HB lawyer escapes suspension

Decorative Scales of Justice in the Courtroom

A Hawke's Bay lawyer has escaped being suspended for misconduct after being caught-up in the financial distress of a client who became a close family friend, but eventually a jailed criminal.

Lawyers and Conveyancers Disciplinary Tribunal recently released a decision which revealed Jonathan Heaphy, of Havelock North, was found guilty on two of four charges.

He was censured and ordered to pay $30,000 tribunal and legal standards committee costs. He also agreed to not offer financial advice nor be a law firm principal before March next year.

With an indemnity agreement in place, no redress was ordered for complainant and former client and horticultural labour services provider Mike Porter, who lost $130,000 in a failed investment suggested by Mr Heaphy as Porter tried to evade consequences of a 2006 immigration fraud bust.

Porter was ultimately sentenced to three years' jail for his role in the illegal employment of immigrant workers, but had denied involvement until faced with the evidence at his trial with three fellow company directors in 2010. Only then did Porter's family and Mr Heaphy learn the real position.

He had in the wake of the raid sought to protect Porter from possible "attack" on his assets, said tribunal head Judge Dale Clarkson. He suggested Porter sell his share in a family-owned property to free $130,000 for possible investment, and then involved second client Mr A, who had proposed a business venture.

"It was at this point that the lawyer's conduct, by his own admission, went seriously awry," the tribunal said. "There was a clear conflict of interest created by the investment in which Mr Heaphy represented the two clients, as lender and borrower, in which neither received independent advice."

The investment failed, and Judge Clarkson said the consequences for the client (Porter) were "disastrous despite the lawyer's best intentions".

The judge said Mr Heaphy allowed himself to become caught up in the panic and stressful situation of Porter, who lodged the complaint and claimed he had not given authority for the investment. Having heard evidence from both men, the judge commented that where it differed, it found Porter's evidence implausible and lacked credibility, and it preferred the evidence of Mr Heaphy.

Judge Clarkson, accepted Mr Heaphy was not implicated in the criminal offending. He was spared suspension "by a fine margin" because of 26 years in legal practice without blemish, either before or since the events, and because there was "no question of dishonesty or personal gain".

"Mr Heaphy conceded that this had been a situation where he had become too close to his client and as a result lost his perspective," the judge said. Through lawyer David O'Connor, Mr Heaphy said the incident was "entirely regrettable". He had not sought to have his identity concealed, while Porter's two attempts at name suppression were declined because of what the tribunal said were the "somewhat unusual circumstances".