New Zealand Law Society - Censured for undermining court

Censured for undermining court

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Auckland lawyer Bruce McNiece has been censured and fined by a lawyers standards committee after arranging for loans of funds days before a High Court judgment ruling that the money should be paid out.

Mr McNiece was the sole executor and trustee of the estate of Mr A. He also considered he was a trustee of a trust that had been set up by Mr A some years before his death.

However, following a hearing on 23 and 24 May 2016, a High Court judgment was issued on 18 July 2016. The High Court held that the trust failed because of uncertainty. The consequence was that the funds reverted to the estate, and that Mr A’s wife was entitled to them as the sole beneficiary. The estate funds were therefore to be paid out to Mrs A.

However, just days before the judgment was issued, Mr McNiece entered into three loan agreements dated 7 June 2016 and 14 July 2016 (two) respectively. The loan expiry dates were 7 June 2017 and 7 September 2017.

“It was the timing of those loans in the very particular circumstances of the case that was problematic,” the standards committee said.

“Mr McNiece was well aware that if the outcome was in Mrs [A]’s favour, the funds should be paid to her.

“Yet, while awaiting the outcome he loaned the funds, making them unavailable.”

Mr McNiece argued that he had done nothing wrong. In terms of timing, he asserted that he had no indication as to when the reserved decision of the court might be available. He argued that, in the meantime, his duties to the trust (including ‘to maximise the return in its investments’) prevailed. He submitted that he acted appropriately, as a prudent trustee, in reinvesting the funds when previous investments matured.

However, the standards committee disagreed with Mr McNiece in all respects. It said, “There was not a completely unknown, open-ended time before the judgments would issue. The High Court has guidelines for such time frames.”

“More importantly, the committee considered Mr McNiece was completely wrong regarding his duties as trustee and the priority of such.”

He owed duties to the court and whether he was even a trustee was a live issue before the court.

“The risk for Mr McNiece was that he would be found to not have the right to deal with the funds as proposed – and that, in fact, came to pass.”

Mr McNiece had “hindered or undermined” the processes of the court by his actions.

“The intended effect of the judgment was that Mr McNiece pay the funds to Mrs [A]. Yet Mr McNiece made that impossible for some time. The funds were potentially tied up for a further year,” the committee said when finding there had been unsatisfactory conduct by Mr McNiece.

The committee considered that the conduct was at the “higher end” of the scale of unsatisfactory conduct and set a fine of $10,000 and $1,000 costs.

Mr McNiece sought a review by the Legal Complaints Review Officer (LCRO).

In LCRO 113/2017, the LCRO confirmed the finding of unsatisfactory conduct, the censure and the $1,000 costs.

However, the LCRO said he did not consider Mr McNiece’s conduct was at the higher end of unsatisfactory conduct and reduced the fine to $7,000. He also ordered Mr McNiece to pay $1,200 costs.

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