Ragg v Legal Complaints Review Officer [2021] NZCA 579 (3 November 2021)

Last Updated: 9 November 2021

IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA

CA508/2020 [2021] NZCA 579

	BETWEEN	HUGH PETER PETRIE RAGG Appellant
	AND	LEGAL COMPLAINTS REVIEW OFFICER Respondent THE NEW ZEALAND LAW SOCIETY Intervener

Hearing:	30 September 2021
Court:	Collins, Goddard and Woolford JJ
Counsel:	Appellant in person No appearance for Respondent C R Johnstone for Intervener
Judgment:	3 November 2021 at 11.00 am

JUDGMENT OF THE COURT

1. The appeal is allowed.
2. The Review Officer’s decision is set aside.

100. There is no order for costs.

____________________________________________________________________

REASONS OF THE COURT

(Given by Collins J)

Introduction

• [1] Mr Ragg, who practises law on his own account in Ashburton, was found by a Standards Committee of the New Zealand Law Society (the Committee) to have conducted himself unsatisfactorily in relation to a conveyancing transaction. After considering an application for review by Mr Ragg, the findings of the Committee were modified by a Legal Complaints Review Officer (the Review Officer). Mr Ragg’s application to judicially review the decision of the Review Officer was dismissed by Osborne J.^[1] Mr Ragg now appeals the High Court judgment.
• [2] Mr Ragg’s grounds of appeal focused upon two points:

(a) His conduct did not constitute a breach of professional standards and that at all times he was doing his best to fulfil his clients’ instructions.

(b) Even if there was a breach of professional standards, it was unnecessary for disciplinary action to be taken against him.

Background

• [3] Mr Ragg acted for Mr and Mrs A (the vendors) who on 20 April 2018 were settling the sale of their home and purchasing another property. Anderson Lloyd in Dunedin were acting for Mr and Mrs B (the purchasers), who were purchasing the property. The conveyancing was to be completed through e-dealing using the Landonline system.
• [4] In preparation for the settlement, Mr Ragg sent Anderson Lloyd two emails on 16 March 2018, which included a link to the name and number of his trust account. Mr Ragg was, at this stage, dealing with Ms Thomas, a legal executive at Anderson Lloyd. She did not ask him to verify the details of his trust account.
• [5] At 10.26 am on 20 April 2018, Mr Ragg received an assurance from Ms Thomas that the purchasers were ready to settle. Mr Ragg contacted the vendors, who were packed and ready to move to their new property. He told them that the purchasers were ready to settle and that they could make their way to their new property. The vendors were reassured by this news. They were very keen to settle because they had previously encountered difficulties when trying to sell their property.
• [6] An issue arose when, later in the morning, Ms Thomas sought verification of Mr Ragg’s trust account details.
• [7] Mr Ragg was very concerned by this development. Because his clients were particularly anxious that the settlement not fall through, Mr Ragg resolved to take two courses of action:

(a) He decided to go to his bank to obtain a deposit slip, preferably one encoded with his trust account details.

(b) Even though he had not received the settlement moneys from Anderson Lloyd, he decided to release his part of the e-dealing instruments, including the transfer that had been signed by his clients and the discharge of the mortgage security that had been executed by his clients’ bank.

• [8] Mr Ragg took the second of these measures, believing that it was in his clients’ interests to do everything to facilitate the sale of their property and because he believed there was no risk Anderson Lloyd would seek to register the mortgage discharge and transfer without first making payment to his trust account.
• [9] Mr Ragg went to his bank and learnt that it would take some time for the bank to issue an encoded deposit slip.
• [10] At 12.06 pm, Ms Thomas sent an email to Mr Ragg seeking further information about the details of his trust account.
• [11] At 12.17 pm Mr Ragg replied to Ms Thomas, saying:

There will be no settlement until I have spoken to your Senior Partner - I also want proof that your requirement[s] are not just your dreamt up Office Rules.

Get you[r] Senior Partner to ring

• [12] At 12.27 pm, Mr Ragg emailed Ms Thomas a copy of a bank statement he had received, but not an encoded deposit slip.
• [13] At 12.31 pm Mr Ragg emailed Ms Thomas, saying:

I probably will report your Firm to the Law Society and as part of my case will be to find out the requirement you made to the Agent before the deposit of 36,000 was paid by your Firm or your client.

• [14] Anderson Lloyd paid settlement funds to Mr Ragg’s trust account at 1.19 pm, and asked him to release his part of the e-dealing instruments into Anderson Lloyd’s workspace. It would seem Anderson Lloyd did not appreciate at that time Mr Ragg had already released his e-dealing instruments.
• [15] At 1.27 pm, Mr Ragg sent an email to Ms Thomas, saying:

Regrettably

I have found your firm to be more than disrespectful - Impertinent even

I am still almost certain to report you all to the Law Society unless I get a personal apology from your sen[i]or Partner.

• [16] Mr Ragg settled his clients’ purchase at 1.43 pm.
• [17] At 1.44 pm Ms Simmers, a partner at Anderson Lloyd, emailed Mr Ragg, saying:

I have been forwarded the email below.

We do not have a record of having previous[ly] made a payment to your firm or to the agent, which was why a deposit slip was requested.

NZLS’s Trust Account Guidelines call for evidence of bank account details to be provided before making an electronic payment from our Trust Account ...

...

I would be happy to discuss this further with your firm’s Trust Account Partner.

I have been advised that your e-dealing for the transfer ... to our client was released before we paid the amount required to settle into your firm’s trust account. Can you please explain why.

• [18] At 1.50 pm Anderson Lloyd submitted documents to Land Information New Zealand (LINZ) for registration.
• [19] Mr Ragg replied to Ms Simmers’ email at 1.50 pm, saying:

Your explanation is not accepted.

The ANZ Bank here in Ashburton do not issue deposit slip[s] unless specially ordered.

I view your conduct as impertinent and I am not impressed by your explanation.

• [20] Three weeks’ later, Ms Simmers forwarded a report to the New Zealand Law Society. This led to the Committee investigating Mr Ragg’s conduct on “its own motion” pursuant to s 130(c) of the Lawyers and Conveyancers Act 2006 (the Act).
• [21] The Committee concluded Mr Ragg had engaged in unsatisfactory conduct in two respects:

(a) By releasing the e-dealing instruments for the discharge and transfer before Anderson Lloyd had paid the balance of the purchase moneys into Mr Ragg’s trust account. The Committee determined that in so doing Mr Ragg breached r 3 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (the Rules). In particular, it found he had breached his obligation to act competently and in a timely manner consistent with the terms of his retainer and his duty to take reasonable care.

(b) By failing to treat lawyers at Anderson Lloyd with respect and courtesy, contrary to the requirements of r 10.1 of the Rules.

• [22] Mr Ragg was required to send written apologies to Ms Simmers and Ms Thomas, pay a fine of $750 for each breach and $500 by way of costs. The Committee also resolved to notify the Registrar-General of Land of its decision pursuant to s 159 of the Act.
• [23] Mr Ragg’s application for review resulted in the Review Officer consolidating Mr Ragg’s conduct into one finding of unsatisfactory conduct. The Review Officer quashed the fine and the requirement Mr Ragg write letters of apology to Ms Simmers and Ms Thomas. The balance of the findings and orders of the Committee were upheld by the Review Officer.

High Court judgment

• [24] In his application for judicial review, Mr Ragg maintained that the decision of the Review Officer was invalid by reason of error of law and/or was unreasonable. He sought:

(a) a declaration that the Review Officer’s decision was invalid;

(b) an order setting aside the finding of unsatisfactory conduct;

(c) an order quashing the requirement he pay $500 by way of costs; and

(d) an order setting aside the decision to notify the Registrar-General of Land about the findings.

• [25] Pivotal to Mr Ragg’s application for judicial review were the Property Transactions and E-Dealing Practice Guidelines (the Guidelines) issued by the Property Law Section of the New Zealand Law Society.
• [26] The introduction to the Guidelines records that they are designed to reflect recommended practices for e-dealings. The Guidelines are endorsed by the Registrar-General of Land for lawyers using Landonline.
• [27] Guideline 2.56 provides:

Remote settlement

2.56 ...

Where a conveyancing practitioner acts for the purchaser, the vendor’s lawyer should not release the instruments until settlement moneys are received in cleared funds.

• [28] Guideline 8.72 provides for release to occur after settlement. It states:

Release should occur immediately after settlement in accordance with the undertaking given. At the same time, the purchaser’s lawyer should be advised by telephone, email or facsimile that release has occurred.

• [29] The commentary to these Rules explains that “Release gives effective possession and control to the purchaser” and that if the vendor’s solicitor releases the vendor’s e-dealing instruments without achieving settlement through payment of the balance of the purchase price, it is the purchaser’s solicitor who gains control of the transaction and may vest the title in the purchaser without the vendor having received the settlement moneys or the vendor’s mortgagee having been repaid its debt.
• [30] Osborne J concluded Mr Ragg had not demonstrated any error in the way the Review Officer had considered and determined Mr Ragg’s application for review. The key findings made by the Judge were:

(a) The Review Officer appropriately recognised the Guidelines reflected orthodox conveyancing practices that were designed to protect the interests of vendors.^[2]

(b) By releasing his e-dealing instruments before receiving the settlement money, Mr Ragg placed the vendors at risk.^[3]

(c) The Review Officer’s comment that Mr Ragg was “flustered” when he released his e-dealing instruments was supported by the evidence.^[4]

(d) The fact Mr Ragg had honestly believed he was justified in taking the course of action he followed did not excuse his departure from normal conveyancing standards.^[5]

(e) The Review Officer’s decision was reasonable.^[6]

The appeal

• [31] It is not necessary to set out all of the grounds of appeal contained in Mr Ragg’s notice of appeal and in his written submissions. Suffice to record:

(a) Mr Ragg challenges the finding that he was guilty of unsatisfactory conduct.

(b) Even if his conduct was a departure from usual professional standards, Mr Ragg contends the Committee and the Review Officer should have considered taking no further action, but failed to turn their minds to this possible disposition.

• [32] In his oral submissions before us, Mr Ragg said that his communications with Ms Thomas and Ms Simmers were not appropriate and that he was not proud of the emails he sent them.
• [33] Mr Johnstone, who appeared for the New Zealand Law Society as an intervener, submitted that the High Court judgment was unimpeachable and that Mr Ragg’s appeal was simply a re-litigation of the arguments he had unsuccessfully pursued before the Committee, the Review Officer and the High Court.
• [34] Mr Johnstone informed us, however, that the decision by the Committee and the Review Officer to refer their findings to the Registrar-General of Land was unusual. Such a referral might be justified where, for example, a practitioner’s conduct risked the integrity of the Landonline system. Mr Johnstone observed there was nothing in Mr Ragg’s conduct that clearly justified referral to the Registrar-General of Land.
• [35] The parties agree that Mr Ragg’s appeal is a general appeal under s 20 of the Judicial Review Procedure Act 2016 and s 56 of the Senior Courts Act 2016. As such, we may grant any of the forms of relief prescribed in s 16 of the Judicial Review Procedure Act, including issuing a declaration or setting aside the Review Officer’s decision if we are satisfied that the Review Officer’s decision was invalid. Both parties submitted that, if we found errors in the Review Officer’s decision that invalidated her decision, we should, if possible, avoid remitting the case back to the Review Officer for further consideration.

Analysis

• [36] Mr Ragg’s actions when he released his e-dealing instruments before he received the settlement moneys from Anderson Lloyd were a departure from normal conveyancing practices and contrary to the advice set out in the Guidelines.
• [37] Mr Ragg’s actions needed, however, to be viewed in context. In particular:

(a) Mr Ragg was acting in what he genuinely believed were the best interests of his clients.

(b) Mr Ragg was entitled to believe that Anderson Lloyd would act ethically and responsibly, and would not register the instruments without making payment from the cleared funds held by them. So no harm would be caused to his clients or their bank.

(c) No harm occurred in this case and it would appear no one even appreciated Mr Ragg had released his e-dealing instruments before Anderson Lloyd released the settlement funds.

(d) Settlement occurred without Anderson Lloyd receiving an encoded deposit slip from Mr Ragg. The requirement they had asserted earlier that day was not in fact necessary, and settlement proceeded without it.

(e) No complaint was made by Mr Ragg’s clients or by the bank. Nor was there any evidence before the Review Officer of any unresolved concerns about his conduct on the part of either his clients or the bank.

• [38] While we can understand the Committee and Review Officer being concerned Mr Ragg had departed from normal conveyancing practices, his conduct was at the low end of the spectrum of conduct that warranted referral to a Committee and was therefore a case that required the Committee and the Review Officer to reflect on the necessity to take disciplinary action against Mr Ragg.
• [39] Section 152(2)(c) of the Act authorised the Committee to “take no further action with regard to the ... matter”. The same power was conferred upon the Review Officer by s 211(1)(b) of the Act.
• [40] When assessing the case against Mr Ragg it was necessary for the Review Officer to consider whether protection of the interests of the community and the profession justified taking the formal step of making a finding that Mr Ragg was guilty of unsatisfactory conduct. The possibility of deciding to take no further action under s 152(2)(c) of the Act needed to be considered. The Review Officer failed to take this step.
• [41] The Review Officer’s failure to address s 152(2)(c) was compounded when she decided to refer the findings against Mr Ragg to the Registrar-General of Land under s 159 of the Act. That was an unusual and potentially punitive step to take, which could have resulted in the Registrar-General taking steps that would adversely affect Mr Ragg’s ability to engage in e-dealing using the Landonline system. That would effectively prevent him from continuing to operate his conveyancing practice. There was nothing in the nature of Mr Ragg’s conduct that could justify the Review Officer exercising her discretion to refer Mr Ragg to the Registrar-General of Land: the purpose of this provision, which is to protect the integrity of the registration process, was not engaged.
• [42] In our assessment, the Review Officer erred when she:

(a) failed to consider exercising the powers in s 152(2)(c) of the Act; and

(b) exercised the powers conferred by s 159 of the Act.

These errors were, in the context of this case, material.

• [43] Normally, errors that invalidate a Review Officer’s decision would be addressed by way of declarations and a direction the Review Officer reassess her decision. This case, however, relates to events that occurred three and a half years ago and, as noted above, involved conduct at the low end of the spectrum of what could be considered unsatisfactory conduct. It is time this matter ended. We will do so by setting aside the Review Officer’s decision and make no further orders.

Result

• [44] The appeal is allowed.
• [45] The Review Officer’s decision is set aside.
• [46] There is no order for costs.

Solicitors:
Crown Law Office, Wellington for Respondent
New Zealand Law Society, Wellington for Intervener

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^[1] Ragg v Legal Complaints Review Officer [2020] NZHC 2057 [High Court judgment].

^[2] At [119]–[125].

^[3] At [128]–[132].

^[4] At [133]–[140].

^[5] At [142]–[143].

^[6] At [144].