New Zealand Law Society - Lawyer fined after providing inaccurate solicitor’s certificate
A Standards Committee (Committee) determined that a lawyer, Mr G, breached his professional obligations under the Lawyers and Conveyancers (Lawyers: Conduct and Client Care) Rules 2008 (RCCC) by issuing an inaccurate solicitor’s certificate. The Committee considered that the breaches amounted to a moderately serious level of unsatisfactory conduct. Mr G was fined $8,000 and ordered to pay costs. The Committee found that the case had educational value to the profession by reminding practitioners of their obligations.
Mr G acted for Mr C in a financing matter with a lender (the Lender). As security, the Lender would secure two mortgages over properties owned by Mr C’s family members who would also guarantee the loan (the Guarantors). Mr G provided a solicitor’s certificate to the Lender certifying and undertaking that all the required conditions were met. However, Mr G had missed that one of the properties already had a registered mortgage to another lender and he had not arranged for a discharge. Mr G also certified that he had witnessed the Guarantors’ signatures when he had not. The Lender complained to the New Zealand Law Society Te Kāhui Ture o Aotearoa that Mr G had provided an unreliable solicitor’s certificate.
The Committee considered whether Mr G had breached his obligations under the RCCC that required him to ensure the accuracy of certificates, act competently, honour undertakings and take reasonable steps to prevent any person from perpetrating a fraud through the lawyers’ law practice.
Mr G submitted that he believed his actions amounted to unsatisfactory conduct. He acknowledged that he overlooked that there was already a mortgage over one of the properties. Upon discovery of this error, he worked with the Lender to find a resolution. The Lender subsequently advised Mr G that they had concerns around the validity of the Guarantors’ signature.
By way of background, Mr C had given Mr G the Client Authority and Instruction Form (A&I) after it had already been signed by the Guarantors. Mr C asked Mr G to witness their signatures. Mr G intended to witness the signatures via AVL, but Mr C advised him that the Guarantors were unwell and unavailable. Mr G was persuaded by the urgency conveyed by Mr C and he witnessed the signatures on the understanding that the Guarantors had received independent legal advice. However, it later became apparent that the Guarantors may not have received independent advice and there was uncertainty about the validity of their signatures.
Mr G expressed remorse for his lack of judgement in the matter and any role that he had in enabling Mr C’s possible fraud. Mr G said that his conduct was motivated by compassion for Mr C as his client.
Lawyers must not certify the truth of any matter unless there are reasonable grounds that the matter certified is true and steps have been taken to ensure the accuracy of the certification. The Committee found Mr G did not take appropriate steps to ensure the accuracy of the certification he provided. He missed the existing mortgage, and he had not witnessed the Guarantors’ signatures. Mr G submitted that his conduct in witnessing the Guarantors’ signatures was a ‘one-off’ error and overlooking the existing mortgage was a mistake. The Committee determined that Mr G breached rules 2.5 and 3 of the RCCC.
Mr G accepted that he breached rule 10.5 of the RCCC which requires lawyers to honour all undertakings. The Committee referred to a Court of Appeal decision1 that emphasised the need for certainty and reliance on the accuracy of a solicitor’s certificate, undertaking and A&I forms. The Committee highlighted that the public is entitled to expect solicitors to prepare precise, clear and accurate documents that can be relied on. It added that anything “…less risks diminishing the trustworthiness, integrity, standing and public confidence in the profession.”
The Committee considered that Mr G failed to exercise the requisite due diligence in this matter. It added that Mr G’s motivation to assist a client in need does not excuse or mitigate his failure in properly carrying out his professional duties. The Committee found that he breached rule 10.5 of the RCCC.
Rule 10.11 of the RCCC records that ‘A lawyer must take all reasonable steps to prevent any person from perpetrating a crime of fraud through the lawyer’s law practice’. Mr G submitted that at the time of the Committee hearing, he remained uncertain about whether the Guarantors agreed to guarantee the loan. He accepted that his conduct in witnessing the Guarantors’ signatures on the A&I likely breached rule 10.11 of the RCCC. The Committee considered that, based on the evidence, it did not have enough evidence to establish whether Mr G had allowed a fraud to be perpetrated through his practice.
The Committee determined that Mr G’s actions amounted to “moderately serious” unsatisfactory conduct. He was ordered to pay a fine of $8,000 and costs. The Committee directed that a summary be published to educate the profession.
1 Thompson v Hopkins [2018] NZCA 197