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Censure and fine of ‘manifestly conflicted’ lawyer upheld

27 September 2016

A lawyer failed to realise the extent to which she was “manifestly conflicted”, justifying a lawyers standards committee finding of unsatisfactory conduct, the LCRO has found.

After making the finding of unsatisfactory conduct, the standards committee censured the lawyer, C, and fined her $10,000.

A Ms A complained to the New Zealand Law Society concerning the administration of the estate of a Mrs B.

Ms A is one of the late Mrs B’ four daughters. C is the late Mrs B’s daughter-in-law and is married to Mr C, who is the late Mrs B’s son.

Under Mrs B’s will, she appointed Mr C and an accountant as executors and trustees. They instructed C to act on behalf of the estate.

Due to a dispute within the family concerning the late Mrs B’s funeral arrangements, C – in her capacity as the estate’s solicitor – instructed a barrister to obtain probate for the late Mrs B’s estate. Probate was granted.

The standards committee found that there was a “serious conflict of interest” arising from the fact that C received instructions to act in the estate when one of the trustees and executors was her husband and he was a beneficiary under the estate.

“That conflict was exacerbated by the history of animosity between family members and the subsequent insolvency of the estate, and compromised [C]’s ability to exercise independent professional judgement.

Should not have acted

“[C] should not have accepted instructions from the trustees and executors and should not have acted on estate matters or in the sale of [Mrs B’s flat].”

The committee also found that C should have advised the executors that they would be acting unlawfully if they failed to execute the terms of the will and transfer Mrs B’s flat to the beneficiaries.

“Although [C] was acting on the executors’ instructions, she should have known that selling that property would defeat the entitlement of [Ms A] and other beneficiaries and her conduct amounted to unsatisfactory conduct.”

The committee further found that C failed to advise the other beneficiaries, other than Mr C, of their entitlement under the will or seek their agreement on steps to be taken. C also failed to provide information or account for the proceeds from the sale of Mrs B’s flat and was unable to provide the Lawyers Complaints Service with relevant information, including distribution statements. That also amounted to unsatisfactory conduct.

The committee declined to award Ms A compensation because she had commenced District Court proceedings against the executors in which C was named as the third defendant.

Last updated on the 27th September 2016