New Zealand Law Society

Navigation menu

Fined for failing to transfer shares

01 November 2019

All names used in this article are fictitious

A lawyer who failed to transfer shares to three beneficiaries of a will has been fined $5,000 by a lawyers standards committee.

Mrs Haddington appointed the lawyer, Bute, as executor of her estate in or around July 2006. In her will, Mrs Haddington made a number of specific bequests, including the transfer of shares to her three children.

In June 2013, Mrs Haddington passed away. Her house and most of her assets were realised in March 2014 and distributions were made to her beneficiaries.

Bute appeared to have been of the view that the estate administration was complete and received payment for his estate administration work in August 2014.

However, one of Mrs Haddington’s children, Mrs Caithness, was of the view that the estate administration was incomplete as Bute did not appear to have arranged for Mrs Haddington’s shares to be transferred.

Mrs Caithness endeavoured to resolve her concerns directly with Bute over several years, without success. In June 2018, Mrs Caithness lodged a formal complaint with the Lawyers Complaints Service.

The standards committee said it was satisfied, on the balance of probabilities, that Bute had failed to effect the share transfer from Mrs Haddington’s name to the names of her three children.

The committee said it considered the situation to be “completely unacceptable”.

Bute’s failure to action the specific bequests, and thereby finalise the administration of the estate, was a “clear and flagrant breach” of his professional obligations under rule 3 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008.

Unsatisfactory conduct

That was unsatisfactory conduct in terms of section 12(c) of the Lawyers and Conveyancers Act 2006.

There were aggravating features present in the case, the committee observed. Not only did Bute fail to complete the estate administration, he also disregarded numerous attempts by Mrs Caithness to ascertain whether, in fact, the shares had been transferred.

The committee said it was “particularly surprised” that Bute, in his response to the complaint, claimed he had experienced “issues” with a brokerage firm before.

“[Bute] provided no evidence of any correspondence with [the brokerage firm] relating to the shares Mrs [Haddington] held, instead claiming to have misplaced the file”.

“The standards committee considered that it was disingenuous for [Bute] to seek to blame [the brokerage firm] for his failure to transfer the shares,” to Mrs Haddington’s children.

“[The brokerage firm] confirmed on 15 August 2018 that they have no record of any correspondence from any lawyer in relation to Mrs [Haddington]’s shares.”

“The Lawyers Complaints Service provided Bute this information, together with evidence that all the shares in question remain in Mrs Haddington’s name.

“[Bute] elected not to comment on this material or provide any submissions, nor has he offered to rectify his omission.

“[Bute]’s silence is telling,” the committee said. “It is no exaggeration to describe [Bute]’s attitude towards the complaint, and the situation of the share transfer, as completely apathetic.”

Lack of respect

The committee said it was of the view that Bute’s handling of the administration of the estate exhibited a lack of respect for both Mrs Haddington and the beneficiaries.

The shares should have been transferred before Bute received payment for the estate administration. “Instead, the shares have languished in the name of a person who passed away more than five years ago.”

The committee said that the $5,000 fine it imposed was “modest” considering the gravity of the conduct and the fact Bute had been the subject of numerous disciplinary findings in the past.

As well as the fine, the committee ordered Bute to rectify, at his own expense, his failure to transfer the shares and to arrange the transfer as quickly as possible. Bute was also ordered to pay $2,000 costs.

Last updated on the 1st November 2019