Stewart v Legal Complaints Review Officer [2016] NZHC 916 (6 May 2016)

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BETWEEN	BRUCE ANTHONY STEWART Applicant
AND	LEGAL COMPLAINTS REVIEW OFFICER First Respondentt
AND	SHARON SCHNEEBELI Second Respondent
AND	THE NEW ZEALAND LAW SOCIETY First Intervener
AND	THE NEW ZEALAND SOCIETY OF CONVEYANCERS _{Second Intervener}

Hearing:	20 October 2015
Appearances:	R J B Fowler QC for Applicant T P Mullins for First Intervener W D Bevan for Second Intervener
_Judgment:	_{6 May 2016}

[1] A lawyer should not seek, accept or need to rely on an undertaking from a non-lawyer. So reads the first sentence of guideline 2.55 of the New Zealand Law Society Property Law Section Guidelines (PLS Guidelines).

[2] Guideline 2.55 has occasionally become a source of tension between lawyers and conveyancers as the due date for settlement of routine conveyancing transactions approaches. This application for judicial review arises out of one such occasion.

[3] Mr Bruce Stewart, the applicant, acted for purchasers in the sale and purchase of a residential property. The second respondent, Ms Schneebeli, is a conveyancing practitioner and acted for the vendors.

[4] The Agreement for Sale and Purchase prescribed the mechanics of settlement by explicit reference to the PLS Guidelines. On the due date for settlement Mr Stewart sought to settle in accordance with those guidelines. Ms Schneebeli’s understanding was that the method of settlement would put her in breach of her undertaking to her clients’ bank not to complete the discharge of mortgage until the funds were received.

[5] When settlement did not take place because of the impasse between the two, Mr Stewart issued a settlement notice and communicated directly with Ms Schneebeli’s clients. Settlement eventually took place.

[6] Subsequently Ms Schneebeli lodged a complaint with the New Zealand Law Society about Mr Stewart’s conduct in contacting her client. The Hawke’s Bay Lawyers Standards Committee (Standards Committee) decided that Mr Stewart had not breached r 10 of the Lawyers: Conduct and Client Care Rules (Conduct and Client Care Rules). Nor had he breached r 12 which requires a lawyer when acting in a professional capacity to conduct dealings with others with integrity, respect and courtesy. The Standards Committee decided that no further action was unnecessary.

[7] On a review by the Legal Complaints Review Officer (LCRO) the Standards Committee’s decision was confirmed.¹Although the LCRO did not find Mr Stewart in breach of any of his professional obligations he determined that Mr Stewart should not have communicated directly with the vendors. He ordered Mr Stewart to pay $400.00 costs to the New Zealand Law Society.

[8] Mr Stewart’s application for judicial review seeks to have the LCRO decision

[9] Mr Stewart’s concise statement of claim pleads one ground of review: the LCRO made an error of law and exceeded his jurisdiction in determining that Mr Stewart should not have communicated directly with the vendors and in ordering him to pay costs. That is because:

(a) Ms Schneebeli is not a lawyer and therefore the provisions of r 10 did not apply to the conduct about which she complained;

(b) There was no jurisdiction for the first respondent to impose a rule or prohibition on the applicant communicating directly with Ms Schneebeli’s clients in the circumstances; and

(c) The LCRO made a determination that was not sought by Ms Schneebeli and which Mr Stewart had not addressed in his submissions to the LCRO.

(a) Does r 10.2 (commonly referred to as the ‘no contact rule’) prevent a lawyer from contacting directly the client of a conveyancing practitioner? The answer to this question will determine the

(b) Did Mr Stewart have a fair hearing before the LCRO? (c) What relief, if any, is appropriate?

[12] The New Zealand Law Society (NZLS) and the New Zealand Society of Conveyancers appeared and made submissions to assist the Court in relation to matters pertaining to professional conduct and the interpretation of the Rules.

[13] It is desirable to detail the course of communications leading up to the settlement of the property, and the regulatory backdrop to those events, because they illustrate the difficulties which conscientious lawyers and conveyancers face when they endeavour to act consistently with their respective professional and contractual obligations and those obligations clash.

[14] The Agreement for Sale and Purchase was the standard form (9th edition) approved by the Real Estate Institute of New Zealand and the Auckland District Law Society. Settlement was scheduled for 1 August 2014. As at 31 July 2014 settlement appeared to be on track.

[15] Clause 3.10 of the Agreement required settlement to be made in accordance with the PLS Guidelines. The relevant guidelines provide:

2.55 A lawyer should not seek, accept or need to rely on an undertaking from a non-lawyer. The paramount concern for the lawyer must be the protection of the interests of the client concerned. Undertakings given by lawyers can be and are enforced by a Court under its inherent jurisdiction arising from the fact that lawyers are officers of the Court. Conveyancing practitioners are not officers of the Court and their undertakings cannot be enforced by the Court under its inherent jurisdiction. An undertaking given by a non-lawyer may not be enforceable in law.

2.56 Where the conveyancing practitioner acts for the vendor and the lawyer acts for purchaser, the instruments should be released into the control of the purchaser before the funds are paid. The conveyancing practitioner is protected by the lawyer’s undertaking, which he or she could enforce

[16] Shortly before noon on 1 August 2014 Mr Stewart confirmed he was ready to complete settlement and the funds were in hand. He provided the undertaking required by Guideline 2.55 in the following form:

In consideration of you releasing workspace number 9799253 we undertake immediately following release to us of the workspace to pay the full amount required in accordance with your Settlement Statement by way of same day cleared payment funds to your Trust Account.

[17] Ms Schneebeli understood the proposed method of settlement would require her to breach her own obligations. She replied:

The mortgagee does not permit the discharge of their mortgage prior to receipt of loan repayment funds, and as such the discharge of mortgage cannot be released prior to settlement.

[18] In his reply Mr Stewart referred Ms Schneebeli to guideline 2.55 and looked forward to Ms Schneebeli’s advice that she had released the e-dealing so that settlement could be completed.

As attached, the discharging mortgagee expressly prohibits the release of its discharge of mortgage prior to repayment of the loan.

You may wish to enquire with the Law Society on this matter. The Law Society is aware that the PLS guidelines are inappropriate in this event and need to be adjusted.

If your firm believes that it is more essential for the court’s inherent jurisdiction to apply to our undertaking to release instruments, as opposed to relying on the express term of the contract, then you are welcome to settle in person so that we may release the instruments to you contemporaneously.

[20] The letter which Ms Schneebeli attached was from Westpac to Ms Schneebeli dated 14 July 2014. It authorised Ms Schneebeli to discharge the mortgage over the property and read:

[21] Mr Stewart and Ms Schneebeli continued to exchange fractious correspondence in which they maintained their divergent views.

[22] In a further letter Mr Stewart referred to faxes which had been exchanged throughout the day on 1 August and wrote:

We are now in a position where either your clients or my clients are extremely disadvantaged by professional disagreements between yourself and myself as to what is appropriate for the completion of settlement.

I note that the Agreement for Sale and Purchase in clause 3.10 requires that settlement should be completed in accordance with the PLS guidelines. This is of course a contractual requirement. PLS guidelines provide in clause

2.55 that I should not accept an undertaking from a Licensed Conveyancer. I note that you claim that those Guidelines are incorrect but professionally I have no alternative but to accept the guidance given to me by those Guidelines.

My understanding is that the reason for the Guideline is that undertakings given by a Licensed Conveyancer are not directly enforceable. Therefore, if I accept an undertaking from a Licensed Conveyancer I am professionally irresponsible and negligent. My clients would not be covered by my professional indemnity insurance. In this case my clients are not only the Purchasers but also the Purchasers’ mortgagee.

I have proposed in my letter to you of 29 July 2014 a method of completion of settlement which relies upon me honouring my undertaking to complete settlement upon you releasing the eDealing to me. I call upon you to follow that. There appears to be no loss to be suffered from your clients’ perspective nor from my clients’ perspective from your following my request.

As outlined in our fax to you at 1:53pm today, we provided evidence to you that we have no authority to release the banks discharge of mortgage because the bank strictly prohibits the release of their mortgage until such time as their loan/s have been repaid. To reiterate again, we do not have authority to release the banks’ mortgage prior to receipt of loan payment (settlement) funds. It is inappropriate that you have requested us to intentionally breach the bank’s instructions. Further to my email of this morning, I have provided a copy of my Practising Certificate which verifies that I am authorised under the lawyers and conveyancers act to carry out this transaction.

The vendors require us to settle in accordance with the express terms of the contract, and in particular we note clause 3.8(1) of the contract requires you to pay the funds, and clause 3.8(2) requires us to release the instrument immediately thereafter.

[24] Still further correspondence was exchanged in which both Mr Stewart and Ms Schneebeli asserted and relied on their respective professional and contractual obligations. At one point Mr Stewart suggested to Ms Schneebeli that she should request the bank’s authority to release its mortgage. Ms Schneebeli suggested it was unlikely that any bank would be willing to compromise its security position in this way and also unlikely that such a decision would be taken within one day.

[26] On the following Monday, 4 August, Mr Stewart sent three communications. (a) He wrote to Westpac referring to the amount which the bank had

advanced to his trust account on 1 August and advising that settlement had not occurred for reasons which Mr Stewart detailed. In particular he referred to cl 3.10 of the contract, the remote settlement requirements of guideline 2.56 and the fact he had given his undertaking to pay over the funds. Essentially Mr Stewart hoped the bank would clarify its instructions to Key Conveyancing Ltd (Ms Schneebeli’s firm) and authorise the contemporaneous transaction of the discharge of mortgage and the repayment to the bank.

My clients are in a position to settle. Settlement was not completed last Friday. Clause 3.10 of the contract requires that settlement should be completed in accordance with the PLS Guidelines. Guideline 2.56 requires settlement to be completed in a particular manner. Your Conveyancer, Key Conveyancing Ltd, does not accept that the Guidelines are correct. She states that they are problematic.

I have issued a Settlement Notice and if this proceeds, then ultimately, my clients will issue court proceedings against you. I hope that it does not come to this.

... might I suggest that you seek the opinion of a Solicitor at this point rather than waiting until the costs and penalties are much greater.

Please note that this email is not purporting to give you legal advice. This email is advising you to take legal advice from a lawyer.

(c) Mr Stewart wrote to Ms Schneebeli advising he had written to her clients’ bank and attached a copy of the letter which he had sent. He also attached a Settlement Notice on behalf of his clients.

[27] Mr Stewart says he received advice from Westpac to the effect it agreed with his suggestion. Settlement followed.

[28] Ms Schneebeli made a complaint to the NZLS. She raised several concerns but of relevance to this proceeding was Mr Stewart’s direct contact with her vendor clients.

[29] Communications between lawyers and clients of other lawyers is governed by r 10.2 of the Conduct and Client Care Rules. Rule 10.2 provides:

10.2 A lawyer acting in a matter must not communicate directly with a person whom the lawyer knows is represented by another lawyer in that matter except as authorised in this rule.

[30] There are six exceptions to the ‘no contact’ rule but none is relevant to the

[31] Before the Standards Committee Ms Schneebeli accepted that r 10.2 referred to “lawyers” but her position was that the rules are a minimum standard. She observed that the difficulties created by the deficiencies in the PLS Guidelines and

Sale and Purchase Agreement are circumvented in most cases by professional and cooperative behaviour on the part of members of both the conveyancing and legal profession.

with Ms Schneebeli’s clients did not breach r 10.2 “as Key Conveyancing is not a

[33] Mr Stewart maintained his freedom to contact any person he wished with a view to furthering the interests of his client providing he did not act unethically.

(a) The failure to settle arose because the lawyer would not accept an undertaking from a non-lawyer and required settlement in accordance with cl 3.10 of the Agreement for Sale and Purchase requiring settlement to be completed in accordance with the PLS Guidelines.

(b) The PLS Guidelines provide in guideline 2.55 that lawyers should not accept undertakings from conveyancing practitioners.

(c) The protocol for remote settlement with a conveyancing practitioner is explained in guideline 2.56 of the PLS Guidelines and requires the documents to be released before settlement funds are paid. The vendor’s representative is able to rely on the undertaking from the purchaser’s lawyer the basis for which is set out in the Guidelines and commentary.

[35] While the Standards Committee took the view that it “would have been preferable had the lawyer observed the courtesy of communicating directly with the conveyancing practitioner” it did not regard the direct communication with Ms Schneebeli’s clients as breaching r 10.2. Nor did that contact breach r 12 which

requires a lawyer, when acting in a professional capacity, to conduct dealings with others, including self-represented persons, with integrity, respect, and courtesy.

[36] The Standards Committee decided to take no further action on the complaint for the following reasons:

(a) The lawyer’s letter to the vendor’s bank was entirely appropriate in that it made clear to the recipient on whose behalf the lawyer was acting, it set out the situation factually, and proposed a reasonable resolution to enable the settle settlement to proceed.

(b) In order to protect and promote the interests of a client, a lawyer is entitled to communicate directly with any person, other than a person whom the lawyer knows is represented by another lawyer in that matter, for the purpose of advancing his or her client’s interests.

[37] Relying on s 138 (2) of the Lawyers and Conveyancers Act 2006 (the Act) the Standards Committee decided not to take any further action because further action was unnecessary or inappropriate.

It appears that the Lawyers Standards Committee has not taken into consideration the inappropriateness of 2.56 of the PLS Guidelines nor considered the repercussions that adhering to such a protocol would have on a conveyancing practitioner the vendor and the vendors mortgagee. In addition 2.56 of the PLS Guidelines are contrary to the definition of “remote settlement” in clause 1.1(18) of the Sale and Purchase agreement.

Disagreement between purchasing lawyers and selling conveyancers in respect of the settlement process has regularly occurred since the inception of 2.56 PLS Guidelines. I consider the decision that the Lawyers Standards Committee has made will now encourage lawyers acting for the purchaser to correspond directly with the vendor, potentially placing themselves in a conflict of interest situation. I seek the LCRO to review the Lawyers Standards Committee decision, with a view of reaching a fair and reasonable outcome in the interest of all parties concerned.

The NZ Society of Conveyancers has instructed conveyancers on numerous occasions to not settle in accordance with clause 2.56 of the PLS Guidelines because to do so would result in a breach of the terms of the contract and a breach of a conveyancers undertaking to the bank. In addition 2.56 of the PLS Guidelines appear to be unenforceable, [because the bank has not permitted release of the bank’s mortgage] prior to the lawyer making loan repayment funds available. Furthermore, settlement in accordance with guideline 2.56 would also place a conveyancer in breach of his/her obligations to the vendor in respect of the transfer of ownership instrument.

It is clear that guideline 2.56 places Conveyancing Practitioners in a compromising and impossible situation and has been constructed to enable maximum protection for the lawyer’s purchasing client at the full exposure of the conveyancer’s vendor client.

It is clear that conveyancers also need to be afforded the professional respect and courtesy given to lawyers, when lawyers are dealing with them on the other side of a conveyancing transaction. The outcome sought as a result of this complaint is an update to the Conduct and Client Care rules which are currently deficient, as nowhere in the rules is the relationship between conveyancers and lawyers addressed.

(a) The application for review did not touch upon the finding of the Standards Committee concerning the complaints as they related to his conduct. It appeared Ms Schneebeli accepted the finding of the Standards Committee was correct but her complaint now to the LCRO was that the Conduct and Client Care Rules should be amended.

(b) The outcome Ms Schneebeli sought was an update to the Conduct and Client Care Rules as they are deficient and do not address the relationship between conveyancers and lawyers.

(c) The application therefore appeared to be without merit as there was no possibility that the LCRO could change the Conduct and Client Care Rules.

The Complainant’s complaint is not concerning my conduct but is concerning the Client Care Rules. The LCRO is in my respectful submission the wrong forum to conduct an application for the review of the Client Care Rules.

[19] If Mr Stewart had acted as Ms Schneebeli had wanted him to, he would have taken on himself whatever degree of “risk” presented in doing so. Given the express directive by the Property Law Section not to accept an undertaking from a conveyancing practitioner, any adverse consequences which arose after assuming that risk would be visited on Mr Stewart.

[20] There was no reasons for Mr Stewart to act other than in accordance with the Property Law Section Guidelines and the New Zealand Law Society Complaints and Disciplinary process is not the appropriate forum for Ms Schneebeli to be attempting to advance her desire for reform in this area.

[44] The LCRO proceeded to consider whether Mr Stewart should have contacted the vendors. Of r 10.2 he observed:

[27] The principle which is encompassed in the rule against contacting another lawyer’s client is that a lawyer should not interfere with the relationship between a lawyer and his or her clients. To do so would expose the client to undue pressure without the filter that his, her or their own lawyer would apply to the communication.

[28] This principle is equally applicable to clients represented by a conveyancing practitioner, and I see no reason why the principle should not apply to all circumstances where a person is represented by a non-lawyer in a professional context.

[30] ... It was wrong for Mr Stewart to interfere with [the relationship between conveyancer and client] and make any suggestions to the vendor that they should instruct a lawyer to act for them. To excuse Mr Stewart’s conduct by taking the point that Ms Schneebeli is not a lawyer is adopting a particularly technical approach that does not recognise the general application of the principle behind rule 10.2 A lawyer exercising a proper standard of professionalism would have recognised and respected the choice by the vendors to engage Ms Schneebeli and to direct communications concerning this transaction through her.

[31] ... should be used in an educative manner and be communicated to lawyers to ensure they respect the relationship between a conveyancing practitioner and his or her clients and acknowledge there should be no direct communications with the clients of a conveyancing practitioner ... future cases will attract an adverse sanction and finding.

[46] The LCRO considered Ms Schneebeli’s complaint concerning Mr Stewart’s communication with her client to be justified and ordered Mr Stewart to pay $400 to the NZLS by way of costs.

Issue One – Does r 10.2 prevent a lawyer from contacting directly the client of a conveyancing practitioner?

[47] Mr Stewart claims this decision was in error of law. That turns on the proper interpretation of r 10.2 and whether it prevents a lawyer from contacting directly the client of a conveyancing practitioner.

[48] Mr Fowler QC, on behalf of Mr Stewart submitted that on its face r 10.2 is inapplicable because Ms Schneebeli is not a lawyer. Significant problems arise in essentially classifying conveyancing practitioners as lawyers for the purpose of r 10.2.

(a) Lawyers’ undertakings are subject to an enforcement regime under the inherent jurisdiction of the High Court quite apart from the professional disciplinary jurisdiction relevant to lawyers’ undertakings. Lawyers’ undertakings are central to a vast number of property settlements throughout the country every week as a matter of course just as Mr Stewart’s undertaking was central to enabling settlement in this case.

(b) Lawyers are subject to other particular or unique requirements and controls with regard to the way they deal with each other, with clients, with confidences, with conflicts and with the Courts.

the ambit of r 10.2 it was not a viable proposition in these circumstances. These circumstances required the provision of and reliance upon an undertaking specifically referable to the PLS guidelines. Mr Fowler submitted that if it were even arguable that a conveyancing practitioner could be treated as a lawyer for some purposes this could never be one of them.

(a) The Conduct and Client Care Rules are minimum standards and not exhaustive statements of professional conduct obligations. An expansive interpretation of ‘lawyer’ was available to the LCRO and a restrictive interpretation presents anomalies.

(b) The rationale for the ‘no contact’ rule is to “prevent a lawyer from circumventing the protection that legal representation provides to an opposing party”²thereby obtaining unfair advantage.

(c) A restrictive interpretation is inconsistent with the preamble to the Conduct and Client Care Rules which provides that the Rules are not exhaustive and cuts across the protective purposes underlying r 1.

(d) A restrictive interpretation would result in a lack of symmetry between the obligations of lawyers and the obligations of conveyancing practitioners when there is no principled basis for such a distinction.

[50] The NZLS did seek to qualify the LCRO decision in one respect. To the extent the LCRO determined that the principle underlying r 10.2 applied “where a person is represented by a non-lawyer in a professional context:” the ‘no contact’

[51] The Society of Conveyancers advanced the following bases for an expansive approach to r 10.2:

(a) The general obligation in r 10 is to “promote and maintain proper standards of professionalism in the lawyer’s dealings” which is a broad obligation and supports the general tenor of the LCRO’s determination.

(b) One of the purposes of the Act is to provide a scheme within which complaints about lawyers and conveyancing practitioners may be processed and resolved expeditiously to enable early resolution for both complainant and the industry participant. In order to achieve the purpose of the complaint scheme the LCRO must be permitted a liberal interpretation of the complaint and complainants should not be fettered by a requirement for proficiency in framing their complaints.

(c) The rules are minimum standards and it was open to the LCRO to find the communication in breach of the principle underlying r 10.2.

(d) The PLS Guidelines are potentially misleading and possibly incorrect when analysed in the context of the circumstances before the LCRO.

[52] I am in no doubt that Mr Stewart did not breach r 10.2 and that the LCRO was in error when he determined that Mr Stewart should have complied with r 10.2 as if Ms Schneebeli were a lawyer.³

[53] The LCRO also concluded that Mr Stewart should have complied with the provision of r 10.1 as if Ms Schneebeli were a lawyer. Rule 10.1 obliges a lawyer to treat other lawyers with respect and courtesy. This proceeding concerns r 10.2 only and it is not necessary to address this particular finding in any great detail except to say that the finding was unnecessary. Rule 12 covers the position. A lawyer is

_{obliged by r 12, when acting in a professional capacity, to conduct
dealings with}

others “with integrity, respect, and courtesy”. I do not understand Mr Stewart to have contended at any stage that he owed no such obligation of courtesy to Ms Schneebeli.

[54] On behalf of the NZLS Mr Mullin pointed to the preamble to the Conduct and Client Care Rules as indicating that “it was not an exhaustive code” although Mr Mullin noted the absence of judicial consideration of the effect of the preamble on the interpretation and application of the rules. The preamble provides:

The rules are not an exhaustive statement of the conduct expected of lawyers. They set the minimum standards that lawyers must observe and are a reference point for discipline. A charge of misconduct or unsatisfactory conduct may be brought and a conviction may be obtained despite the charge not being based on a breach of any specific rule, nor on a breach of some other rule or regulation made under the Act.

[55] This statement appears with others under a heading “Notes about the rules”.

(a) explain the basis for the rules, namely the fundamental obligations of lawyers set out in s 4 of the Act;

(b) emphasise that the rules are not an exhaustive statement of conduct expected of lawyers but set minimum standards and are a reference point for discipline;

(c) refer to orders of a disciplinary nature that may be made against a lawyer on grounds set out in s 241 of the Act and that the standards committee can make a variety of orders;

(d) state that the rules are binding on all lawyers whether they work in private practice as barristers and solicitors or as barristers sole or as in-house lawyers in the private or public sector;

(e) emphasise that the preservation of the integrity and reputation of the profession is the responsibility of every lawyer who must be guided by his or her own sense of professional responsibility; and finally

[57] That the rules are not an exhaustive code nor the only source of ethical standards is well established. For example:

The rules are not the only source of ethical standards, and in the commentaries there are references to cases and other sources of authority. The introduction makes it clear that they do not purport to deal with every circumstance that might give rise to an ethical responsibility and the rules are “not to be considered an exhaustive code or treatise”. However, insofar as the rules relate to the type of conduct that is the subject of a specific complaint, they are highly relevant.

The parties referred to the New Zealand Law Society Rules of Professional Conduct for Barristers and Solicitors. ... They are not an exhaustive code or treatise, and do not have the force of law. They are under review following the enactment of the Lawyers and Conveyancers Act 2006. They are, however, of obvious assistance in assessing a practitioner’s ethical obligations to a client, and indeed are useful in considering a practitioner’s fiduciary duties.

The New Zealand legal profession has grappled with the issue of what constitutes a conflict of interest. Its rules of professional conduct while drafted pursuant to the New Zealand Law Society’s obligations under the Law Practitioners Act 1982, have no force of law, and are not an exhaustive code or treaties. Rather, as is stated in their introduction, they are a definition of the bounds within which a practitioner can practice the profession. As was commented in Black v Taylor ... , the rules can be seen as an appropriate guide in the exercise of the Court’s inherent jurisdiction.

⁴_{Harold v Legal Complaints Review Officer [2012] NZHC
145, [2012] 2 NZLR 559 at [32].}

⁵_{Legal Services Agency v Haslam [2007] NZHC 1590; (2007) 18 PRNZ 469
(HC) at [27].}

An ethical code of this kind expresses the profession’s own collective judgment as to the standards to be expected of practitioners. While it does not impose legal obligations or have the force of law it is some indication of relevant public policy concerns.

[58] That the Rules are minimum standards takes the interpretive exercise only so far. The Rules are a mix of guiding principles, commentary and prescription. If many are to be workable a ‘good faith’ approach will be required “due to the vague manner in which they are expressed”.⁸

[59] The minimum standards framework will be apt when assessing whether there has been a breach of r 10 for example: “A lawyer must promote and maintain proper standards of professionalism in the lawyer’s dealings”. In assessing the obligations imposed by r 10 it may be appropriate to construe the rule in the language of respect and courtesy and require adherence to general standards of behaviour. But that approach is not justified by the plain and unambiguous language of a rule such as r 10.2:

A lawyer acting in a matter must not communicate directly with a person whom the lawyer knows is represented by another lawyer in that matter except as authorised in the rule.

Lawyer means a person a person who holds a current practising certificate as a barrister or as a barrister and solicitor.

[61] It is unnecessary and undesirable to have recourse to principles of “minimum standards” in the face of such precise and certain language.

[62] Rule 10.2 may require reform particularly in light of its relationship to the contentious PLS Guideline 2.56. Meanwhile those who are bound by the Conduct and Client Care Rules and who are vulnerable to disciplinary action for their breach

_{ought to be able to carry out their professional duties with a degree of
confidence}

⁸Duncan Webb, Kathryn Dalziel and Kerry Cook Ethics, Professional Responsibility and the

that in relying on the clear terms of rules they will not unwittingly fall foul of those rules. As Dobson J commented in a similar disciplinary context:⁹

It is desirable that rules of professional conduct be applied as specifically as possible, rather than requiring adherence to general standards that may be difficult to interpret and apply.

[64] Mr Stewart’s position is that Ms Schneebeli did not seek the outcome determined by the LCRO. Had he been on notice of the ambit of the LCRO’s review and determination he would have advanced arguments made in the present proceeding and perhaps others that are specific to the LCRO jurisdiction. Mr Fowler submitted that in light of the content of Ms Schneebeli’s complaint and submissions, including the outcome she sought —“A change to the Conduct and Client Care Rules”— “Mr Stewart was quite properly of the view his conduct was not at issue”.

[65] Mr Stewart’s submission to the LCRO was brief, nearly to the point of non- existence. In barely more than one page Mr Stewart, as I have already set out, commented that Ms Schneebeli appeared not to take issue with the decision of the Standards Committee but, rather, sought review and amendment of the Conduct and Client Care Rules. If the LCRO had concerns about Mr Stewart’s behaviour, he should have put Mr Stewart on notice and invited him to make submissions. The essence of Mr Fowler’s submission is that the process precluded Mr Stewart from adequately being heard.

constrained by the particulars of what the party seeking review (who may be a lay person) has sought in terms of a remedy”.¹⁰Deliu v Hong is cited:¹¹

⁹_{Q v Legal Complaints Review Officer [2012] NZHC
3082, [2013] NZAR 69 at [59].}

[40] The Review Officer has broad powers to conduct his or her own investigations including the power to exercise for that purpose all the powers of a Standards Committee or an investigator and seek and receive evidence. These powers extend to “any review”. He or she may also postpone the review while attempting to negotiate, conciliate or mediate a resolution.

[41] In my view the power of review is much broader than an appeal. It gives the Review Officer discretion as to the approach to be taken on any particular review as to the extent of the investigations necessary to conduct that review, and therefore clearly contemplates the Review Officer reaching his or her own view on the evidence before her. Nevertheless, as the Guidelines properly recognise, where the review is of the exercise of a discretion, it is appropriate for the Review Officer to exercise some particular caution before substituting his or her own judgment without good reason.

[67] Mr Bevan on behalf of the Society of Conveyancers focussed on the role of the complaints scheme as a form of industry-specific consumer dispute resolution. Decision-makers working in such schemes need discretion to handle complaints that may not be worded precisely. Accordingly it should not matter that the outcome was not expressly sought by the complainant. That would be too technical an approach.

[68] The LCRO must conduct any review with as little formality and technicality and as much expedition as is permitted by the requirements of the Act and a proper consideration of the review and the rules of natural justice.¹²

[69] Thus, although the LCRO exercises broad powers of review, must avoid unnecessary formality and has power to seek and receive evidence, and make such investigations and inquiries as he or she thinks fit,¹³the principles of natural justice continue to operate.

[70] Whether or not it was reasonable to regard Ms Schneebeli’s application as not touching upon the Standards Committee’s findings concerning Mr Stewart’s conduct it would not have been unduly formal or technical for the LCRO to invite Mr Stewart to specifically address his conduct given it became the dominant theme of the LCRO

[71] Mr Stewart did make submissions to the Standards Committee and it can be assumed the LCRO had that information and knew his position. Nevertheless the LCRO was on notice that Mr Stewart took literally the form of the application for review and tailored his response accordingly. Mr Stewart inferred the application no longer implicated his conduct and it focussed instead on achieving a rule change. He directed his brief submission to that very point:

It is my submission that the application is not an application for a review of the decision of the Hawkes Bay standards committee but an application to amend the Client Care Rules.

[72] Without at least having the benefit of Mr Stewart’s input into the analysis that

led the LCRO to his critical findings the LCRO went too far in determining that:

[30] It was wrong for Mr Stewart to interfere with [the relationship between Ms Schneebeli and her clients]. ... To excuse that Mr Stewart’s conduct by taking the point that Ms Schneebeli was not a lawyer is adopting a particularly technical approach that does not recognise the general application of the principle behind r 10.2. A lawyer exercising a proper standard of professionalism would have recognised and respected the choice by the vendors to engage Ms Schneebeli and to direct communications concerning that this transaction through her.

[31] I therefore intend this complaint should be used in an educative manner and be communicated to lawyers to ensure that they respect the relationship.

[33] Again, I do not think the content of the letter [to Ms Schneebeli’s clients] adds anything more to the underlying issue that Mr Stewart should not have communicated directly with Ms Schneebeli’s client.

[39] I consider that Ms Schneebeli’s complaint concerning Mr Stewart’s communication with her client to be justified and Mr Stewart should meet the costs associated with this aspect of her complaint.

[73] A fair hearing before the LCRO would have seen Mr Stewart being put on the “right track” by the LCRO having regard both to the LCRO’s line of reasoning and that it passed Mr Stewart’s apparent understanding of the application like a ship in the night. With minimal formality and without compromising expedition Mr Stewart could have been given an opportunity to say something relevant to the LCRO’s

proposed approach and he should have been given that opportunity. To the extent he was not he was denied a fair hearing.

[74] The LCRO’s determination was reached in error. As well, Mr Stewart was denied a fair opportunity to put his case. That said there is little to be gained in subjecting the parties to the further expense and effort of a rehearing and I make no such order.

[75] The application for judicial review is granted. The decision of the LCRO is set aside as is the order for costs.

[76] The parties agreed that costs would lie where they fall regardless of the outcome. Accordingly, there is no order for costs.

High Court of New Zealand Decisions

Stewart v Legal Complaints Review Officer [2016] NZHC 916 (6 May 2016)