MB v AS [2012] NZLCRO 50 (30 July 2012)

Last Updated: 3 August 2012

LCRO 143/2010

CONCERNING an application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006

_AND

CONCERNING a determination of Auckland

Standards Committee 4

BETWEEN MB

_Applicant

AND AS

_Respondent

The names and indentifying details of the parties in this decision have been changed.

Introduction

[1] This is an application for review of a determination by Auckland Standards Committee 4 to take no further action in respect of a complaint by MB about advice provided by AS in connection with a relationship property agreement entered into by MB with his former wife.

Background

[2] AS acted for MB in a relationship property dispute. Proceedings were issued and the parties attended a mediation on 26 August 2008. Agreement was reached at the mediation and an Agreement was entered into by MB with his former wife.

[3] As part of the agreement MB was required to pay his wife the sum of

$410,000.00 on 10 September 2008 and the sum of $595,000.00 on 2 March 2009. He was unable to make the second payment and his former wife issued proceedings

against him to recover that amount as a result of which he was facing bankruptcy.

[4] On 15 March 2010 MB lodged a complaint with the New Zealand Law Society Complaints Service about the advice provided to him by AS in relation to the Agreement and alleged that “the Agreement would not work”.

[5] On 12 July 2010 the Standards Committee issued its determination pursuant to section 138(2) of the Lawyers and Conveyancers Act 2006 to take no further action.

[6] MB applied for a review of that determination on the grounds that the Standards Committee had proceeded to make its determination prematurely in that MB’s response to the last letter received from AS was not included in its considerations. Instead, the Complaints Service treated that response from MB as a second complaint.

The complaints process

[7] The facts with regard to the process followed by the Complaints Service require close consideration.

[8] Following receipt of MB’s complaint, the Complaints Service sought a response from AS. AS provided that response by letter dated 12 May 2010.

[9] That was forwarded to MB. On 30 May he replied briefly, referring to Part 6 of his complaint in which he sought that AS provide him with “an accounting ledger that resulted from the mediation and compensation for the costs incurred from that mediation to date”.

[10] He also noted that AS had not explained the figure of $30,000.00 included in the calculation of the sum to be paid to his former wife which he asserted he had no knowledge of and which was not mentioned in the mediation agreement. He asked that AS “explain the nature of this figure to enable [him] to respond to his letter dated

12 May 2010”. He was, in short, seeking further information.

[11] AS responded to that letter by letter dated 10 June. He noted that the

$30,000.00 referred to was part of a calculation set out in schedules, one of which had been provided MB. He advised that the other 2 schedules were tabled at the mediation. AS also provided further information as to how the figure was calculated.

[12] That letter was sent to MB by the Complaints Service on 11 June. That letter also advised that “the file will be placed before Standards Committee 4 for its

consideration during its next meeting.” No response was sought from MB nor was the date of the next meeting provided.

[13] The next meeting of the Standards Committee was on 22 June at which the matter was considered and a determination made. The determination was recorded in writing and dated 12 July. It was presumably sent to MB’s P O Box on that date.

[14] MB wrote to the Complaints Service on 21 July. He referred to the letter from the Service dated 11 June which had enclosed AS’ letter of 10 June. He made no reference to having received the Standards Committee determination. In his letter he commented on AS’ letter of 10 June and requested further information from AS on 13 specific points.

[15] Presumably as a result of discussions with the Complaints Service, MB then lodged a further complaint form in respect of the matters raised in his letter of 21 July. In that complaint he sought as an outcome that AS provide him with the information requested in his letter of 21 July.

[16] He also lodged an application for review of the Standards Committee determination of the first complaint. That is the subject matter of this review. The grounds for the application for review are, in substance, that the Standards Committee made its determination prematurely. In the application MB states that “[AS] has stated in his two letters to the Law Society that all matters were discussed. From my perspective all matters were not discussed in my presence or explained to me and that is why I need his answers”.

[17] The outcome sought by MB is “compensation for my loss”. That is something which is clearly outside the jurisdiction of this Office.

[18] In his response to notification of the review application AS referred to “an element of duplicity” between the second complaint to the Complaints Service and this review application. He also responded in some detail to the Complaints Service as to the matters raised by MB in the second complaint.

[19] That response was sent to MB and when the Complaints Service sought a reply from MB, he responded by letter dated 17 November 2010 as follows: -

I have spoken to you about obtaining an extension of time in order to complete my complaint and I’m advised that a time extension would be unlikely.

Therefore in order to not put my complaint application at risk due to not meeting your time schedule and receiving a default judgement in [AS’] favour I respectfully seek without prejudice to withdraw my complaint application to the Law Society.

Having received [AS’] explanations, I intend to progress this matter further by seeking legal advice and clarification in order to complete a more fulsome complaint application to the Law Society about [AS’] conduct and negligence in his handling of my matrimonial property affairs.

[20] The situation therefore is that matters raised by MB in his letter of 21 July 2010 have not been considered by the Standards Committee and MB has indicated that he wishes to comment further on those.

The review hearings

[21] An Applicant-only hearing was scheduled for 8 December 2011 but because MB was unable to attend on that date the hearing was rescheduled for 13 March 2012. On that date MB attended in person and AE attended as an observer for AS.

[22] At that hearing, MB advised that he had withdrawn the second complaint because he was under some time pressure to respond and that he had been told by the Complaints Service that the second complaint could not include reference to the matters raised in the first complaint because they had already been dealt with. He therefore chose to continue with this review.

[23] I adjourned that hearing to request the Standards Committee file in respect of the second complaint.

[24] A further Applicant only hearing was then scheduled for 10 July. This was attended by MB with a support person and AE again attended to observe for AS.

[25] At this hearing MB referred to allegations with regard to the fact that AS did not have an instructing solicitor. This was not a matter referred to in the first complaint under review nor indeed referred to in the second complaint. No new matters can be considered in the course of a review and consequently this issue will not be considered further by me.

[26] MB then questioned how the mediated agreement could be considered to be fair to him as, in his view, it did not achieve an equal division between him and his former wife. He advised that his former wife was now in possession of the former matrimonial home which she was neglecting, and that he was being pursued for payment. These are issues that do not fall to be considered in this review. The

question is whether AS’ conduct is unsatisfactory in terms of the Act.

How to proceed?

[27] As noted above, the essence of this review is that the Standards Committee determination was made without consideration of MB’s letter of 21 July and therefore the investigation was terminated prematurely. I have no difficulty in accepting that was the case. As noted, the Complaints Service did not seek any comment from MB on the response from AS dated 10 June 2010. Nor did the Complaints Service give an indication of when the “next meeting” of the Standards Committee was to take place. If it had, MB would have had the opportunity to immediately indicate that he wished to respond to AS’ letter. Instead, the matter proceeded to be determined by the Committee without considering the further matters that MB wished to raise.

[28] AS responded to MB’s letter of 21 July before MB withdrew his second complaint. However, MB remains unsatisfied with those responses and maintains that he did not receive satisfactory advice from AS in relation to the Agreement. He views the process to date, including this review, as a means of obtaining information from AS to enable him to lodge a further complaint.

[29] In this regard I note MB’s letter of 29 September 2011 to this Office in which he states “[i]n the event that I secure the necessary information, and dependant on the same, then and only then will I be in a position to determine whether to file a complaint.” Again on 9 May 2012 he states: -

Because of the premature actions of the Law Society I have not been able to raise the full extent of professional standards issues with the Law Society and lodge my complaint.

[30] Further in that letter he states that “essential ingredients and aspects of my first application which the Law Society has ruled on will form part of my full complaint yet to be lodged”.

[31] The questions asked by MB are directed at gaining information about the terms of the Agreement, and how and why they were included. AS advises that the effects and implications of the Agreement were explained to MB at the time, and AS has certified the Agreement accordingly.

[32] The only basis on which the Standards Committee or myself could make an adverse finding against AS would be on the basis that the certificate provided by AS in

the Agreement is not true.

[33] MB signed the Agreement. He thanked AS in a telephone conversation some 2 weeks after the mediation and paid AS’ bill. He made the first payment to his wife due in terms of the Agreement on 10 September 2008. He did not raise any concerns with AS about the terms of the Agreement, although he was unable to sell the [...] property to enable him to make the second payment to his wife. These are not actions which support an assertion that the effect and implications of the Agreement had not been explained to him.

[34] The Property (Relationships) Act provides that an Agreement can be set aside by the Court if, having regard to all the circumstances, it is satisfied that giving effect to the Agreement would cause serious injustice. MB advises that he has proceedings on foot to overturn the Agreement for which a hearing is scheduled in September this year.

[35] That is the proper way in which this matter should be addressed. MB accuses AS of not explaining the effects and implications of the Agreement to him resulting in him entering into an Agreement which has caused serious injustice. There is a remedy provided for that in the Act, and the Family Court is the proper forum in which that matter should be addressed. Even if the Agreement were to be set aside, that does not necessarily mean that the effects and implications of the Agreement were not explained to MB. MB would still have to explain why he signed the Agreement, and why it was part performed.

[36] I have considered whether completion of this review should be deferred until the Court proceedings are completed. However, while the result of the Court proceedings would be taken into account in a review, comments made by the Court in the course of

a judgement do not relieve either the Standards Committee or myself from coming to an independent decision about a complaint.1

[37] In addition, section 200 of the Lawyers and Conveyancers Act 2006 requires the LCRO to “conduct any review with as little formality and technicality, and as much expedition, as is permitted by...”-

(a) the requirements of the Act; and

_{(b) a proper consideration of the review; and}

1 Refer Dorbu v Lawyers and Conveyancers Disciplinary Tribunal HC Auckland CIV-2009-404-

7381, 11 May 2011.

(c) the rules of natural justice.

[38] The requirements of section 200 dictate that a decision is made now in respect of this review. On the facts before me, I find it difficult to accept that MB would have willingly entered into an Agreement if he did not understand its terms. His subsequent conduct gives no support to his contention that he did not and that AS had failed in his duty to him.

[39] In all of the circumstances, and addressing all of the information presently before me, including the information provided in respect of the second (withdrawn) complaint, I have come to the view that there is nothing to support MB’s complaint.

Decision

Pursuant to section 211(1)(a) of the Lawyers and Conveyancers Act 2006, the determination of the Standards Committee is confirmed.

_{DATED this 30}th _{day of July 2012}

O W J Vaughan

Legal Complaints Review Officer

In accordance with s 213 of the Lawyers and Conveyancers Act 2006 copies of this decision are to be provided to:

MB as the Applicant

AS as the Respondent

The Auckland Standards Committee 4

The New Zealand Law Society