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RE v WG [2018] NZLCRO 114 (14 November 2018)

Last Updated: 1 December 2018


LCRO 217/2016 LCRO 218/2016

CONCERNING
applications for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006
AND

CONCERNING
a determination of the Taranaki Standards Committee

BETWEEN
RE and YI

Applicants

AND
WG

Respondent

DECISION

Introduction


[1] YI and RE have each applied for a review of the determination by the [Area] Standards Committee (the Committee) in which the Committee made three findings of unsatisfactory conduct against Mr WG.

[2] The Committee made no orders following the findings of unsatisfactory conduct as Mr WG had already refunded fees paid by the applicants and apologised for any stress caused to them.

[3] The review hearing was attended by all parties. Mr WG was represented by Ms GR, who advised that he accepted the findings of the Committee.

Background


[4] Mr WG acted for IS and YI, and their son, RE, for some twenty-five years. IS and YI had established a Trust, as had RE. Mr WG was a trustee of each Trust.

[5] The two Trusts operated in partnership together and held considerable assets, which included farm blocks, residential property and ERQ shares. By 2012, the parties had reached the conclusion they were no longer able to continue to work together and agreed to a distribution of the partnership assets. At the same time, IS made it known that he wished to dissolve his marriage to YI.

[6] RE and YI instructed Mr PL of MOS Lawyers in July 2012 and Mr WG continued to act for IS throughout the partnership and marriage dissolutions. Ms GR was instructed by Mr WG to act in various matters arising out of the dissolutions and disagreement between the parties.

[7] Following a meeting at the offices of the partnership’s accountant (Mr TC of TAM), Mr WG was instructed, and undertook, to prepare an Asset Division Agreement (the Agreement) incorporating the agreed terms. However, on instructions from IS, Mr WG included additional terms in the Agreement, none of which had been agreed to by YI and RE.

The complaints


[8] RE and YI lodged separate complaints with the Lawyers Complaints Service but raised identical issues. RE lodged his complaint on 19 February 2015 and summarised his complaints in the following way:

[9] YI lodged her complaint on 5 March 2015 and summarised her complaints in the following way:

WG charged us for writing up a settlement that contained fictitious information. He had been my solicitor for twenty years and I believed I had to accept the 1.5m interest cost in my settlement as IS didn’t want it in his. RE also believed WG that he had to pay the 1.5m interest on difference in equity (dating back 10 years) between our Trust and his Trust.


[10] The essence of each complaint was that Mr WG had inserted additional terms into the Agreement without instructions or agreement from RE and YI.

[11] A letter from RE sent with his complaint, commenced with a complaint about an invoice received from Mr WG in March 2013. However, he did not detail his complaint and the Legal Standards Officer for the Committee recorded this as a complaint about the quantum of the bill.1

[12] The Committee combined the complaints from RE and YI. It summarised the complaints against Mr WG that he had:

The Standards Committee determination


[13] From the complaints, the Committee distilled the following issues to be addressed:

1 It would seem that the complaint related to the fact that the invoice included reference to work relating to the dissolution of the partnership commencing two years prior to the invoice.


(b) did Mr WG breach r 8.7.1 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (the Rules) when acting against YI and RE?

(c) were Mr WG’s fees fair and reasonable?

(d) did Mr WG fail to ensure that his practice was administered in an appropriate manner and/or breach his obligations under rr 10 and 11 of the Rules?

(e) did Mr WG breach any of his professional obligations in relation to any of the other matters raised?

[14] It reached the following conclusions in respect of each issue.

Breach of professional obligations

The Standards Committee was satisfied that IS, YI and RE’s interests were sufficiently aligned to permit Mr WG to act for all of them from early 2010 up until the point when he received IS’s separate instructions to alter the terms of the draft agreement.2

The Standards Committee did, however, determine that Mr WG had breached the obligations imposed by rule 6.1 by continuing to act for IS, YI and RE after he accepted separate instructions from IS to alter the terms of the draft agreement. It ought to have been clear at this point that there was a more than negligible risk that Mr WG would not be able to discharge the obligations he owed to all three clients and should therefore withdraw. ... From this point onwards, Mr WG was acting in breach of his professional obligations by continuing to act for all parties. Even if the Standards Committee was incorrect on this point, it was satisfied that Mr WG had also failed to take any additional steps to comply with his obligations under rule 6.1.1 before he chose to continue to act.3

Mr WG’s conduct was a clear breach of the obligations imposed by rule 6.1. He also failed to take any real steps to comply with his obligations under rule 6.1.1 of the Rules (following the inclusion of the additional terms) and his conduct also fell short of the diligence and competence a member of the public is entitled to expect from a competent lawyer. In the circumstances, the Standards Committee was satisfied that Mr WG’s conduct amounted to unsatisfactory conduct pursuant to sections 12(a) and 12(c) of the Lawyers and Conveyancers Act 2006...4

Rule 8.7.1 – a lawyer must not act for a client against a former client

The Standards Committee was satisfied that Mr WG held confidential information about YI and RE which would be likely to adversely affect their interests if disclosed. This was information he had acquired as a result of having been a trustee, close family friend and the RE, YI and IS’s lawyer for over 25 years. The knowledge included a familiarity with their financial affairs, personalities,

2 Standards Committee determination, 17 August 2016 at [14].

3 At [17].

4 At [22].

strengths and weaknesses that could be used to IS’s advantage in the ongoing negotiations and potentially in the Summary Judgment proceedings.5

The Standards Committee also noted that Mr WG remained as a trustee of both trusts during the relevant period. This carried additional obligations to YI and RE which would be likely to come into conflict with his obligations to IS as his solicitor. Indeed, Mr WG himself had cited the impossible circumstances that existed for his reason to tender his resignation as a trustee of the RE Family Trust.6


[15] The Committee determined that Mr WG’s conduct constituted unsatisfactory conduct with regard to this issue pursuant to ss 12(a) and (c) of the Lawyers and Conveyancers Act 2006 (the Act).

Fees


[16] The Committee reviewed Mr WG’s files and “was satisfied that a significant amount of work had been undertaken”.7

[17] The Committee also took note of the fact that Mr WG had voluntarily refunded his fees and determined to take no further action with regard to the complaint about fees.

Proper standards of professionalism

The Standards Committee also considered that it was incumbent on Mr WG to maintain records of the meetings that took place regarding the division of the assets. This would have included file notes of the parties’ discussions and records of any preliminary agreements that were reached...8

...the Standards Committee was satisfied that the failure to maintain appropriate file notes and/or records of the advice Mr WG provided and instructions he received amounted to a breach of his obligations to maintain proper standards of professionalism and administer his practice in a manner that ensures his duties to his existing clients ...9


[18] The Committee determined that Mr WG’s conduct with regard to this issue amounted to unsatisfactory conduct pursuant to ss 12(a) and (c) of the Act.

5 At [25].

6 At [30].

7 At [35].

8 At [40].

9 At [41].

Other issues


[19] The Committee reached the following views on other issues raised in the complaints:

[20] The Committee determined to take no further action on these and other complaints raised by RE and YI.

The applications for review


[21] The first ground for review put forward by RE was that new matters had been raised by Ms GR in her letter 6 May 2016 which, he said, had not been referred to him or YI for comment.

[22] Ms GR’S letter was sent to RE on 25 May 2016 and he responded in several emails, including a comprehensive email dated 20 June 2016. This assertion by RE is not therefore correct but in any event, he has now had the opportunity to address the issues raised in Ms GR’s letter by way of this review.

[23] RE expressed the view that he considered the Committee had “downplay[ed] the seriousness of the offending by Mr WG”. He considered that Mr WG was obliged to keep file notes and records particularly “when there are clear conflicts of interest involved” and that the Committee had “brushed this under the carpet”.

10 At [45].


[24] He referred in detail to the amendments made by Mr WG on IS’s instructions to the Agreement and sought publication of all matters relating to the complaint, and that Mr WG be identified.

[25] In subsequent correspondence with this Office he referred to the dispute over the date on which discussions with regard to the dissolution of the partnership began and posed a number of rhetorical question which reflected his dissatisfaction with the decision.

[26] The grounds for review provided by YI in her application were the same as those provided by RE.

Delegate


[27] This review proceeded by way of a hearing in [area] on 4 October 2018. The hearing was conducted by Mr Vaughan acting as a delegate duly appointed by the Legal Complaints Review Officer (LCRO) pursuant to cl 6 of sch 3 of the Act.

[28] The LCRO has delegated Mr Vaughan to report to me and the final determination of this review as set out in this decision is made following a full consideration of all matters by me.

Review

General comments


[29] At the commencement of the hearing RE advised that he disagreed with the whole of the Committee’s determination. Clearly, he and YI did not disagree with the findings of unsatisfactory conduct against Mr WG and Mr Vaughan advised the applicants, that having brought the applications for review, this Office was obliged to consider all aspects of the investigation and determination by the Committee. This included the possibility that the findings against Mr WG could be overturned. Neither of the applicants expressed concern at this possibility.

[30] At times during the review hearing it seemed that they (particularly RE) wished to confront Mr WG personally to express dissatisfaction with his service, both generally and specifically. A review hearing does not include provision for cross examination of, or confrontation by, the parties, and accordingly the applicants were denied any opportunity for this by Mr Vaughan.

[31] An issue which exercised both applicants during the hearing was the statement by the Committee that the decision to dissolve the partnership was taken in 2010.11 Both applicants are adamant that the decision to dissolve the partnership was not taken until 2012 and the difference between the Committee’s view and their own has seemingly resulted in a view that the whole determination is flawed.

[32] In her letter to the Complaints Service and response to the complaint, Ms GR says:

By 2010, it had become clear, that the various partnerships had run their course and that it was desirable to separate the interests of the various parties.


[33] In addition, Mr WG’s bill of costs dated 19 March 2013 refers to “professional services...for the past two years”.

[34] The most definitive act evidencing a decision to terminate the partnership was recorded at the meeting at Mr TC’s office on 8 August 2012. However, it would seem that IS had made it known to Mr WG as early as 2010 that he wished to terminate the partnership. That points up the conflict faced by Mr WG when he continued to act for all three parties and that is reflected in the finding of unsatisfactory conduct against him recorded in paragraph 22 of the Committee’s determination.

[35] There is nothing further of any relevance attaching to the date on which termination discussions commenced.

Acting for all parties


[36] The Committee determined that:12

Mr WG had breached the obligations imposed by rule 6.1 by continuing to act for IS, YI and RE after he accepted separate instructions from IS to alter the terms of the draft agreement.


[37] Prior to that, the Committee:13

was satisfied that IS, YI and RE’s interests were sufficiently aligned to permit Mr WG to act for all of them from early 2010.


[38] The applicants confirm there was no dissension between them and IS until 2012. Consequently, it is Mr WG’s conduct from that time on that falls to be considered.

11 At [3].

12 At [17].

13 At [14].


[39] The meeting in 2012 took place at the offices of TAM and was conducted by Mr TC. Mr WG’s attendance was to assist with the process of reaching agreement, and no doubt, to provide information as and when required. At the conclusion of the meeting, Mr TC provided Mr WG with his written notes of the meeting and Mr WG was instructed to draft a formal agreement.

[40] As noted by the Committee, it was when Mr WG acted at the sole direction of IS subsequently, that his conduct contravened r 6.1 of the Rules. The Committee also noted that in the period immediately prior to this, Mr WG had acted for all RE, YI and IS without their consent as required by r 6.1.1.

[41] The Committee determined that both breaches constituted unsatisfactory conduct pursuant to ss 12(a) and (c) of the Act.14 Section 12(c) of the Act defines unsatisfactory conduct as “conduct consisting of a contravention of this Act, or of any practice rules made under this Act”. The Rules, are practice rules made under the Act. These breaches therefore fit definitively with s 12(c) of the Act, and are not necessarily breaches of the “diligent and competent” requirements of s 12(a).

[42] The findings of unsatisfactory conduct are confirmed pursuant to s 12(c) of the Act.

File notes/records


[43] An issue which stood out during this review was the fact that Mr WG was unable to provide any notes or records made by him. In particular, RE made many references to this and it seemed he was expecting that either himself or the Review Officer would examine Mr WG’s files in some detail to confirm the lack of notes.

[44] The Committee had reviewed Mr WG’s files and took note of the lack of notes or time records. Mr WG has not disputed this and it is unnecessary for there to be any further examination of Mr WG’s files.

[45] There is no specific requirement for a lawyer to keep file notes and time records, but clearly it is good practice to do so for multiple reasons. The Committee:15

was satisfied that the failure to maintain appropriate file notes and/or records of the advice Mr WG provided and instructions he received amounted to a breach of his obligations to maintain proper standards of professionalism and administer his practice in a manner that ensures his duties to his existing clients.

14 At [22].

15 At [41].


[46] Much of the time at the review hearing was expended by the applicants returning to this issue and Mr Vaughan ultimately had to refuse any further reference to it. The Committee expressed its disapproval of Mr WG’s failings in this regard and the comments made by the LCRO in the decision referred to by the Committee at [40]–[41] of its determination are endorsed. A copy of that decision is supplied to the parties with this decision, and the relevant comments are made in paragraphs [24]–[68].

[47] The Committee’s finding of unsatisfactory conduct pursuant to ss 12(a) and (c) in this regard is confirmed on review.

Publication


[48] The only outcome of the review sought by the applicants is that “the public have a right to know we have a crooked lawyer in our midst”.

[49] Mrs YI returned to this objective towards the end of the review hearing when she expressed a wish for publication of all the issues addressed in the complaint and this review, including Mr WG’s name, as she would “hate for other people to have the same problem”.

[50] It seems that both applicants maintain a bitterness towards IS and this bitterness was reflected on to Mr WG, as a person who had assisted IS.

[51] The Act provides that proceedings and decisions of both the Standards Committee and this Office are to be confidential, unless specifically ordered by the Committee or this Office.16 The presumption therefore is one of confidentiality and it is incorrect to refer to decisions of either Office as being “suppressed”. For either Office to make publication orders in respect of any aspect of the decision (including identification of the parties) there must be reason to do so.

[52] In this instance, the only reason for identifying Mr WG would be if it was considered he represented a threat to the public and/or other clients.

[53] The facts giving rise to the complaints against Mr WG are somewhat unique. The identified breaches of the Rules by Mr WG result from those unique facts — acting for more than one party, acting against former clients, failing to keep adequate notes and records.

16 Lawyers and Conveyancers Act 2006, ss 182(2), 206(4).


[54] None of these findings place Mr WG into the category of a “crooked lawyer”. If that were the case, charges would have been laid against Mr WG before the Lawyers and Conveyancers Disciplinary Tribunal, where the presumption is one of publication and there must be particular reasons to make suppression orders.

[55] Overall, there is no pressing reason where, in the interests of the public at large or Mr WG’s clients, for Mr WG to be named and/or the facts of this decision to be published. The applicants’ call for publication seemingly stems from a desire for retribution rather than any apparent need for protection of the public. This desire for retribution may be driven by the fact that Mr WG continued to act for IS (as instructing solicitor) in matters arising out of the dissolution of the partnership and his marriage to YI, both of which became somewhat contentious.

Orders


[56] Mr WG voluntarily refunded all fees to the applicants and also tendered an apology with Ms GR’s response to the complaints.

[57] The Committee did not impose any further orders.

[58] Publication, as sought by the applicants, is not to be regarded as part of the “punishment” to be imposed following an adverse finding against a lawyer. The applicants seek publications so that “other people should not have to go through what we ... have”. This has been addressed in the section of this decision dealing with publication.

[59] Orders that need to be considered are a censure and/or a fine.17 Other orders provided for in s 156(1) of the Act are inapplicable.

[60] In addressing the nature of a fine the authors of the text Ethics, Professional Responsibility and the Lawyer say: 18

A fine has no protective or rehabilitative function. It is largely punitive, and perhaps also serves the purpose of setting certain conduct aside as falling short of acceptable standards to a significant degree.


[61] Mr WG’s acceptance of the adverse findings by the Committee, his voluntary apology and fee refund, are all actions which deserve recognition and are not to be

17 Lawyers and Conveyancers Act 2006, ss 156(1)(b), 156(1)(i).

18 Duncan Webb, Kathryn Dalziel and Kerry Cook Ethics, Professional Responsibility and the Lawyer (3rd ed, LexisNexis, Wellington, 2016) at 129.

dismissed. The disapproval by the Committee (expressed in paragraph 40 of the determination) of Mr WG’s conduct in not making his own records of the meeting is specifically confirmed. Mr WG has accepted his conduct fell short of acceptable standards and it is expected that he will be somewhat more diligent in this regard in the future. It is expected, that if Mr WG is the subject of complaints of similar failings in the future, the consequences will be somewhat greater than imposed by the Committee in this instance.


[62] An option that is available to reinforce the findings of unsatisfactory conduct, would be to impose a fine by way of penalty. In the decision of this Office referred to in

[40] of the Committee’s decision, the LCRO confirmed a fine of $1,500. However, neither the Standards Committee nor the LCRO specifically recorded what findings the fine in that case related to and it is likely that the fine related to all of the adverse findings against the lawyer.


[63] The comments referred to in [60] above (that a fine is neither protective or rehabilitative) would not further the applicants’ desire to “protect” others from Mr WG’s shortcomings and it not considered necessary to modify the Committee’s findings in this regard.

[64] No other orders by way of penalty are necessary or appropriate to fulfil the functions of the Act.

Decision


[65] Pursuant to s 211(1)(a) of the Lawyers and Conveyancers Act 2006 the determination of the Standards Committee is confirmed, modified as in [42] above.

Costs


[66] The Standards Committee determinations of unsatisfactory conduct on the part of Mr WG have been confirmed on review. If Mr WG had been the applicant, then, in accordance with the Costs Guidelines issued by this Office, there would be an order that he contribute towards the costs of this review.

[67] That is not the case. There will be no order for payment of costs by either party.

DATED this 14th day of November 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 RE and Ms YI as the Applicants Mr WG as the Respondent

Ms GR as the Respondent’s Representative [Area] Standards Committee

New Zealand Law Society

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