New Zealand Law Society - Lawyer suspended for 15 months for acting in the face of a conflict of interest and failing to pay Standards Committee fine

Lawyer suspended for 15 months for acting in the face of a conflict of interest and failing to pay Standards Committee fine

The New Zealand Lawyers and Conveyancers Disciplinary Tribunal (the Tribunal) has suspended former Gisborne lawyer Edward Alexander Hunt (Mr Hunt) for a period of 15 months. Mr Hunt admitted two charges of misconduct and two charges of unsatisfactory conduct. The majority of the charges related to Mr Hunt’s conduct in acting for both parties to a business transaction and there was one charge for failure to pay a Standards Committee fine. The Tribunal considered Mr Hunt’s previous disciplinary record an aggravating factor, but he was given credit for his personal circumstances and resolving the charges. The Tribunal declined to award compensation for the complainants or impose a censure.

Mr Hunt acted for the vendor and the purchasers (who went on to become the complainants) in relation to the sale of a business in 2015. Mr Hunt claimed he was only acting for the complainants in relation to the financing part of the transaction, but accepted that he was reckless as to the exact nature of his retainer. There were also matters which were omitted from the agreement for sale and purchase which had been the subject of verbal agreements, of which Mr Hunt said he was unaware. Mr Hunt also failed to sufficiently explain the finance and security documents to the complainants and did not keep proper records of the meeting at which they signed them. Mr Hunt said he did not explain the personal guarantees as that was outside his retainer.  However, Mr Hunt issued an invoice which included advice on the sale and purchase agreement. The complainants did not pay the invoice and instructed a new lawyer, who then sought to uplift the file. Mr Hunt, however, refused to provide it. The business ultimately failed, leading to civil proceedings. Mr Hunt was joined as a party and ordered by the District Court to pay the complainants over $330,000.

Separate to the sale of the business, in March 2017 Mr Hunt had been ordered by a Standards Committee to pay a fine after he was found to have engaged in unsatisfactory conduct by acting for the vendor and purchaser in property transaction without obtaining prior informed consent. Despite many requests for payment being made by the Law Society, Mr Hunt did not pay the fine until May 2019.

In assessing the seriousness of the conduct, the Tribunal noted that acting in a situation that gives rise to a conflict of duties to clients is “a serious offence”, but accepted this was not at the highest end of the spectrum. The Tribunal accepted that the harm to the complainants was an aggravating factor, but it was mitigated by the fact the conduct occurred five years ago and the complainants received full compensation through the civil proceedings. In relation to the unpaid Standards Committee fine, the Tribunal noted that any breach of a disciplinary order is serious, but noted Mr Hunt was confused if he had applied to review the Committee’s order and had paid the fine in advance of the current proceedings. In addition to the previous finding of unsatisfactory conduct for similar behaviour, the Tribunal noted that Mr Hunt had a further two findings of unsatisfactory conduct from 2010 and 2013 and this was an aggravating feature.

In terms of mitigating features, it was acknowledged that Mr Hunt suffered significant health issues in recent times and this had delayed matters. He was now 70 years old and had retired from practice. He was given credit for accepting the charges following negotiation regarding the summary of facts.  In the absence of those factors, the Tribunal would have imposed an 18 month suspension, but reduced this to 15 months suspension to account for these factors. It noted this was consistent with other similar cases. While a suspension was academic in light of Mr Hunt’s retirement, it signalled “the serious failures that have occurred”. The Tribunal also took into account that the findings would have significant reputational damage for Mr Hunt, who lived in a provincial town. The Tribunal acknowledged that this had a punitive effect for Mr Hunt, given his long career, pro bono work and community service.

The Tribunal declined to award compensation to the complainants, including for emotional harm. The Tribunal noted that Mr Hunt had intended to be helpful, but failed to observe his duties and there was insufficient evidence to justify such a claim. The Tribunal also declined to censure Mr Hunt as it did not consider appropriate to censure an elderly and retired practitioner who has very poor health. The Tribunal ordered Mr Hunt to pay limited costs, noting that he is of limited means, retired and in poor health.

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