Law system a 'laughing stock'

TONY MOLLOY: Judges often sit on cases they should not.
TONY MOLLOY: Judges often sit on cases they should not.

New Zealand is making a hash of its legal structures, tinkering with legislation and losing its reputation as a place where the legal system can be trusted to produce authoritative and internationally respected judgements, Tony Molloy, QC, said last week.

And that combination could torpedo any ambition John Key's government has left to promote New Zealand as an international financial services centre.

"It is making New Zealand an international laughing stock at a time when we are aspiring to recognition as a recognised international trust and funds jurisdiction," Molloy said in a paper presented to a forensic accounting conference in Auckland.

In his "Trust Busting" paper, Molloy cited a series of cases that he said "raise disturbing questions of systemic integrity".

He complained about New Zealand's "one judge fits all" approach to law, where the legal profession fails to insist counsel should not argue cases in areas where they have no competence, and parliament fails to insist judges sit on cases only where they have acknowledged expertise.

"Parliament continues to fail to organise the High Court into divisions dealing with crime, family law, equity [trusts and fiduciary matters] and other general litigation," Molloy said.

He compared the approach to having a gynaecologist performing brain surgery, or electrical engineers designing viaducts. That judges are allocated "like cabs off a rank", he said, is "deplorable".

Molloy said counsel would be in breach of their duty of care and exposed to claims of negligence were they to litigate in areas beyond their expertise. Yet judges often sit on cases they should not.

"What sort of madness has infected our legal system when what would be misconduct for a barrister becomes routine – and consequence-free – for a judge? It is certainly not consequence-free for the hapless litigant who gets seriously short-changed for his court filing and hearing fees."

The government's International Funds Services Development Group found New Zealand had a "good reputation" in offshore trusts, but Molloy said the people he interacts with as a speaker and co-editor of Trusts & Trustees are "well aware of the mess the New Zealand court system is in".

He quotes professor David McLauchlin, a contract law specialist, saying he increasingly found New Zealand cases not worth the effort of reading.

"Decisions are reached that fail to reflect the reasonable expectations of the parties. And sometimes they simply defy common sense," McLauchlin wrote.

He cited Canadian trust lawyer, professor Donovan Waters, QC, saying he was taken aback by one New Zealand trust case, while UK professor Peter Watts, editor of a leading international law textbook, was dismayed by arguments made to courts in leaky homes cases.

Molloy was also critical of arguments put in Financial Markets Authority v Hotchin & Others, a recent case in which Justice Winkelmann said she was not able to follow the authority's arguments.

Molloy said international trust business here would be hobbled until the legal profession and courts learned "to exercise the restraint and integrity of surgeons and engineers".

Molloy also slammed the Law Commission for reviewing trustee law without specialist expertise.

Parliament also got a serve for "incessant and ignorant tinkering with legislation".

Sunday Star Times