New Zealand Law Society - Duty to disclose information to clients

Duty to disclose information to clients

A Standards Committee has made a finding of unsatisfactory conduct against a lawyer for failing to promptly advise his fellow trustees that GST was payable on a trust property.

The lawyer was a trustee of two trusts along with his clients, the complainants.

In 2006 a property belonging to the complainants was to be resettled and transferred to one of the trusts. Resettlement was subsequently delayed until 2008.

The lawyer sought advice in respect of the GST status of the resettlement and transfer and was advised that GST would be payable unless the trust was registered for GST. However, it was never registered, and no GST was paid.

The lawyer became aware of the GST oversight in 2014 but did not draw this to his clients’ attention until approximately 6 months later.

The Committee concluded that the lawyer’s failure to promptly disclose to his clients all information that he had or acquired that was relevant to the resettlement, and in particular to the GST issue, and his failure to take reasonable steps to ensure that his clients understood the GST issues and to obtain their instructions was a breach of the lawyer's obligations under rules 7 and 7.1 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008.

The Committee determined that such a breach amounted to unsatisfactory conduct. A subsequent review by the Legal Complaints Review Officer upheld this finding and confirmed the Committee’s order that the lawyer pay costs of $3,000 to the New Zealand Law Society | Te Kāhui Ture o Aotearoa.

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