Lee v Auckland Standards Committee 3 (ASC3) [2016] NZHC 2372 (7 October 2016)

Last Updated: 18 October 2016

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-002665 [2016] NZHC 2372

BETWEEN	YOON BOO LEE Appellant
AND	AUCKLAND STANDARDS COMMITTEE 3 (ASC3) Respondent

Hearing:	22 September 2016
Counsel:	Mr Lee in person R McCoubrey for Respondent
Judgment:	7 October 2016

_{JUDGMENT OF FOGARTY J}

This judgment was delivered by me on 7 October 2016 at 4.00pm

Pursuant to Rule 11.5 of the High court Rules.

Registrar/Deputy Registrar

Date:..............................

Counsel/Solicitors:

Y Lee, Barrister, Auckland

R McCoubrey, Meredith Connell, Auckland

LEE v AUCKLAND STANDARDS COMMITTEE 3 (ASC3) [2016] NZHC 2372 [7 October 2016]

Introduction

[1] This is an appeal against two decisions of a New Zealand Lawyers and Conveyancers Disciplinary Tribunal (the Tribunal).¹ In the first decision, the Tribunal dismissed a charge of misconduct, but found in the alternative unsatisfactory conduct. In a second decision, the Tribunal, censored Mr Lee, imposing a fine of $2,000, and imposed an order that he pay 50 per cent of the Standard Committee’s fees, namely $5,535, and that he reimburse the Law Society

for the s 257 costs of the Tribunal of $3,914.

Supplementary submissions

[2] The appeal was heard on 22 September 2016. Following the hearing, I received two sets of supplementary submissions from Mr Lee and a submission from Mr McCoubrey in reply. The first set of submissions from Mr Lee argued that it is impossible to be found guilty of contempt for wilful disobedience of an order which is a nullity from the outset, or an order which ought not to have been made.²

[3] Mr McCoubrey, for the respondent, replied with the simple submission that the hearing before the Tribunal was in relation to a specific charge of misconduct which was not advanced as a contempt of Court, even if there was an argument that it could be approached as a contempt of Court. In opening the case in the Tribunal, counsel stated:

I should make it clear the Committee doesn’t hang its hat on this technically being a contempt of Court. The charge is not brought, the charge would not fail if I could not make out the elements of a contempt of Court.

[4] That drew a second set of submissions, filed without leave, but addressed now, submitting that the charge of disobeying a Court order is contempt of Court by another name. But, Mr Lee was not charged with disobeying a Court order. He was charged with misconduct, or in the alternative, unsatisfactory conduct. I agree and adopt Mr McCoubrey’s submission. Mr Lee did not face a contempt allegation

_{before the Tribunal.}

¹ _{2015 NZLCDT 33 LCDT 046/14 and 2015 NZLCDT 42 LCDT 046/14.}

2. Citing re Te Rangi (A Bankrupt) [1961] NZLR 942 (SC) at 944 and Taylor v The Attorney- General [1975] 2 NZLR 675 (CA) at 687.

Some further background

[5] The appeal arose out of orders made by Judge M E Sharp of the District

Court at Auckland at a hearing on 9 December 2013 in the case of Konishi v Jin.³

[6] The parties to this litigation were in dispute over the performance of an agreement for sale and purchase of property, entered into on 19 July 2010. Mr Lee acted for the vendor. The agreement provided that any defects in the dwelling be notified to the vendor and made good by the vendor. The purchasers gave notice of the defects to the vendor, but she refused to remedy them. The purchasers gave notice cancelling the agreement for sale and purchase and followed this up with a claim to the District Court seeking the refund of the deposit and other related costs. However, following the issuing of the District Court information capsule of May

2011 the parties had been negotiating possible settlement whereby the vendor would agree to cancel the agreement and return the deposit. Nonetheless the litigation was still continuing in 2013.

[7] In August and December 2012 the District Court required the defendant vendors to provide affidavits; for trial (August 2012), and in opposition to a strike- out of the defence (December 2012). On 30 April 2013 Judge Sharp had struck out the vendor’s defence for failure to comply with unless orders.

[8] The defendant then applied to set aside the strike-out. That application was considered by Judge Sharp on 9 December 2013. The Judge averted to what she called the “continuing saga” and the progress of the dispute before various appellate courts, including the High Court and Court of Appeal. The Judge dismissed the application to set aside the strike-out and moved on to costs.

[9] The Judge had before her two applications for costs from the plaintiffs, first against Mr Lee personally and the second against his client. She granted full indemnity costs to the successful plaintiffs on this application and ordered that they

_{be paid personally by Mr Lee. She then went on:}

³ Konishi v Jin DC Auckland CIV-2011-044-000085, 9 December 2013.

[52] Finally I deal with an application by Mr Hickson on behalf of the plaintiffs that until and unless the costs awards of the High Court and Court of Appeal, and now the award that I have made against Mr Lee personally, have been met, Mr Lee may not on behalf of his client appear in this Court on any matter to do with this piece of litigation. That is CIV-2011-044-000085. That seems to me to be a perfectly appropriate order to make however I did hear from Mr Lee and I think he is entitled to make submissions on that now.

Discussion with Mr Lee

[53] To permit the defendant to continue to litigate with the Konishis in this proceeding despite unpaid costs awards in the High Court and the Court of Appeal is an abuse of process in any Court. I therefore now make an order preventing her from taking any steps in this proceeding unless and until those costs awards are met. This does not mean that I have in any way revised or altered the order that I made previously debarring her or striking out her defence. That position remains and it is my view that they have no standing to appear and present any argument at the formal proof hearing next week.

[54] To make it doubly clear I make the order that I just have which is that they may not take any steps at all in this proceeding whilst cost awards remain unmet. The same goes for Mr Lee. I have made an award of costs against him personally in respect of this application to set aside my judgment of 30 April 2013. That must be paid before he may represent them on this piece of litigation at any time. Again that should not be taken to indicate an invitation for the defendant to continue to litigate in this proceeding. I have struck out her defence. I was right to do so and I have rejected her application to set aside those orders. She had no standing; she continues to have no standing. I am only adopting a belts and braces approach by making the further orders.

[10] These remarks and directions were delivered orally. A transcript was not sent to Mr Lee until 23 December.

[11] About a week after the oral directions, on 13 December, Mr Lee made another attempt to settle the case by correspondence with Mr Singh of the solicitors for the holder of the deposit, Barfoot and Thompson (the real estate agent). It was an attempt by Mr Lee to end the litigation by the real estate agent returning the deposit.

[12] This communication generated a complaint to Judge Sharp made by Mr

Hickson, counsel for the plaintiffs, on 18 December 2013.

[13] This led to a minute of Judge Sharp on 20 December saying, in paragraph [3]:

[3] I was, I hope completely clear in my direction on 9 December 2013 that Mr Lee was not to act for the defendant in this proceeding until he made payment of the costs order that I had made against him. It seems to me that engaging in communications about the litigation (or subject matter of it) that the stakeholder’s solicitor comes close, if not actually is a breach of that order and therefore contempt.

(underlining in the original).

The Judge directed the Registrar to refer the matter to the New Zealand Law Society to investigate whether a disciplinary offence had been committed. She went on to say:

[5] I do, however, make it plain that if Mr Lee continues his communications with any person involved in this proceeding, whether as a witness or as a party, relevant to the litigation, I will have no hesitation in citing him for contempt and requiring that he appear before the Court.

[14] The New Zealand Law Society responded by convening this prosecution.

Scope of appeal

[15] The jurisdiction of the High Court to entertain an appeal from the

Disciplinary Tribunal is contained in s 253 of the Lawyers and Conveyancers Act

2006. There is a general right of appeal contained in subsections (3) and (4) of that section. The relevant parts of the section record:

253 Appeal against order or decision of Disciplinary Tribunal

(1) Any of the persons specified in subsection (2) may appeal to the High Court against any order or decision made under this Part by the Disciplinary Tribunal.

...

(3) Every appeal under subsection (1)—

(a) must be by way of rehearing; and

(b) must be made within such time and in such form as may be prescribed by rules of court; and

(c) must be heard in such manner as may be prescribed by rules of court.

(4) On hearing an appeal under subsection (1), the High Court may confirm, reverse, or modify the order or decision appealed against.

[16] Because the appeal is not limited it is a general appeal on fact and law, this Court is guided by the decision of the Supreme Court in Austin, Nichols & Co Inc v Stichting Lodestar.⁴

[4] Perhaps the most familiar general appeals are those between courts. So, in the present case, the Court of Appeal on general appeal from the High Court under s 66 of the Judicature Act 1908 was entitled to take a different view from the High Court. Similar rights of general appeal are provided by statute in respect of the decisions of a number of tribunals. The appeal is usually conducted on the basis of the record of the court or tribunal appealed from unless, exceptionally, the terms in which the statute providing the right of appeal is expressed indicate that a de novo hearing of the evidence is envisaged. (An example of a right of appeal with that effect was that under the legislation considered by the Court of Appeal in Shotover Gorge Jet Boats Ltd v Jamieson. In either case, the appellant bears an onus of satisfying the appeal court that it should differ from the decision under appeal. It is only if the appellate court considers that the appealed decision is wrong that it is justified in interfering with it.

[5] The appeal court may or may not find the reasoning of the tribunal persuasive in its own terms. The tribunal may have had a particular advantage (such as technical expertise or the opportunity to assess the credibility of witnesses, where such assessment is important). In such a case the appeal court may rightly hesitate to conclude that findings of fact or fact and degree are wrong. It may take the view that it has no basis for rejecting the reasoning of the tribunal appealed from and that its decision should stand. But the extent of the consideration an appeal court exercising a general power of appeal gives to the decision appealed from is a matter for its judgment. An appeal court makes no error in approach simply because it pays little explicit attention to the reasons of the court or tribunal appealed from, if it comes to a different reasoned result. On general appeal, the appeal court has the responsibility of arriving at its own assessment of the merits of the case.

(Footnotes omitted)

The appellant’s arguments on appeal

[17] The principal argument by Mr Lee was that there was no substance to the allegations of misconduct on his part as the District Court had never had the authority to award costs against him as was confirmed by Gilbert J in Jin v Konishi.⁵

Therefore, Mr Lee submitted that the decision of the District Court Judge to do so

_{was a nullity. He relied on the decision of Holland J in Black v Huffman.}⁶

⁴ _{Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103; [2008] 2 NZLR 141 (SC).}

⁵ _{Jin v Konishi [2014] NZHC 1150, (2014) 22 PRNZ 133.}

⁶ Black v Huffman HC AP54/89; AP55/89; AP98/89, 22 November 1990 at 18.

[18] Essentially this first argument depended on the proposition that Mr Lee could not possibly be in contempt of Court or in any way misconducting himself because he flouted a condition imposed on a null and void award of costs against him personally. I have ruled he was not charged with contempt of Court. See [4] above.

[19] In reply Mr McCoubrey submitted that justice could not be conducted in an orderly fashion if barristers were able to form their own judgment as to the legality of orders against them before establishing that illegality by way of a judgment of a superior court.

[20] The second defence of Mr Lee, and I think his principal defence, is that the terms of the directions made by the Judge on 9 December (see paragraphs [52], [53] and [54] above at [9]) prevented him from litigating and taking steps in this proceeding, but not from writing a letter to the real estate agent, a non-party, in an attempt to get a settlement. Further, that this was Judge Sharp’s view only became apparent at the end of January when on 30 January Judge Sharp clarified that until the outstanding costs were paid “he may not take steps on behalf of his client”.

This Court’s assessment of the merits of the case

[21] I agree with the submission of Mr McCoubrey in relation to Mr Lee’s first argument. Judges regularly make mistakes. There are two ways in which mistakes can be corrected. First is by way of appeal if the mistake is of a character which is appealable. The second is by way of an application asking the Judge to reconsider what is contended to be a mistake.

[22] What a barrister, with audience before the court, cannot do is flout a direction from a presiding judge because of a professional disagreement as to the merit or illegality of it. It does not matter for these purposes whether the Judge had any authority to make the direction.

[23] I would also add that the concept of “nullity” is rarely deployed these days.

Let alone the concept of nullity ab initio.

[24] Mr Lee’s second ground of appeal, that the directions of the Judge did not prevent him from writing the letter, is addressed at the outset of the judgment under appeal. The Tribunal recorded the contention by Mr Lee that he was not aware in December 2013 that his communication with the lawyer representing the real estate agent who held the deposit was in breach of the order. The first reason given was that the costs award had not been paid at this point because it had not been quantified and therefore could not be paid.

[25] Paragraph [17] of the judgment under appeal records in the first sentence:

Under cross-examination Mr Lee confirmed he had been told clearly “not to

do anything in relation to the litigation”.

[26] But Mr Lee had had put to him a number of similar propositions to which he gave different answers. It was put to him that the Judge in December was “telling you to take no further steps?” He answered, “I disagree”.⁷ It was put to him again, “And you have been told to take no steps in the litigation?” And his answer was, “In Court, correct”.⁸ In his evidence Mr Lee distinguished between what Judge Sharp said on 9 December set out in the minute quoted above at [13] and what she said on

20 December. Paragraph [14] of the Tribunal judgment records that Mr Lee received the written record of the oral direction on 23 December, the same day he received the minute of 20 December. On this topic a member of the Tribunal, Mr Simmonds, put it to Mr Lee:

Q So as at, at least the 23^rd of December, when you received [the 20

December minute], you must have appreciated the Judge was preventing you from having any further involvement in this

litigation? Surely?

A With respect, Sir, when I read paragraph 5 I apprehended that I understand that to be anyone involved in the proceeding and I thought the proceeding meant the proceeding in the court, not outside the court. That – perhaps if the Tribunal finds I have breached that, I am sorry, I misunderstood that.⁹

[27] It is not clear, however, from the judgment under appeal whether the Tribunal

_{was taking into account the reiteration of Judge Sharp’s views made by her on 30}

⁷ _{Notes of Evidence at 19.}

⁸ _Above.

⁹ At 34.

January. In this Court Mr Lee’s answer was that once the Judge had clarified the

scope of her order in January he stopped.

[28] Because of these doubts about the reasoning of the Tribunal, on appeal I assume in Mr Lee’s favour that the question of misconduct or not on his part needs to be determined against the phrasing of the direction by Judge Sharp on 9

December, orally, rather than against her clarifications in January.

[29] In paragraph [52] of the ruling released in writing on 23 December, Judge Sharp is directing that he may not, on behalf of his client, appear in the Court on any matters to do with the litigation. Paragraphs [53] and following are under the heading “Discussion with Mr Lee”. I draw the inference that they record the clarifications Judge Sharp made at the time and following the summary of her order in paragraph [52]. This led to the important two first sentences in paragraph [54] set out above. The phrase “any steps at all in this proceeding” is broad. It is not limited to conduct in court or to the filing of documents in the Registry.

[30] It is plain from the minute that on 9 December that Judge Sharp intended to draw a halt to litigious conduct while costs awards remained unmet. But it is important to recall they were delivered orally and the minute was not distributed until 23 December.

[31] The significance of the minute of the Judge on 20 December, after receiving the complaint, makes it clear that in her own mind the conduct of Mr Lee conducting the communications over the release of the deposit, the subject of the proceedings, was contrary to what she had directed he should not do until the costs award had been made.

[32] I accept Mr Lee’s argument that paragraph [52] of 9 December can be read as confining Mr Lee from appearing in Court. It may be the phrase “not take any steps at all in this proceeding while costs awards remain unmet”, appearing in paragraph [54] could be interpreted as confined to procedural steps involving papers lodged with the District Court but not extending to correspondence between the litigants.

[33] Were the directions of this kind by a presiding Judge to counsel subject to careful and hostile scrutiny there might be an argument that Mr Lee was not caught by the scope of these words. But that is a false approach to the issue. Directions by a presiding Judge to counsel of this sort are rare and significant. Counsel have the privilege of audience before the Court on behalf of their clients. Counsel’s reception of directions made personally to counsel by a Court have to be accepted with the humility of counsel and respectfulness to the Judge that, goes with the appreciation that an appearance before the Court is of counsel to speak on behalf of another is a privilege, not a right.

[34] When the Judge as a superior gives a direction to the lawyer as an inferior, and where the direction is ambiguous or otherwise uncertain, or even clearly wrong, the correct response of the inferior is to politely query the scope of the direction or very politely point out the potential error in the direction. But there is no basis for the inferior thumbing his nose at the direction and simply ignoring it.

[35] The mistake Mr Lee made was in not going back to the Judge seeking clarification of what were quite extraordinary directions.

[36] It is for these reasons this Court has no difficulty in agreeing immediately with the dismissal of the charge of misconduct. But I disagree with the qualification in the reasoning saying that it was by a “fine margin”.

[37] I am satisfied, from a perusal of the record, and from the submissions of Mr Lee before me, that when he communicated with the solicitors for the real estate agent following upon the oral directions to him on 9 December, and before he received the written text of those directions, that the prosecuting Law Society had not proved that he understood that sending that letter was himself continuing to litigate or taking steps in this proceeding “steps ... in this proceeding”.

[38] The charge of misconduct is intended to be a very serious charge as is apparent from the text of s 241 which provides:

241 Charges that may be brought before Disciplinary Tribunal

If the Disciplinary Tribunal, after hearing any charge against a person who is a practitioner or former practitioner or an employee or former employee of a practitioner or incorporated firm, is satisfied that it has been proved on the balance of probabilities that the person –

(a) has been guilty of misconduct; or

(b) has been guilty of unsatisfactory conduct that is not so gross, wilful, or reckless as to amount to misconduct; or ...

it may, if it thinks fit, make any 1 or more of the orders authorised by section

242.

[39] Unsatisfactory conduct appearing in subpara (b) obviously distinguishes between gross, wilful or reckless conduct.

[40] One of the arguments made by Mr McCoubrey for the Committee was that the more serious charge had been brought because of the reference of the matter directly to the Law Society by the Judge. The way he put it to the Court suggested that there ought to be a natural deference by the prosecutor when drawing up charges to the views of the Judge. That may well be so where the Judge has had an opportunity to hear the other side of the argument. The Tribunal decision does not record what the Judge had before her, which was a highly emotive complaint.

[41] Mr Lee argued that on these facts it was wrong for the Law Society to lay a charge of misconduct before the Tribunal. Rather, the Law Society should have pursued the alternative charge of unsatisfactory conduct. He submitted that the Auckland Standards Committee had jurisdiction to rule on the unsatisfactory conduct charge, and to impose a fine of up to $25,000 and its own costs at committee level. Had this route been taken the costs and penalty awarded against him would have been less.

[42] The jurisdiction to lay a charge with the Disciplinary Tribunal or to pursue the matters merely before a standards committee rests with the Legal Complaints Review Officer. Section 212(1) of the Lawyers and Conveyance Act 2006 provides:

212 Laying of charge with Disciplinary Tribunal

(1) The Legal Complaints Review Officer, if he or she decides that any complaint or matter should be considered by the Disciplinary Tribunal, must either—

(a) frame an appropriate charge and lay it before the

Disciplinary Tribunal; or

(b) direct a Standards Committee to lay, under section 154, a specified charge before the Disciplinary Tribunal.

[43] This provision creates a discretionary power for the Legal Complaints Review Officer. The exercise of this discretion is not included in the right of appeal from the Tribunal to the High Court. The right of appeal, as noted above, is contained in s 253 and is against any decision of the Tribunal.

[44] On balance I do not think it was wrong for the Law Society to lay the charge of misconduct before the Tribunal. On the other hand, in my view, the Legal Complaints Review Officer who lays the charge with the Tribunal could have elected not to do that on these facts and rather exercised his or her powers under ss 213-215 of the Act. The net result would have been a lower order for costs or expenses.

[45] Whichever route was taken I am satisfied that Mr Lee’s conduct was unsatisfactory. This is for the reasons that I have explained: namely, that given the extraordinary order of costs against him personally and the oral directions to the effect that at the time he take no further steps, he should not have written to the real estate agent’s solicitors without clarifying with the Judge first whether he was going beyond the scope of her direction. Had he done this, there is no doubt that Judge Sharp would have clarified her direction to him, and probably on the terms of clarification which she naturally used in January 2014.

[46] Accordingly, I leave in place the Tribunal’s decision of unsatisfactory conduct.

The penalty and costs appeal

[47] Given the view this Court has taken as to the merits, but also upholding the finding of unsatisfactory conduct, it is appropriate to revisit the penalty and costs

awarded. The penalties are set out in [1] above. This Court’s perception of the merits being significantly different from those findings made by the Tribunal, it is appropriate to halve the penalty decision. Accordingly, the penalty decision is amended by leaving in place the censoring of Mr Lee but reducing the fine to $1,000 and ordering that he pay 25 per cent of the Standard Committee fees, namely

$2,767.50 and that he reimburse the Law Society for the s 257 costs of the Tribunal in the sum of $1,957.

_{[48] There will be no order for costs on this appeal.}

Fogarty J

ADDENDUM TO JUDGMENT ISSUED ON 7 OCTOBER 2016

[1] Following the release of this judgment on 7 October, counsel for the Auckland Standards Committee 3, Mr McCoubrey, has advised that this matter was referred to the Tribunal under s 152(2)(a) of the Act, rather than by virtue of a charge being laid under s 212 of the Lawyers and Conveyancers Act. The Disciplinary Tribunals’ judgment¹⁰ does not record the section of the Lawyers and Conveyancers Act which was employed to lay the charge before the Tribunal.

[2] I acknowledge and am grateful for the correction by Mr McCoubrey. Paragraph [42] is wrong in laying the responsibility for the charge on the Legal Complaints Review Officer. In this case it was the Auckland Standards Committee 3 which referred the matter to the Tribunal under s 152(2)(a) of the Act.

[3] That Committee could have determined that it was examining unsatisfactory conduct applying s 152(2)(b).

[4] The nature of Mr Lee’s conduct was such that the Standards Committee could have made a determination of unsatisfactory conduct rather than deciding that the complaint should be considered by the Disciplinary Tribunal.

[5] Because my error as to the procedure was of no consequence to the judgment, my view is that it is appropriate for the judgment to say the same but to be

_{accompanied by this addendum.}

¹⁰ 2015 NZLCDT 33 LCDT 046/14.