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Fined for lack of diligence and care

27 February 2015

A Wellington lawyer, Brendan McDonnell, has been found guilty of unsatisfactory conduct and censured by a lawyers standards committee.

Mr McDonnell was the subject of an own motion investigation by the standards committee following a judgment against him personally. The judgment related to the lodging of a caveat without reasonable grounds.

In March 2014, the High Court heard an application for costs and compensation against Mr McDonnell brought by a company X Limited. Mr McDonnell filed no defence and did not appear. In his absence the Court granted judgment against him in the sum of $14,806.51 together with costs of approximately $3,000.

Mr McDonnell had acted for a Ms M who owned a property which was the subject of a mortgagee sale. The mortgagee, X Ltd, secured an unconditional agreement for the sale of the property in June 2013.

Subsequently, Mr McDonnell lodged a caveat against the property’s title. X Ltd applied for removal of the caveat which was ultimately achieved by consent in July 2013. The Court found that there was no evidence provided to support an honest belief on reasonable grounds that Ms M had a caveatable interest.

Mr McDonnell said that Ms M had been referred to him by a mortgage broker and that the wording of the caveat was provided by Ms M’s former lawyer. He said he had been unable to prepare a release of caveat as Ms M left her appointment with him immediately and he had not heard from her since.

The committee noted the obligations on lawyers when registering a caveat and the provisions of s 146(1) of the Land Transfer Act 1952. That section provides that any person who lodges a caveat without reasonable cause is liable to make good any loss suffered as a result.

It also noted rule 2.3 of the Rules of Conduct and Client Care which places an obligation on lawyers to ensure that legal processes are only used for their proper purposes not for the purpose of causing “unnecessary embarrassment, distress, or inconvenience to another person’s reputation, interests or occupation”.

The committee said that there may have been an element of naivety on Mr McDonnell’s part in accepting the instructions. However, it considered that he showed a lack of diligence and care when he agreed to lodge the caveat without making routine enquiries.

The committee found there had been a clear breach of Mr McDonnell’s professional obligations in lodging the caveat without reasonable grounds. It noted that he had readily accepted that his actions fell short of the standards that the public was entitled to expect.

The committee also had concerns about Mr McDonnell’s failure to respond to X Ltd’s counsel and to engage in the court proceedings against him. It considered that an earlier acceptance of the issues regarding the caveat could have minimised the impact of the caveat and any inconvenience caused.

As well as a censure, the committee fined Mr McDonnell $4,000 and ordered him to pay $1,000 costs.

Last updated on the 17th August 2015