him by counsel.
[139] Who had purchased the property was not simply a question of law. The Court was required to make a finding of fact as to whether to accept the evidence of Ms B that she and Mr J purchased the property in their own names or the evidence of Mr J and Mr Morahan that the Trust purchased the property.
[140] Mr Morahan did not simply unreservedly accept the proposition put to him. He maintained, up until the point where the late production by him of the documentation during the course of the hearing meant that it was simply untenable for him to continue to maintain any longer, that Rosetta Road had been purchased by the parties.
[141] Mr Beck referred to the extract from the transcript in the Tribunal in support of his contention. However, the extract referred to actually contradicts the claim that all Mr Morahan did was unreservedly accept a proposition put to him by counsel. The relevant section of the transcript starts by recording the question in cross-examination as “And it’s correct, isn’t it, that you have always denied that the property was originally purchased by [Mr J] and [Ms B] …”. Mr Morahan answered “if you say so, yes.”
[142] The Tribunal was correct to find that “the issue of who purchased the Rosetta Road property was put in contention at the commencement of the proceedings.”58 It was obvious from the start that Mr Morahan would likely be required to give evidence and that evidence would be contentious.
58 Tribunal Substantive Decision, above n 1, at [85].
[55] Mr Morahan’s pleadings and evidence in the Family Court Proceedings
[143] [55] of the amended notice of charges alleged that Mr Morahan filed proceedings and gave evidence in the Family Court proceedings that he knew, or ought to have known, was false and/or misleading in contravention of rr 3, 13.1 and 13.10.59
[144]Rule 3 is a general rule which provides:
In providing regulated services to a client, a lawyer must always act competently and in a timely manner consistent with the terms of the retainer and the duty to take reasonable care.
[145] Rule 13.1 focuses on a lawyer’s obligations to the Court and says, “A lawyer has an absolute duty of honesty to the court and must not mislead or deceive the court.”
[146] Rule 13.10 also relates to a lawyer’s obligations to the court and says, “A lawyer must not adduce evidence knowing it to be false.”
[147] Mr Beck submitted that “Rule 13.10 concerns the duty of counsel dealing with witnesses in litigation. It has no bearing on the role of the lawyer giving evidence.”
[148] This is a startling proposition and one I reject. In this case, Mr Morahan was both solicitor on the record and a witness. He elected to call himself to give evidence and therefore adduced his own evidence. He is therefore bound by r 13.10. I note that here the Tribunal did not make any particular finding about a breach of r 13.10. I do still, however, think it is important to make the point that in a situation such as this where a solicitor on the record makes a decision to give evidence himself, r 13.10 will apply. In light of the lack of findings based on r 13.10, this appeal point is moot in any case.
[149] In relation to the filing of false or misleading proceedings, Mr Beck claimed that “the solicitor on the record would have no part in settling the pleadings.” I do not accept that proposition either. A solicitor cannot abandon his or her responsibilities simply because counsel is instructed. Lawyers who are solicitors on the record breach their obligations if they file pleadings which they know to be false.
59 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, Sch 1.
[150] As solicitor on the record, and someone who had been intimately personally involved in the transaction in question both as solicitor for all parties and as a trustee of the Trust, Mr Morahan knew or ought to have known that the statement of defence which asserted that the Trust had purchased the property was false.
[151] Mr Beck went so far as to say, “there is no obligation to ensure that a pleading is not ‘false and misleading’”. This is another startling proposition. While pleadings are not evidence, any solicitor who knowingly files a statement of claim or defence with allegations in it which they know, or ought to have known are false, misleads the court.
[152] As the Tribunal noted, it is one thing to plead a simple denial putting the plaintiff to proof, and it is another to affirmatively plead something which the solicitor knows to be untrue.60 Here, the offending passage in the statement of defence said:
…the original proprietors of 110 Rosetta Road were the plaintiff and first and second named defendants as trustees of the PGJ Trust.
[153]That affirmative denial was false.
[56] breach of discovery orders
[154] [56] of the amended notice of charges related to discovery in the Family Court proceedings. It was alleged that by failing to comply with the discovery order made in the Family Court, Mr Morahan failed to maintain proper standards of professionalism and/or comply with his obligations as an officer of the Court contrary to rr 13.1 and 13.9 of the Rules of Conduct and Client Care.
[155] [56] of the amended notice of charges alleged that by failing to comply with the discovery orders, the practitioner failed to maintain proper standards of professionalism and/or comply with this obligations as an officer of the court in relation to the Family Court proceedings contrary to rr 13.1 and 13.9.61
60 Tribunal Substantive Decision, above n 1, at [98].
61 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, Sch 1.
[156] Rule 13.1 says “A lawyer has an absolute duty of honesty to the court and must not mislead or deceive the court.”
[157]Rule 13.9 relates specifically to discovery obligations. It provides:
A lawyer who acts for a party in a proceeding must, to the best of the lawyer’s ability, ensure that discovery obligations are fully complied with by the lawyer’s client and that the rules of privilege are adhered to …
[158] Mr Morahan claims that discovery orders made in the Family Court in Porirua were made against his client and no discovery orders were made in relation to him. He notes that the Tribunal accepted that the discovery orders were not made against him personally and says that should be the end of the matter.
[159]In relation to this issue, the Tribunal said:62
Rule 13.9 of the 2008 Rules requires a lawyer acting for a party to ensure that discovery obligations are fully complied with by the lawyer’s client. The respondent was the person in possession of the material about which discovery was required. It was he who had the obligation under the rule to ensure that Mr J made full discovery.
[160] The Tribunal again refers to the decision of Judge Grace on costs where he said:63
The trustees persisted in denying the factual situation which they either knew to be incorrect, or at the very least, had documentation they either refused to disclose or acknowledge, until well into the hearing of this matter.
[161] It is inescapable that Mr Morahan breached his obligation under r 13.9 to ensure, to the best of his ability, the discovery obligations of his client were fully complied with.
Finding of negligence or incompetence
[162] As with Charge 1, Mr Morahan says that the conclusions reached by the Tribunal did not specify whether the finding was negligence or incompetence, what yardstick was applied, and whether Mr Morahan was unfit to practice or the profession
62 Tribunal Substantive Decision, above n 1, at [94].
63 Family Court Decision, above n 3, at [19].
had been brought into disrepute. He says that there is an insufficient basis for himself or the Court to determine how the conclusion of the Tribunal was reached.
[163] Although the Tribunal did not always explain why it elected not to make findings on some of the allegations, it did signal what matters it regarded as important.
For example, the Tribunal said:64
[72] The Tribunal accepts that the respondent had prior knowledge of Ms B’s affairs relevant to the matters in issue (relating to property transactions) but it is less clear in the circumstances of this case that it was information which if he continued to act had the potential to be to her detriment or could reasonably be expected to be objectionable (para [47](e)). The focus of the complaint here was the respondent continuing to act for Mr J and the Trust in the Family Court proceedings.
[164] The Tribunal went on to set out the four necessary elements for a breach of r 8.7 to be made out and explained why not all of those cumulative requirements were met. The Tribunal was clear that was why it concluded that r 8.7 had not been breached.65
[165]The Tribunal also made it clear what it was concerned about:66
[82] The respondent should never have been acting in the contested relationship property proceedings given the additional circumstance that he was a party to the Family Court proceedings as well.
[83] Not only did the lawyer here act against his former client, he presented the case in such a way as to compel her to call correcting evidence from the lawyer himself adding complexity and delay and inevitable consequential added costs.
[166] The Tribunal then explained why it found rr 13.5.1 and 13.5.3 had been breached. It made it clear that this case was different to a pleading where there is a simple denial or putting to proof because there was a counter allegation which was false or misleading.67
[167] The Tribunal detailed its finding in holding that Mr Morahan had a duty to ensure that counsel was properly briefed to ensure the accuracy of pleadings. Similar
64 Tribunal Substantive Decision, above n 1, at [72].
65 At [75]-[77].
66 At [82]-[83].
67 At [85] and [88].
comments apply to the Tribunal’s findings in relation to the breach of discovery obligations.68
[168] It was not necessary for the Tribunal to articulate whether their findings were based on negligence or incompetence, or to set out a “yardstick”. It found that the express provisions of the rules had been breached. At the very least that will either be negligent or incompetent.
[169]The specific conclusion of the Tribunal was:69
[96] The Tribunal finds that the respondent’s conduct reaches a threshold of negligence or incompetence in his professional capacity, to such a degree that it reflects on his fitness to practice as a barrister or solicitor and tends to bring the profession into disrepute.
[170]That conclusion is consistent with the findings that preceded it.
[171] Here, the charges were laid in the alternative. Negligence or incompetence were the least serious of the charges. It cannot be tenably argued that a practitioner could fail to comply with a variety of rules over an extended period of time but yet not be either negligent or incompetent.
Penalty decision – 22 November 2017
[172] The Tribunal dealt with the issue of penalty in a separate decision dated 22 November 2017.70 This was issued following receipt of written submissions.
[173] The penalty imposed was suspension from practice for four months (effective from 4 December 2017)71; costs in favour of the applicant totalling $37,171.63; and a refund to the Wellington Standards Committee 2 of the Tribunal’s costs of the hearing of $12,272. Mr Morahan challenges each aspect of this decision.
[174] Mr Morahan submits that four matters were not specifically addressed by the Tribunal and should have been, namely the:
68 At [89].
69 At [96].
70 Tribunal Penalty Decision, above n 2.
71 Subsequently suspended pending the hearing of this appeal.
(a)historical nature of the conduct;
(b)absence of any deliberate act;
(c)absence of any consequence for Ms B; and
(d)likelihood of repetition.
[175]I will address each of these separately.
Historical nature of the conduct
[176] The submissions of Mr Morahan misrepresent the Tribunal’s findings as to the historical nature of the conduct. He submits that the Tribunal found a fundamental error was made by Mr Morahan some 15 years ago.
[177] While the Tribunal accepted the submission that Mr Morahan made an error 15 years ago, its findings were that there were many ongoing breaches after that initial error. What the Tribunal actually found was that:72
The respondent’s conduct involved breaches of a number of rules of conduct and client care over a number of years. Firstly, by allowing his long-standing client relationship with one person to overlook his obligations to others involved and, secondly, by his conduct in respect of proceedings in the Family Court …
[178] The conduct in this case is not accurately described as “historical”. It extended over a lengthy period of time up to and including the proceedings in the Family Court which were concluded shortly before the complaint was made.
Pre-1 August 2002 conduct
[179] Mr Morahan asserted that the Tribunal had wrongly taken into account a pre-1 August 2002 conduct when setting the penalty. He noted that in referring to pre- 1 August 2002 conduct, the Tribunal had relied on Daniels v Complaints Committee 2 of the Wellington District Law Society.73
72 Tribunal Penalty Decision, above n 2, at [5].
73 Daniels v Complaints Committee 2 of the Wellington District Law Society [2011] 3 NZLR 850.
[180] However, Mr Morahan confuses the issue of jurisdiction for the lodging of a complaint about events which occurred prior to 1 August 2002, with factors relating to penalty. As the High Court in Daniels stated:74
In considering sanctions to be imposed upon an errant practitioner, a disciplinary tribunal is required to view, in total, the fitness of a practitioner to practice, whether in the short or long term.
[181] There are many relevant factors that can be considered in forming a view as to the fitness of a practitioner to practice. These can include:
(a)whether the conduct in question was a one-off event in an otherwise blameless career;
(b)whether the practitioner has insight into the consequences of his or her actions;
(c)whether the practitioner has expressed remorse or apologised for their actions;
(d)whether the conduct in question is part of a consistent pattern of behaviour extending over a long period of time (including in this case, prior to 1 August 2002); and
(e)any prior disciplinary sanctions that may have been imposed on the practitioner.
[182] In that context, there was no reason why the Tribunal should not have had regard to the fact that the conduct in question had commenced prior to 1 August 2002.
No deliberate conduct
[183] Mr Morahan claims that there was no deliberate conduct on his behalf and that the Tribunal “appears to have accepted that the conduct in question was a result of an error of judgment”. There is nothing in the Tribunal decision that supports the claim
74 At [34].
that all that was involved was an error of judgement which occurred long in the past.
On the contrary, the Tribunal found:75
[6] We accept the applicant’s submission that the respondent’s overall course of conduct was relatively serious which requires us to consider suspension as the starting point for imposition of an appropriate penalty bearing in mind the purpose of penalty and the requirement to impose the least restrictive outcome.
[184] Mr Morahan seems to be arguing that a finding of negligence or incompetence does not justify suspension.
[185] However, there have been examples where suspension has been imposed following a substantiated charge of negligence.76 Suspension was imposed in Monckton for negligence notwithstanding the fact that the practitioner had accepted responsibility for her actions and ultimately pleaded guilty.77
Consequences for Ms B
[186] Mr Morahan claims that the Tribunal failed to consider that there was no evidence of any financial impact from his conduct on Ms B. However, the Tribunal was clearly aware of, and specifically noted, Mr Morahan’s submissions to this effect.78 Mr Beck’s submission on behalf of Mr Morahan was that in this case “any loss was solely in the realms of theory”.
[187] It was clear that the Tribunal did not accept that submission. This is most obvious in relation to Charge 2. The Tribunal found that Mr Morahan should never have been acting in contested relationship property proceedings, and also held:79
Not only did the lawyer here act against his former client he presented the case in such a way as to compel her to call correcting evidence from the lawyer himself adding complexity and delay and inevitable consequential added cost.
75 Tribunal Penalty Decision, above n 2, at [6].
76 Waikato Bay of Plenty Standards Committee 1 v Monckton [2014] NZLCDT 51.
77 At [15].
78 Tribunal Penalty Decision, above n 2, at [11(d)].
79 Tribunal Substantive Decision, above n 1, at [83].
[188] While the Family Court ameliorated some of the costs consequences by the costs order it made, that order could not address the inconvenience and distress caused to Ms B by Mr Morahan’s conduct.
[189] Had Mr Morahan’s conduct caused specific financial loss to Ms B, that is likely to have been regarded as an aggravating feature. There is no suggestion that the Tribunal imposed a penalty because of any aggravating feature such as this.
Likelihood of repetition
[190] Mr Beck submits that there is no likelihood that Mr Morahan will repeat this conduct. He says given this assumption the principal aim of any sanction should only be deterrence. Therefore, he reasons that an order of censure and a financial penalty would be sufficient to achieve this aim.
[191] The Tribunal did not conclude that there was an absence of any likelihood of the conduct being repeated. Indeed, its conclusions were to the opposite effect.
[192] In the Tribunal, the Standards Committee relied on factors which it submitted were relevant to the penalty to be imposed including Mr Morahan’s previous disciplinary history:
(a)his failure to take care to recognise duties and avoid conflicts of interests;
(b)the overly technical approach taken to defence of the charges;
(c)the unprofessionalism Mr Morahan displayed when he made disparaging comment about the complainant in his initial response to her complaint; and
(d)the fact that Mr Morahan had shown that he was not remorseful for his conduct.
[193]The Tribunal clearly accepted those submissions.
[194]In the penalty decision, the Tribunal specifically said:80
In reaching [the decision on suspension] we have preferred the submissions of the applicant. While the respondent made the single mistake that his counsel refers to, that mistake gave rise to the breaches that we have found proved against him and which occurred over several years. The respondent’s previous disciplinary finding is relevant because it relates to conduct not too dissimilar to the charges before us.
[195] Given Mr Morahan’s history of prior conduct coupled with his lack of remorse and unwillingness to accept responsibility for this conduct, it was open to the Tribunal to consider that a period of suspension was required to mark the gravity of the conduct and ensure that there was no repetition.81
[196] Mr Morahan contends that the Tribunal gave no consideration to the possibility that anything less than suspension could achieve the objective of disciplinary proceedings.
[197] In considering whether to impose a penalty of suspension, the Tribunal acknowledged that the starting point in considering penalty must always be the nature and seriousness of the negligence or incompetence of the conduct complained of.82
[198] The Tribunal went on to find that Mr Morahan’s conduct involved breaches of a number of rules of conduct in client care over a number of years. It specifically referred to Mr Morahan’s conduct in relation to the Family Court proceedings that had been criticised by that Court.
[199] The Tribunal’s reasons for not considering penalties less than suspension were set out in its conclusion:83
We accept the applicant’s submission that the respondent’s overall course of conduct was relatively serious which requires us to consider suspension as a starting point for imposition of an appropriate penalty bearing in mind the purpose of penalty and the requirement to impose the least restrictive outcome.
80 Tribunal Penalty Decision, above n 2, at [15].
81 Daniels v Complaints Committee 2 of the Wellington District Law Society, above n 73, at [34],
[38] and [40]. A full Court noted that absence of acceptance of guilt or expressed remorse or contrition were factors directly relevant to the need for suspension.
82 Tribunal Penalty Decision, above n 2, at [4] quoting Hart v Auckland Standards Committee 1
[2003] 3 NZLR 103 (HC).
83 Tribunal Penalty Decision, above n 2, at [6].
[200] The Tribunal’s conclusion that this conduct was “relatively serious” and therefore conduct for which suspension was the starting point for the consideration of penalty justified it not considering an outcome less than suspension.
Suspension
[201] A Tribunal is obliged to impose the least restrictive penalty appropriate to maintain professional standards and to impose sanctions on the practitioner for the conduct in question.84
[202] While the penalty of suspension clearly has a punitive element, as the Full Court said in Daniels:85
… its purpose is more than simply punishment. Its primary purpose is to advance the public interest. That includes that of the community and the profession, by recognising that proper professional standard must be upheld, and ensuring there is deterrence, both specific for the practitioner, and in general for all practitioners.
[203] The English Court of Appeal considered the justification for suspension in the case of Bolton v Law Society.86 In that case the Divisional Court had quashed a suspension for two years and replaced it with a fine. The Court of Appeal held that this was inappropriate although, given the time that had elapsed, they did not reimpose the suspension on the grounds that it would have been oppressive.
[204] After noting that in cases where a practitioner has been subject to a criminal sanction, the disciplinary outcome is not punitive in intention, Sir Thomas Bingham MR said:87
… In most cases the order of the Tribunal will be primarily directed to one or other or both of two other purposes. One is to be sure that the offender does not have the opportunity to repeat the offence. This purpose is achieved for a limited period by an order of suspension; plainly it is hoped that experience of suspension will make the offender meticulous in his future compliance with the required standards. The purpose is achieved for a longer period and quite possibly indefinitely, by an order striking off. The second purpose is the most fundamental of all: to maintain the reputation of the solicitor’s profession as
84 Daniels v Complaints Committee of the Wellington District Law Society, above n 73, at [22].
85 At [24].
86 Bolton v Law Society [1994] 2 All ER 486 (CA) at 492.
87 At 492.
one in which every member, of whatever standing, may be trusted to the ends of the earth.
[205] Those observations are equally applicable to suspension of a practitioner in New Zealand. In this case, where the practitioner shows no insight, remorse or contrition, suspension for four months could be said to be required to achieve both of these purposes. I also add that, even if I had found that the shortcomings in relation to Charge 1 was sufficient to invalidate that charge, I would have found that the penalties imposed were appropriate on the basis of the findings of the Tribunal in relation to Charge 2 given Mr Morahan’s lack of remorse or contrition.
Costs
[206] The Tribunal awarded costs of $37,171.63. The quantum of this award is challenged by Mr Morahan. It was submitted that there should be some deduction from the costs award because the Committee was ordered to particularise its charges and the Tribunal did not substantiate all of the allegations made. It was also claimed that the costs of the Committee appeared “to be on the high side for what was ultimately in the nature of a one day hearing”. Mr Morahan submits that an order for payment of 50 per cent of the reasonable costs would have been in accordance with the general approach to costs in civil proceedings.
[207] Costs in disciplinary proceedings are subject to their own regime rather than the “general approach to costs in civil proceedings”. It is wrong to assert that the general approach to costs in civil proceedings must be followed.
[208] The courts have made it clear that the public interest factor in ensuring that professional standards are maintained justifies a different approach to costs. Indeed, there is provision for an award of costs against a practitioner notwithstanding that the practitioner may have been completely successful.88
[209] It is also misleading to say that these proceedings were simply a one-day hearing. There were pre-hearing challenges raised by Mr Morahan.
88 See Daniels v Complaints Committee 2 of the Wellington District Law Society, above n 73 and
Lagolago v Wellington Standards Committee 2 [2018] NZHC 1090.
[210] Mr Beck submits that because costs in the High Court on a 2B scale would have been $22,300, this means that the Tribunal’s costs were unreasonably high. That logic is not accepted.
[211] The costs in the Tribunal were supported by invoices submitted as part of the Committee’s penalty submissions. The members of the Tribunal were therefore in a good position to assess them. The fact that they produced a higher figure than 2B scale costs does not automatically mean that they were unreasonable.
[212] An appellate court will only interfere with a costs award made by a disciplinary Tribunal if the Tribunal has exercised its discretion in a way that is wrong in principle or clearly unreasonable.89 That is not the case here.
[213] There is no rigid formula to be applied to costs in the Tribunal, as the Court said in Daniels:90
Costs orders made in proceedings involving law practitioners are not to be determined by any mathematical approach. In some cases 50% will be too high, in others insufficient.
[214]Mr Morahan has not identified any error of principle or clear unreasonableness.
Conclusion
[215] In relation to Charge 1, the Tribunal referred to events which occurred prior to 1 August 2002 in a way that went beyond context or background. This should not have been done. However, its decision formally records that it relied only on matters that occurred after 1 August 2002 to reach the decision that the charge was established. The decision would have benefitted from a clear articulation of what aspects of the charges were found proven (rather than the reader of the decision being left to infer). The decision also could have been clearer about which specific allegations the Tribunal found proven and which it did not. It would also have been helpful to explicitly note what aspects were being relied on and whether the conduct in question amounted to negligence or incompetence.
89 Daniels v Complaints Committee 2 of the Wellington District Law Society, above n 73 at [44].
90 At [47].
[216] While there is scope for improvement in the articulation of the reasoning behind the Tribunal’s conclusions, ultimately the findings are sufficiently clear for Mr Morahan to understand the basis for the conclusions reached. The same comments apply to Charge 2. The Tribunal’s finding that Mr Morahan’s conduct was “relatively serious” is one that was open to it.
[217] The fact that Mr Morahan still appears to have no remorse for his conduct, or any real insight into it, is disturbing and is a significant factor in making the sanction of suspension an appropriate one.
[218] I have considered whether the passage of time has rendered the outcome of suspension inappropriate on the same basis that the Court of Appeal found in Bolton v Law Society.91 However, I have rejected that proposition. The Court has been able to deal with this matter relatively promptly. It would also not be desirable for a precedent to be set to the effect that where a practitioner appealed a suspension order, they enhanced the chance of the suspension being changed, merely because of the consequences of the appeal being filed and substantial time having past.
[219]Accordingly, both appeals are dismissed.
Costs
[220] I invite the parties to agree costs, but in the absence of agreement, direct that the respondent file submissions within 14 days of this judgment, with the appellant having 14 days to reply.
Churchman J
Solicitors:
Luke Cunningham & Clere, Wellington for Respondent
91 Bolton v Law Society, above n 86.
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