FD v QB [2018] NZLCRO 102 (16 October 2018)

Last Updated: 30 October 2018

	LCRO 47/2016
CONCERNING	an application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006
AND
CONCERNING	a determination of the [City] Standards Committee [X]
BETWEEN	FD Applicant
AND	QB Respondent

DECISION

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

Introduction

[1] Mr FD has applied for a review of a decision by the [City] Standards Committee [X] (the Committee) to take no further action in respect of his complaint concerning conduct on the part of Mr QB.

Background

[2] Mr QB acted for Mr FD’s mother’s estate on instructions from the executors. Mr FD was not an executor, but was named as one of the beneficiaries.

[3] Mr FD was unhappy with the way Mr QB’s firm (the firm) carried out some of the estate work, and corresponded with Mr QB and the Chief Operations Officer (COO) of the firm accordingly. When he was unable to persuade them to his view, Mr FD made a complaint to NZLS repeating his concerns.

Complaint

[4] The Committee set out the substance of Mr FD’s complaint in the decision and addressed his concerns on the basis that further action was not necessary or appropriate. It is not necessary to repeat that information here. Suffice to say, Mr FD was not happy with the Committee’s decision and applied for a review.

Application for review

[5] Mr FD says Mr QB:

• (a) provided incorrect advice with respect to bonds;
  
• (b) created tension between him and the executors by providing incompetent advice that Mr FD properly questioned, in respect of “bonds, choice of Real Estate Agents, disposing of estate assets, depositing of funds from the estate into their own bank accounts and not [the firm’s] Trust Account, the requirement to keep proper financial records, asset records” and a mistake by the firm;
  
• (c) should not have charged for attending the funeral;
  
• (d) mis-recorded time between files;
  
• (e) failed to provide copies of correspondence to the executors to Mr FD; and
  
• (f) colluded with the executors.
  

[6] Mr FD says that if the firm had given correct advice or the executors had questioned the incorrect advice they had received there would have been no need for him to sign an Indemnity Form and Deed of Release. He believes that Mr QB:

not even bothering to respond in making any sort of defence to the claims made against him but to use only the information that was provided by myself shows that [the firm] and Mr QB have nothing but contempt for the complaints process by the New Zealand Law Society.

[7] Mr FD objects to the Committee having taken no further action even though Mr QB was “loose with the facts”, gave incorrect advice and made a mistake. Mr FD, who says he has previously been an executor of two estates, expresses the view that administering the estate was a simple exercise because his mother kept her records in

good order. Mr FD says Mr QB overcharged by around $3,500 and should reimburse him his share, $2,834.67.

[8] Mr QB did not wish to make any further comment, but confirmed he would provide any specific information that this Office might request.

Review Hearing

[9] Mr FD attended a review hearing by telephone on 10 October 2018. Mr QB was not required to attend and did not exercise his right to do so.

Nature and scope of review

[10] The nature and scope of a review have been discussed by the High Court, which said of the process of review under the Act:1

... the power of review conferred upon Review Officers is not appropriately equated with a general appeal. The obligations and powers of the Review Officer as described in the Act create a very particular statutory process.

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” ...

... 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.

[11] More recently, the High Court has described a review by this Office in the following way:2

A review by the LCRO is neither a judicial review nor an appeal. Those seeking a review of a Committee determination are entitled to a review based on the LCRO’s own opinion rather than on deference to the view of the Committee. A review by the LCRO is informal, inquisitorial and robust. It involves the LCRO coming to his or her own view of the fairness of the substance and process of a Committee’s determination.

1 Deliu v Hong [2012] NZHC 158, [2012] NZAR 209 at [39]–[41].

2 Deliu v Connell [2016] NZHC 361, [2016] NZAR 475 at [2].

Discussion

Early Intervention Process

[12] On review, Mr FD says that Mr QB “not even bothering to respond” to his complaint shows he has “nothing but contempt to the complaints process by the New Zealand Law Society”.

[13] The complaint was determined through the NZLS Early Intervention Process (EIP). Mr QB was not required to respond because the Committee’s view was that there was sufficient information for it to make a decision.

[14] There is no difficulty with that approach because there had been detailed correspondence between Mr FD, Mr QB and the COO in which responses had been given to the concerns Mr FD had raised directly with them. His complaint did not add to those.

[15] There is no basis for the suggestion that Mr QB holds the complaints process in contempt. The fact that NZLS adopted a process that did not require Mr QB to respond further cannot be called in aid of that argument.

[16] Mr FD’s criticisms in that regard are firmly rejected. That view is further supported by the fact that Mr QB offered to provide any specific information that this Office might request on review.

Mr QB’s advice with respect to bonds was incorrect

[17] The nub of this aspect of Mr FD’s complaint is that he obtained information from the share registry that added to the options available to the executors, but, Mr FD says, the firm did not advise the executors on that basis.

[18] The contention advanced is that Mr QB’s advice to the executors was deficient to a material extent (and he should agree to provide a refund that acknowledges that deficiency).

[19] Ms SU, the Legal Executive at the firm who was working on the estate administration file, received information from Computershare. She conveyed that to Mr FD in an email dated 28 April 2014.

[20] Independently Mr FD sought information directly from Computershare and sent that on to Ms SU.

[21] Ms SU acknowledged that the information was conflicting, sought further information from the Share Registry and said, “if the cash in option is available then the executors will no doubt want to consider which option is best taking into consideration penalty, interest etc. etc.”.

[22] Ms SU’s response tends to suggest that communication between the firm and the executors followed. It is clear that the executors gave instructions because the firm passed on an instruction to refer any further queries from Mr FD to his executrix sister who had all the information he needed.

[23] On this somewhat tenuous factual basis, Mr FD says the firm gave bad or incomplete advice to the executors.

[24] Mr FD’s argument assumes that advice and information are the same thing when they are not. Although Mr FD knows what information was available he does not know what advice was provided in relation to it. The advice itself is confidential to the executors and is the subject of lawyer/client privilege. The executors are said to be happy with the advice they have received.

[25] As Mr FD is not entitled to know what advice the executors received, that aspect of his complaint cannot be advanced on review. The evidence suggests the advice to the executors was not incorrect. That position is accepted.

Mr QB created tension between him and the executors by forcing Mr FD to be more actively involved than should have been necessary

[26] Mr FD says he lost confidence in Mr QB early on because he believed he was providing incompetent advice, and what followed did nothing to allay his concerns. Mr FD believes he properly questioned the executors’ decisions over the Bonds, the real estate agent, disposal of various estate assets, their choice to deposit estate funds to their personal accounts rather than into trust and their failures to keep proper financial records. He attributes failings on the part of the executors to the advice they had received.

[27] That proposition cannot be sustained. Mr QB was the executors’ legal advisor. He could not force them to follow his advice.

[28] This Office exercises jurisdiction over lawyers. It would have no power to determine claims by beneficiaries against executors even if Mr FD had not signed a Deed that appears to prevent him from challenging the executors’ actions. Mr FD

cannot advance collateral attacks on the executors via Mr QB through the process of review.

[29] It is not accepted that Mr QB created tension between Mr FD and the executors by forcing Mr FD to be more actively involved than should have been necessary.

Mr QB charged for his attendance at the deceased’s funeral

[30] Mr FD notes that Mr QB recorded his first attendance on [Date] as attending his mother’s funeral. In his letter to the firm’s COO, Mr FD said that he had asked the executors to challenge the firm’s fees and they had refused but he wanted to pursue the issue, with a focus on his concern that the firm had charged for attending the funeral. He then says he finds it disturbing:

that [the firm] charged to attend funerals prior to a Letter of Engagement being duly executed, if in fact one exists. This in my opinion raises not only ethical issues but moral ones as well. There is no mention of this charge on the statement of accounts.

[31] The first point is that lawyers can charge for providing services. The second point is that the evidence does not support the proposition that Mr QB charged a fee for attending Mr FD’s mother’s funeral.

[32] Mr FD says his mother’s funeral took place on [Date] which is consistent with the entry on Mr QB’s timesheet for that day.3 Mr FD then refers to the “statement of accounts”, which is assumed to be or represent the invoices.

[33] Three invoices have been provided in the materials, the first of which spans the period 13 January to 30 April 2014. The relevant invoice therefore excludes charges for the day of the funeral. As the day of the funeral is before the first attendance charged for in the first invoice, the issue Mr FD identifies does not arise on the facts.

[34] The evidence does not support the contention that Mr QB charged for his attendance at the deceased’s funeral. Whether or not it would be moral for a lawyer to charge for attending a funeral is not an issue that can be determined on review.

3 Mr QB recorded one and a half hours at the funeral and creating a new matter on [Date].

Mr QB mis-recorded time between files

[35] Mr FD is concerned that Mr QB recorded time to the estate file that should have been recorded to his sister’s personal file.

[36] The problem was rectified by Mr QB’s office when Mr FD first identified it. It is accepted it was a minor clerical error.

[37] No professional standards issue arises.

Mr QB failed to provide Mr FD with copies of his correspondence to the executors

[38] Mr FD objects to be excluded from correspondence between Mr QB and the executors.

[39] Mr QB and his firm were not acting for Mr FD. They were not obliged to copy him into correspondence. It must be assumed that Mr QB and others at the firm acted in accordance with the executors’ instructions in that regard. There is no evidence to the contrary.

[40] No professional standards issue arises.

Mr QB colluded with the executors

[41] Mr FD believes that if the firm had given correct advice or the executors had questioned the incorrect advice they had received there would have been no need for him to sign an Indemnity Form and Deed of Release.

[42] It seems that Mr FD did not trust the executors to administer the estate properly. Responsibility for the executors’ decisions and conduct cannot be attributed to Mr QB, nor can Mr FD’s reactions. No professional standards issue arises.

[43] Mr FD says Mr QB was “loose with the facts”.

[44] Mr QB’s primary duties were to the executors. He owes them a continuing duty of confidence. Their information is not his to share. If he was “loose with the facts” he shared with Mr FD, his obligations to his clients account for that.

[45] No professional standards issue arises.

Fees

[46] Mr FD remains adamant that he is due a refund of $2,834.67. Mr QB disagrees.

[47] Mr QB acted for the executors of the estate. Mr FD was not one of the estate’s executors. As a beneficiary, however, Mr FD is entitled to make a complaint about the amount of Mr QB’s bill.

[48] Mr FD’s complaint about Mr QB’s fees is that Mr QB’s fee should be reduced for a number of reasons, but primarily because his advice was deficient and he should not have charged for going to the funeral.

[49] Mr QB did not act for Mr FD or on his instructions and did not provide him with advice. Mr QB provided a copy of his timesheets, and confirmed that the executors and other beneficiaries were “perfectly happy with the level of fees”. Mr QB says the executors received every bit of advice they needed in relation to their duties and obligations as executors.

[50] The COO’s response to Mr FD included a comment attributed to the executors that:

a significant part of the difference in cost between the estimate in the letter of appointment (over which a claim of legal privilege was made) and the final fee was directly attributable to the need to respond to your detailed inquiries.

[51] Mr FD rejected that contention and his concerns were not satisfied. He speculated over other deficiencies and remained concerned about the firm having charged for attending his mother’s funeral.

[52] All of the concerns raised by Mr FD in his complaint and on review have been carefully considered, as have his submissions at the review hearing.

[53] It is accepted that a beneficiary is entitled to challenge the bill of the lawyer acting for the estate. It is also accepted that it may be more difficult for a beneficiary to provide evidence that supports the challenge, particularly if the beneficiary is, like Mr FD, a lone dissenting voice.

[54] That said, decisions made by this Office are dependent on evidence. Mr FD is unable to provide that and it seems the executors are not minded to support him.

[55] Argument about overcharging cannot be based solely on a time record when recorded time and attendance are but one of many factors that are relevant to setting a

fee.4 The mere fact that a lawyer might charge a fee that exceeds the value of time that has been recorded to a matter does not mean the fee was not fair and reasonable.

[56] The Committee considered the fee of $11,700 with reference to the reasonable fee factors and was satisfied there was no basis on which to find the fees were unfair or unreasonable.

[57] Mr QB’s fees, time records and invoices have been considered on review along with all the other available information. Mr QB has not been asked to produce his files and it is not necessary for him to do so to be able to determine this aspect of concern to Mr FD.

[58] Mr QB’s fee represents marginally more than the value of the time and labour recorded if the value of the time recorded on [Date] is excluded. It is accepted that the firm was responsible to the executors and beneficiaries for performing the services properly, and that it did. It is also accepted that the timesheets accurately record the services provided.

[59] A reasonable level of skill and specialised knowledge was required to perform the services properly. The matter was important to the executors and the beneficiaries. The result was the successful winding up of the estate according to the testator’s wishes which enabled early final distributions to be made to the beneficiaries. There is no evidence of any particular urgency in respect of the work that was done, although the circumstances were complicated to some extent by Mr FD actively involving himself. He should not take that as a criticism, but it is also not a cost that the lawyers or other beneficiaries should bear alone.

[60] Except to say that the hourly rates appear reasonable, the other factors set out in r 9.1 do not appear particularly relevant.

[61] Standing back and looking at all of the work done as recorded on the time sheet, and taking the relevant factors into account, there is no basis on which to say Mr QB’s fees are not fair and reasonable for the services he provided, having regard to his interests and those of his client. That is consistent with the Committee’s view. Nothing raised on review constitutes reason to depart from that.

Summary

[62] There is no basis on which to reverse or modify the Committee’s decision. That is confirmed.

4 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, rr 9 and 9.1

Decision

Pursuant to s 211(1)(a) of the Lawyers and Conveyancers Act 2006 the decision of the Standards Committee is confirmed.

DATED this 16th day of October 2018

D Thresher

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:

Mr FD as the Applicant Mr QB as the Respondent

Mr UF as the Related Person [City] Standards Committee [X] The New Zealand Law Society