New Zealand Law Society - Lawyer fined and censured for failing to recognise conflicts

Lawyer fined and censured for failing to recognise conflicts

Failing to recognise and respond to conflicts has led to a finding of negligence for former Wellington lawyer Lloyd Collins. The New Zealand Lawyers and Conveyancers Disciplinary Tribunal (the Tribunal) found Mr Collins had fallen short of his obligations when acting for Mrs M, who was a vulnerable client suffering from Alzheimer’s. The Tribunal fined Mr Collins $8,000, censured him and ordered him to pay costs.

Mr Collins began acting for Mrs W after her husband had passed away. Mrs W was staying with her sister Mrs M at the time, and Mrs M came with Mrs W to the meeting. At the meeting, Mrs W asked Mr Collins to do various work for her, including arranging the sale of a property in Carterton (which she jointly owned with her late husband), and asked for all correspondence to go through Mrs M. A month later, Mr Collins received an email from Mrs H, who was Mrs W’s friend, which warned of possible undue influence from Mrs M and the consequent risk of financial abuse. Mr Collins forwarded this email to Mrs M but took no further steps to inquire into the matters raised (despite radical changes being made to her will including entirely removing her stepchildren whom she had helped raise).

Subsequently, Mrs W signed a new EPOA, which made Mrs M her attorney. Mr Collins and Mrs M understood that the EPOA came into effect immediately but it in fact only came into effect once Mrs W lost capacity (which medical assessments confirmed she had not at this stage). The Carterton property was sold at reserve price in January 2018 to Mrs M, her partner, and her brother as trustees of their family trust (the first sale). Another solicitor in Mr Collins’ firm acted for the family trust as the purchasers. Mr Collins raised a notice of claim based on actions taken by the solicitors for the estate (the vendors). Approximately a fortnight later, the property was resold for a profit of $40,000 (the resale). Mr Collins’ firm again acted for the vendors on the resale.

As part of the dealings on the first sale, Mr Collins became aware that the EPOA had not come into effect and an amended EPOA was signed which came into effect immediately. Mr Collins certified the EPOA on the basis he was independent. No steps were taken to regularise any of the decisions Mrs M had made as attorney under the previous EPOA.

The Tribunal first assessed who Mr Collins’ clients were and concluded that Mr Collins or his firm were variously acting for Mrs W, Mrs M, Mrs M’s partner and Mr M’s brother. The Tribunal noted there was a clear divergence of interests between those parties in relation to the first sale. Mrs W was never given independent advice and the evidence was that she was kept away from the auction because it would be upsetting to her. The Tribunal held that after the resale of the property, Mr Collins should have considered if Mrs M was in breach of her fiduciary duties to Mrs W, particularly in light of the email he had received from Mrs H. The Tribunal held that Mr Collins took little or no time to weigh the information in Mrs H’s email. An aggravating feature was that payments from Mr Collins’ firm were paid into a joint account to which both Mrs W and Mrs M had access at Mrs M’s request (although the Tribunal noted this was common practice when an EPOA is in effect). The Tribunal also noted that Mr Collins erred in witnessing the amended EPOA as he could no longer certify himself as independent (having acted for Mrs M on the first sale).  

The Tribunal did not find that Mr Collins’ failure to recognise and respond to the conflicts involved a reckless disregard for the Rules. However, the Tribunal accepted that a reasonable member of the public informed of the circumstances of the case “would be deeply concerned about Mr Collins’ failure to spot what we have referred to as red flags and discernible conflicts”. The Tribunal did not find the conduct reflected on Mr Collins’ fitness to practise, but considered it would bring the profession into disrepute in the eyes of a reasonable member of the public.

In its penalty decision, the Tribunal referred to Mr Collins’ conduct as involving “serious defaults, albeit unintentional”. The Tribunal noted that Mr Collins had now retired and had had a long and successful career (other than one previous finding of unsatisfactory conduct). It noted there were no public protection concerns and fined Mr Collins $8,000 and censured him. He was also ordered to pay costs to the New Zealand Law Society.