BL v JC [2018] NZLCRO 140 (30 November 2018)

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	LCRO 52/2017
CONCERNING	an application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006
AND
CONCERNING	a determination of the [Area] Standards Committee [X]
BETWEEN	BL Applicant
AND	JC _Respondent

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

[1] Ms BL has applied for a review of a decision by the [Area] Standards Committee [X] to take no further action in respect of her (and Mr SF’s) complaint concerning the conduct of Mr JC, at the relevant time a director of [Firm 1], an incorporated firm, [City 1] (the firm).

[2] In January–March 2014, Ms BL and Mr SF purchased a property at [City 2], [Property 1] (the property), on which they intended to construct a house. Mr JC acted for them on that purchase.

[3] In essence, their complaint was that Mr JC did not provide them at that time with details of the easements registered against the title to the property. In particular, the electricity supply easements, to which the property was subject to, and had the benefit of, respectively.

[4] The agreement for sale and purchase was subject to a due diligence condition. Mr JC’s assistant, Ms GH, a lawyer employed by the firm, made a file note (handwritten, undated) of the interests, including easements, registered against the title to the property.

One of those easements, an electricity supply easement, affects [Area 1] on [Property 1]

[5] On 24 January 2014, Ms GH sent an email to Ms BL and Mr SF stating that “various interests” including the “right to transmit electricity” were registered against the title to the property.

[6] Ms BL and Mr SF settled the purchase of the property in mid-March 2014. In June 2015 they commenced construction of their new house. Four months later, in October 2015, they found out that the cable within area D had insufficient capacity to supply electricity to the new house.

[7] From their subsequent inquiries, they also found out that there was another electricity supply easement registered against the title to the property which benefitted the property. That easement, over [Area 2] on [Property 1], is situated to the west on adjoining [property 1] which, at the relevant time, was owned by the developer and vendor of the property (the vendor).

[8] On 4 July 2016, Ms BL and Mr SF asked Mr JC for his confirmation that the property had the benefit of the electricity supply easement over area E on adjoining Lot

[9] A week later on 7 July 2016, Mr JC sent Ms BL a two-page letter of advice in which he confirmed that the electricity supply easement over area E benefited the property. He sent his 12 July 2016 invoice of $800 (fee component) plus GST and disbursements (total $966) to Ms BL on 13 July 2016.

[10] Ms BL and Mr SF objected to being billed for work which they claimed Mr JC had not done in January 2014, yet had billed them for in March 2014, when they purchased the property. Mr JC offered to reduce his invoice by $100. Ms BL offered to pay him $345, equivalent to one hour of his time. Mr JC informed Ms BL that he would refer the matter to his firm’s collection agency.

Zealand Law Society Complaints Service (NZLS) on 14 November 2016. [12] They described their complaint being about Mr JC’s:

(a) legal work searching the title when they purchased property in January - March 2014;

(b) advice in July 2016 concerning the electricity easement over area E on adjoining Lot 1 which benefitted the property; and

[13] They claimed that in January 2014, when acting for them on the purchase of the property, Mr JC did not provide “any explanation of easements” and “failed to identify the adequate power connection option as part of his due diligence work”.

[14] They explained that in October 2015, 19 months after they purchased the property, they discovered that the property “could not be connected to the electricity supply due to insufficient infrastructure”.

[15] They stated that having found out “by chance” that there was an alternative “adequate and sufficient electricity supply” to the property, they asked Mr JC to “clarify” their “understanding of the definition of ‘easement’”. They claimed Mr JC “should have done [this] at the time of purchase ... together with identifying the adequate power supply during his due diligence”.

[16] Ms BL and Mr SF said they wanted Mr JC to advise them whether their “understanding of an easement was accurate”. Ms BL had “made it clear” to Mr JC in a telephone conversation with him that “all [they] needed was a quick review and a one sentence email confirming [their] understanding”.

[17] Ms BL and Mr SF claimed Mr JC did not provide them with his “terms of engagement” or “any fee estimates” before he provided his 11 July 2016 advice letter, which was accompanied by his terms of engagement.

[18] They failed to see “how a simple interpretation of the word easement can be worth 3-4 hours of a lawyer’s time”, particularly where Ms BL stated she had provided Mr JC with “the legal interpretation ... in NZ law” of an easement.

[19] They said Mr JC’s 13 March 2014 invoice “specific25ally included attendances in relation to the due diligence investigation” of the property, in particular, “review of easements and providing explanation”.1 They alleged his 12 July 2016 invoice charged them “again for the same work”.

[20] The Committee delivered its decision on 22 February 2017 and determined, pursuant to s 138(2) of the Lawyers and Conveyancers Act 2006 (the Act), that no further action on the complaint was necessary or appropriate.

[21] The Committee concluded that in January 2014, when Ms BL and Mr SF purchased the property, Mr JC had “provided appropriate advice”. In the Committee’s view, “[i]t could not be expected that [Mr JC] would have identified the issues that arose with respect to the existing power cable and disputes with the neighbouring property”.

[22] The Committee “was also satisfied” that two and a half years later, in July 2016, when Ms BL and Mr SF sought Mr JC’s advice as to whether they could “enforce” their “rights ...under the easement” which “included their right to gain access to the power cables that supplied electricity to their neighbour’s property”:

(a) Ms BL and Mr SF instructed Mr JC to provide “fulsome advice” about their rights under that easement and whether those rights could be enforced; and

1 13 March 2014 invoice $2,930 (fee component) plus GST and disbursements which included

[23] The Committee noted that having requested Mr JC to provide that advice Ms BL subsequently provided him with “additional clarification and confirmed that she sought advice as to [the] enforceability” of the easement by “[utilising] their neighbour’s existing power cable to overcome the restrictions they found in developing the [property]”.

[24] In the Committee’s view, because of the vendor’s opposition to the proposal, Mr JC “was required to provide advice that went beyond a simple explanation of what an easement may entail”. This, stated the Committee, included consideration of issues including “the use and supply of electricity, in addition to any compensation issues that may arise” and a review of the “background” material provided by Ms BL.

[25] Ms BL and Mr SF did not complain about Mr JC’s 13 March 2014 invoice until

September 2016, over two years later. Mr JC’s 12 July 2016 invoice was for less than

[27] The Committee did not consider that Mr JC’s legal work in respect of his (a)

13 March 2014 invoice in relation to the purchase of the property, and (b) 12 July 2016 invoice in relation to Mr JC’s subsequent easement advice was “sufficiently linked to be included as part of the same retainer”, and were “therefore assessed separately”.

[28] In the Committee’s view, there were no “particular features that would justify the examination of the fees in this instance or that could overcome the restrictions imposed by regulation 29”.

[29] Ms BL filed an application for review on 27 February 2017. She claims that the Committee’s decision is “unfair”, is “clearly favourable” to Mr JC, “completely ignores [her] arguments”, and is “almost solely based” on his submissions.

[30] She seeks a reduction of his 12 July 2016 invoice “to an equivalent of half an hour of a standard fee rate by a similar size legal firm”.

2 Lawyers and Conveyancers Act (Lawyers: Complaints Service and Standards Committees) Regulations 2008, reg. 29.

[31] Ms BL repeats that when she and Mr SF purchased the property Mr JC did not provide details and an explanation of the easements registered against the title to the property, in particular, “the reason for having two electricity easements”.

[32] She says she asked Mr JC “for his confirmation of [her] own understanding of what an easement is based on [her] research ...and the effect of the Land Transfer Regulations 2002”. She denies, as stated by the Committee, she asked Mr JC for “fulsome advice” by way of a “formal legal opinion”.

[33] She says she sought only “confirmation” of “a right to connect under the definition of an easement”. She says that “the comprehensive background documentation” referred to by the Committee consisted only of “an electrician’s certificate showing the presence of a cable [and] the property title document which Mr JC should have already been familiar with”.

[34] She repeats that because Mr JC did not (a) confirm his “understanding of her instruction”, (b) provide “any fee indication”, and (c) provide a letter of engagement until he forwarded his “legal opinion” she and Mr SF did not have “the opportunity to review and/or agree to a scope of work Mr JC had in mind”. She denies she instructed Mr JC “to contact the Council” about the matter.

[35] Ms BL asks why the Committee “could not see any ‘special circumstances’” to enable the Committee to consider both invoices. She maintains Mr JC’s “attempt... to charge twice for the same job” qualifies as special circumstances. She disagrees that Mr JC’s March 2014, and July 2016 invoices “should be treated separately”.

[36] She considers that the scope of Mr JC’s “initial advice” in January 2014, as recorded in his March 2014 invoice, included “explanation of the rights attached to easements”. In her view, Mr JC’s July 2016 explanation of the electricity supply easements and his requirement to provide that explanation in January 2014 were “connected”.

[37] Mr JC wishes to rely on his submissions made to the Committee which I refer to in my consideration of the issues.

[38] In response to a request from this Office for a copy of his “file notes” of his explanation of the electricity supply easements to Ms BL in January 2014, he says he “do[es] not hold a file note of the discussions/meeting recorded in the [work in progress] record” in respect of his March 2014 invoice. However, he says Ms BL had “never suggested [he] did not advise as to the existence of the electricity easement”.

[39] This review was progressed by way of an applicant only hearing, attended by Ms BL, in [City 1] on 22 November 2018. Although invited to attend, Mr JC did not do so.

[40] The role of the Legal Complaints Review Officer (LCRO) on review is to reach his own view of the evidence before him. Where the review is of an exercise of discretion, it is appropriate for the LCRO to exercise particular caution before substituting his own judgement for that of the Standards Committee, without good reason.

[41] The nature and scope of a review have been discussed by the High Court, which said of the process of review under the Act:3

... 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.

[42] More recently, the High Court has described a review by this Office in the following way:4

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.

(a) Concerning Mr JC’s retainer in respect of the purchase of the property in January 2014, what information and explanation was Mr JC required to provide to Ms BL and Mr SF about the electricity supply easements registered against the title to the property? What information and explanation did he provide?

(e) Did Mr JC provide the required client care and service information, including the basis on which he proposed charging his fees, to Ms BL and Mr SF in respect of Ms BL’s July 2016 instructions?

[44] The term “retainer” appears in a number of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (the Rules) and is described in r 1.2 as an agreement between a lawyer and the lawyer’s client whereby the lawyer “undertakes to provide or does provide legal services to the client”. The agreement (a) may be express or implied, (b) may or may not be recorded in writing, and (c) may or may not provide for payments to be made by the client.5

... central to various aspects of the lawyer-client relationship. Fundamentally, it identifies the client and prescribes the services expected of the lawyer. In doing so it determines upon whose instructions the lawyer acts, the scope of the lawyer’s authority in carrying out those instructions and the scope of the lawyers’ duties.

[46] Rule 3 states that when providing “regulated services” to a client a lawyer “must always act competently and in a timely manner consistent with the terms of the retainer and the duty to take reasonable care”.7

[47] The duty to be competent has been described as ‘the most fundamental of a lawyer’s duties’ in the absence of which “a lawyer’s work might be more hindrance than help”.8 The observation has been made that in the practice of law competence “entails an ability to complete the work required by finding the relevant law and applying the relevant skills”. Whether the lawyer concerned meets this standard is to be determined objectively.9

[48] However, this does not impose the duty “to provide a high level of service to clients” and “is, in reality, a duty not to be incompetent ... aimed at ensuring minimum

5 Although not defined in the Act or the Rules, the term “client”, is included in this definition as the

6 GE Dal Pont, Lawyers’ Professional Responsibility (6th ed, Thomson Reuters, Sydney, 2017)

7 Lawyers and Conveyancers Act 2006, s 6 — “regulated services” is defined as including “legal services” and “conveyancing services”, which are themselves defined.

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

standards of service”. The duty is concerned with “the outcome of lawyer’s work rather than the way in which they deal with clients”.10

[49] A lawyer must disclose to his or her client information that is relevant to the retainer, take reasonable steps to ensure that the client understands the nature of the retainer, keep the client informed about progress, and consult the client about steps to be taken to implement the client’s instructions.11

[50] Information a lawyer is required to provide to a client must (a) be provided in a clear manner, and (b) not be misleading. In doing so the lawyer is required to take into consideration (c) the identity and capabilities of the client, and (d) the nature of the information being provided.12

[51] Ms BL claims that when she and Mr SF purchased the property in January 2014, Mr JC did not provide “any explanation of easements” and “failed to identify the adequate power connection option as part of his due diligence work”.

[52] She says Ms GH’s 24 January 2016 email, which was the only communication received from the firm on the subject of easements, “proves that Mr JC failed to identify the second connection point” within area E on the vendor’s adjoining Lot 1 “as well as the right to use it”.

[53] She says Mr JC’s comment in his 13 July 2016 email to her that he was “unsure as to how” Ms BL thought he “could advise as to utilising a cable that was not in existence at the time” supported her position.

[54] In her view, had Mr JC been more thorough, and therefore aware of the electricity supply easement over area E on adjoining Lot 1, he would have told her and Mr SF about it.

11 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, rr 7, 7.1.

12 Rule 1.6 — see discussion in Sandy v Kahn LCRO 181/2009 (9 December 2009) at [38].

[55] Mr JC says when acting on the purchase of the property in January – March

2014 his attendances included preparation of a conditional (finance and due diligence)

[56] He refers to the firm’s work/disbursement (work in progress) report which records that on 24 January 2014 he and Ms GH provided an explanation of the easements to Ms BL on the telephone, and at a meeting with her that day.

[57] He contends that his attendances were not “limited to a review of the title” and included a review of “10 separate interests recorded”, namely, “the easements, right-of- way, electricity and telecommunications”. He says he “did explain the easement position on the purchase” as recorded in the firm’s work in progress report, and in the narration of his March 2014 invoice.

[58] He says he “identified the easement rights” but “could not have known that an existing cable had already been constructed”. He says locating a cable “would not normally have been expected of the solicitor acting”. He explains he was “unsure as to how” Ms BL thought he “could advise” about “utilising a cable that was existing at the time”.

[59] Ms BL acknowledges she knew area D on the property was subject to an electricity supply easement within which there was an electricity cable, but says the cable had insufficient capacity to provide electricity to their new house. However, she says she did not know about the other electricity supply easement in favour of the property over area E on adjoining Lot 1 and that a cable within area E was available for connection.

[60] As noted above, Mr JC says in January 2014 he reviewed all interests “recorded” against the title including the “electricity” easements. He says he explained “the easement position on the purchase” to Ms BL on 24 January 2014 both on the telephone and at a meeting with her that day. He contends Ms BL has not suggested he did not advise her on the “existence of the electricity easement”.

[61] However, Ms GH’s 24 January 2004 email to Ms BL contains only a general statement about of the easements, namely, that “upon reviewing the [title] it has various interests registered including ... 1. electricity ... rights, right to transmit electricity ...to the

various sections around the property”. There is no clear description in that email of any of the registered easements to which the property was subject, or benefited.

[62] Although Ms GH’s file note (undated), produced by Mr JC, refers to three registered easements which include the electricity supply easement over area D on the property,13 [the file note] omits the electricity supply easement over area E on adjoining Lot 1 in favour of the property.14

[63] Guidance as to the appropriate steps to be taken by a lawyer acting for a purchaser of the property is contained in the New Zealand Law Society, Property Law Section Property Transactions and E-dealings Practice Guidelines (the Guidelines).15

The Guidelines state that a lawyer acting for a purchaser can be expected to “[g]et a search of the title and all relevant encumbrances on it”, “make sure the purchaser identifies the correct property on a suitable plan”, and “explain the effect of any relevant interests, restrictions or encumbrances to the purchaser”.16

[64] It follows that Mr JC’s retainer January–March 2014 required him to provide Ms BL and Mr SF with a description and explanation, preferably in writing, of all interests recorded against the title. Particularly so where for Ms BL and Mr SF, as purchasers of land on which they proposed building a house, the availability of services was crucial.

[65] The issue is not so much as Mr JC contends, that the retainer did not require him to advise Ms BL and Mr SF about the existence or otherwise of services physically available to the property, but details of the services easements registered against the title to which the property was both subject to, in favour of surrounding land, or benefited from, over surrounding land.

[66] The standard of proof to be applied in disciplinary hearings, is the civil standard of a balance of probabilities applied flexibly to the seriousness of the matter.17

[67] On the information provided to this Office, I am satisfied that on the balance of probabilities in January–March 2014 Mr JC did not provide Ms BL and Mr SF with details about the electricity supply easements, in particular, the easement over area E on adjoining Lot 1 in favour of the property. In my view, by failing to do so, Mr JC

13 Ms GH’s file note refers to easement certificate [redacted]; easement instruments [redacted], [redacted].

14 Easement instrument [redacted], the subject matter of Mr JC’s 11 July 2016 advice letter.

15 New Zealand Law Society “Property Transactions and E-dealings Practice Guidelines” (April

contravened rr 3 and 7.1 which constitutes unsatisfactory conduct under s 12(c) of the

[68] Ms BL says “all” she sought from Mr JC in July 2016 was to “clarify [her] understanding of the meaning of an easement as applicable to [her] property”, and “reassurance of [her] own research and understanding”. She denies “it was agreed” with Mr JC on the telephone that “a letter/opinion on [the] firm’s letterhead ... presented to the [vendor] would be used to support [her] argument” that she and Mr SF were “entitled to utilise the cable laid by the [vendor]”.

[69] She says she provided Mr JC with a copy of the “definition of an easement as per the Land Transfer Regulations 2002” and a certificate from an electrician which showed “the existence of the cable”. She says she wanted “a one sentence confirmation of [her] understanding of an easement based on the information [she] supplied”.18

[70] She contends “an experienced lawyer” would have realised that the fact “there were two easements for electricity for the same property to achieve the same goal” was “not standard”. She denies she “requested any reviews or discussion with the Council”.

[71] Ms BL says when she spoke to Mr JC on the telephone on 4 July 2016 he “was surprised to learn” from her that “easement rights imply the use of any existing infrastructure and not simply a right to lay cables over someone’s land”.

[72] She says her “idea about the scope” of her request differed from Mr JC’s. She explains she was also surprised to receive “a letterhead opinion”, and “assumed” Mr JC was “simply acting professionally by formalising the response he had provided”.

[73] She claims had Mr JC “conducted his due diligence thoroughly” in January 2014

_{he would “have discovered information about the cable”
within area E “as this was}

18 Referring to: (1) Extracts from sch 4 of the Land Transfer Regulations 2002, which contained the definition of easement, and easement rights; (2) Electrical Certificate of Compliance showing that the electricity cable was run to the property and adjoining Lot 1; (3) letter from the vendor evidencing that the cable had been laid for the property and adjoining Lot 1; (4) confirmation from the trenching company that the cables had been laid; (5) a statement from the surveyor that an electricity easement was required “to legalise the use of power” by the property.

included in [their] Council file”. She says she and Mr SF “did not know that [they] had a

good power supply” within area E because the vendor “did not tell [them] about it”.

[74] Mr JC says on Monday, 4 July 2016, he telephoned Ms BL having received her Sunday, 3 July 2016 email (re-sent Monday, 4 July 2016) in which she requested “more clarification with one of the easements that came with the title”. He says Ms BL informed him that the vendor was disputing “the rights attached to the electricity easement”.

[75] He says Ms BL wanted to use “an existing cable laid” by the vendor to provide electricity to the property and required support for her argument with the vendor.

[76] He contends that Ms BL agreed to him providing “a letter/opinion on [the] firm’s letterhead” that they were “entitled to use the cable ...without paying the [vendor] compensation”. He says Ms BL required his advice urgently because “they were close to finalising the construction of their dwelling but ... did not have the ability to connect ... to an existing electricity supply”.

[77] He rejects that there was “any discussion” he would provide a “quick review and

[78] He says in Ms BL’s 6 July 2016 follow-up email to him she requested his “opinion in relation to [their] right to use electricity and associated equipment”. He says when speaking to Ms BL again on the telephone later that day she requested his acknowledgement of receipt of the information accompanying her email that day which included “the 288 page Council File”. He says he responded “yes”, which he confirmed by email the following day.

[79] Mr JC says in response to his 11 July 2016 advice, Ms BL explained to him by email later that day that she and Mr SF “wanted to understand [their] right fully” because the vendor had “hid[den]” from them the fact that there was a suitable electricity cable within easement area E.

[80] In his view, if Ms BL was expecting a brief response then she would have raised it with him at that time, and not until she had received his invoice a day or so later.

[81] Ms BL claims Mr JC ought to have provided his July 2016 advice about the electricity supply easements, to which the property was subject, and had the benefit of,

two years earlier in January 2014. She says Mr JC's 11 July 2016 advice was not what she requested.

[82] She says she informed Mr JC on the telephone on 4 and 6 July that all she wanted was his confirmation of her understanding of the information she provided to him that the property had the benefit of the electricity supply easement over area E on adjoining Lot 1 owned by the vendor. She says she told Mr JC she only required a brief response.

[83] Mr JC says whilst his January 2014 title search identified the easements, it did not show whether cables had been laid. He contends it “would not normally be expected” a purchaser’s lawyer would make such enquiries.

[84] He submits that Ms BL’s July 2016 instructions to him were to provide his “opinion” whether she and Mr SF had the “right to use electricity and associated equipment on [area] E” on adjoining Lot 1. He says he regarded Ms BL’s instructions as a request for formal “professional advice”.

[85] A lawyer must take reasonable care to ensure the accuracy of his or her advice to a client. As such, it would have been necessary for Mr JC, as evidenced in his 11 July

2016 advice letter, to review his 2014 title search material and consider easement instrument [redacted].

[86] Having summarised the terms of the electricity supply easement over area E on adjoining Lot 1, provided by Ms BL with her instructions, Mr JC advised that the easement was “in place and the rights described ... exist[ed]” as recorded on the titles to both the property and adjoining Lot 1.

[87] From my assessment of the information produced to this Office by the parties on this issue, Mr JC can be forgiven for proceeding on the assumption that Ms BL had requested a more formal response from him rather than the “one sentence” response she suggests. If a client requires a “yes” or “no” response to a request for advice it is reasonable to expect that the client will make the request on those terms.

[88] The conclusion I have reached is that Ms BL’s request for advice did not constrain Mr JC either as to the content, length, or mode of communication (written or verbal) of his advice.

(a) Jurisdiction — “special circumstances” — regulation 29 (i) Professional rules, regulations

[89] Regulation 29 of the Lawyers and Conveyancers Act (Lawyers: Complaints Service and Standards Committees) Regulations 2008 provides that a Standards Committee’s jurisdiction to consider complaints about fees does not extend to bills of costs (a) rendered more than two years prior to the date of the complaint, or (b) that do not exceed $2,000.00 exclusive of GST unless the Standards Committee determines that there are “special circumstances”.

[90] The term “special circumstances”, which was contained in the corresponding provision in the previous Lawyers Practitioners Act 1982, has been considered by the Court of Appeal which stated that “special circumstances” could be present “if the issue is to be related to perceived injustice” in which case “the simple risk of injustice should be sufficient”. Alternatively, “it is a question of where the interests of justice lie in all the circumstances”; or “all that can be said is that to be special circumstances must be abnormal, uncommon, or out of the ordinary”.19

[91] Circumstances in which “special circumstances” have been held by this Office to have applied include where two or more invoices can be considered “together as one bill of costs for the same transaction”.20 Conversely, circumstances where the exception has been held not to apply include where the invoices concerned unrelated transactions.21

[92] Ms BL disagrees with the Committee’s decision that Mr JC’s January 2014 review of the easements, and his July 2016 advice about the alternative electricity supply easement were not sufficiently connected or linked so as to qualify as “special circumstances”.

19 Cortez Investments v Olphert and Collins [1984] 2 NZLR 434 (CA) — applied in AY v YY LCRO

263/2011 (10 May 2013) at [16]–[17]. s 151(1) of the Law Practitioners Act 1982 provided that (a) a bill of costs could “not be revised by a District Council of its own motion, or referred for revision except by order of a Court”; and (b) the Court could “not make an order for the reference of a bill for revision except in special circumstances”.

20 Reading v Bracknell LCRO 81/2009 (18 July 2009); AT v ZH LCRO 127/2013 (26 March 2014)

[93] She explains that this aspect of her complaint is really about Mr JC having billed her for his July 2016 advice which he ought to have provided to her and Mr SF in January

[94] She says before providing his July 2016 advice Mr JC did not (a) consult with her about what he understood she required of him, and (b) explain his basis of charging fees for that work. She says she was therefore deprived of the opportunity to tell him whether she wanted him to provide his advice in the way he did.

[95] Mr JC’s 24 January 2014 invoice concerned Mr JC’s “review” and “explanation” of easements. His 11 July 2016 advice, which also concerned the easements, focused on Ms BL’s and Mr SF’s rights, as owner of the property, to use the electricity supply easement within area E on adjoining Lot 1.

[96] In my view, this similarity of subject matter is sufficient to qualify as “special circumstances” for the purposes of reg 29 such as would justify the consideration of both Mr JC’s 13 March 2014 and 12 July 2016 invoices to the extent necessary to consider Ms BL’s complaint.

[97] Rule 9 prohibits a lawyer from charging a client a fee that is more than fair and reasonable for the legal services provided by the lawyer:

A lawyer must not charge a client more than a fee that is fair and reasonable for the services provided, having regard to the interests of both client and lawyer and having regard also to the factors set out in rule 9.1.

[98] Rule 9.1 specifies that “The factors to be taken into account in determining the reasonableness of a fee in respect of any service provided by a lawyer to a client include” the thirteen factors contained in paragraphs (a) to (m).

[99] Considerations to be taken into account when determining whether a fee is fair and reasonable include:22

(a) ...a global approach; (b) what is a reasonable fee may differ between lawyers, but the difference should be “narrow” in most cases; (c) ... time spent ... is not

22 Hunstanton v Cambourne and Chester LCRO 167/2009 (10 February 2010) at [22] referring to Property and Reversionary Investment Corporation Ltd v Secretary of State for the Environment [1975] 2 All ER 436 at 441 and Gallagher v Dobson [1993] 3 NZLR 611 (HC) at 620. See also Chean v Kensington Swan HC [City 1] CIV 2006-404-1047 7 June 2006 at [24] referred to in AA v BK, BL and BM LCRO 264/2012 (25 July 2013) at [57].

the only factor; (d) It is not appropriate to (as an invariable rule) multiply the figure representing the expense of recorded time spent on the transaction by another figure to reflect other factors.

[100] Because the process of determining a fair and reasonable fee is “an exercise in balanced judgment - not an arithmetical calculation”,23 one lawyer may reach a “different conclusion[s]” from another lawyer “as to what sum is fair and reasonable, although all should fall within a bracket which, in the vast majority of cases, will be narrow”.24

[101] For that reason, there is a “proper reluctance to ‘tinker’ with bills by adjusting them by small amounts”. It “is therefore appropriate for Standard’s Committees not to be unduly timid when considering what a fair and reasonable fee is”.25 Also, that “where there is a complaint about a bill of costs there is no presumption or onus either way as to whether the fee was fair and reasonable”.26

[102] Ms BL “dispute[s] the scope of work and the appropriateness of [Mr JC’s July

2016] fees”. She claims Mr JC did not provide “any fee estimates” before he provided his

11 July 2016 advice, which was accompanied by his 4 July letter of engagement, followed two days later by his 12 July 2016 invoice.

[103] She says she considers Mr JC’s fee “unreasonable”. She says she would not have “proceeded” had she known the cost beforehand. In her view, “the work [she] requested [had] already been paid for in respect of the purchase of the property in January – March 2014”.

[104] She considers her request for “clarification” that the property had the benefit of an electricity supply easement over area E on adjoining Lot 1 “was within the scope of the work [she] had already paid for” on the purchase of the property. She says she did not anticipate that an opinion on “letterhead” would “cost almost [$1,000]”.

[105] She says having received Mr JC’s invoice, she told him on the telephone that

_{had he “done his job more thoroughly in the first place, [she]
would not have been in}

23 Property and Reversionary Investment Corporation Ltd v Secretary of State for the Environment

24 Hunstanton v Cambourne and Chester LCRO 167/2009 (10 February 2010) at [62].

need of any further advice”. She says she subsequently offered to pay the equivalent of

[106] Mr JC says his 12 March 2014 fee was $2,930 plus GST, not “$4,065.50 as stated in Ms BL’s email”. He says his 11 July 2016 advice “is separate to the due diligence work completed in 2014”.

[107] He says even if the July 2016 review “was the same (which it wasn’t) it would have been appropriate for [him] to invoice for further attendances in reviewing the title”. He contends it “could not be expected [he] would understand the rights and obligations” relating to the purchase which took place “over two years previous without a suitable review”.

[108] He says it would have been “negligent of” the firm had he not carried out a “review [of] the easements/interests” in July 2016. He says he “discounted” his recorded time in his 12 July 2016 invoice “by approximately 30% from $1,215 to $800 plus GST and disbursements” which took account of “some duplication in reviewing the easements”.

[109] He says he offered to reduce his 12 July 2016 invoice, which he considers was

[110] Whilst it is open to me to return the question of whether Mr JC’s 12 July 2016 invoice was fair and reasonable to the Committee for consideration, in my view the further delay that would be encountered by doing so would be inconsistent with the requirement of the Act to hear and determine complaints expeditiously.27 I have therefore decided to consider this issue on review.28

[111] Mr JC recorded 3.77 hours on the matter which at his hourly rate of $324 plus GST totalled $1,215 plus GST and disbursements. He billed $800 plus GST and disbursements. He explained to Ms BL that because he had reviewed documents “previously looked at” in relation to the purchase of the property in January 2014 he had,

27 Lawyers and Conveyancers Act (Lawyers: Complaints Service and Standard Committees) Regulations 2008, reg 10(1).

[112] Those of the factors in r 9.1 which I consider warrant a weighting in determining a fair and reasonable fee on this matter include Mr JC’s “(a) time and labour expended”; “(c) the importance of the matter to the client and the results achieved”; “(g) the experience, reputation and ability of the lawyer”; and “(m) the fee customarily charged in the market and locality for similar legal services”.

[113] Concerning Mr JC’s time and labour, his charge out rate of $324 plus GST per hour compares favourably with those of employed lawyers in the [City 1] area with post qualification experience of more than 10 years.29 As to the other factors mentioned, he states, as noted above, that he reduced his overall time spent on the matter by $415 plus GST “in recognition of ... some duplication in reviewing the easements previously looked at”.

[114] As discussed in respect of his January 2014 attendances, Mr JC would have been required to revisit that work, peruse the electricity easement (including the related plans) in respect of area E on adjoining Lot 1, and Land Transfer Regulations 2002, before recording his findings in his 11 July advice letter to Ms BL.

[115] Although Ms BL states in her application for review that she considers Mr JC’s July 2016 fee ought to be reduced to the equivalent of “half an [h]our of a standard fee rate by a similar size legal firm”, she did offer to pay for “an hour of his work” before making her complaint.

[116] In my view, it would have taken Mr JC longer than one hour of his time for that exercise.

[117] However, because Mr JC did not in January 2014, as I have found, provide Ms BL and Mr SF with details about the electricity easements, in particular, the easement over area E on adjoining Lot 1 for the benefit of the property, yet billed them for that work, I do not consider it would be fair for Mr JC to, in effect, bill them again for that work.

[118] For that reason, I consider that having regard to the interests of both Ms BL and Mr JC, Mr JC’s July 2016 invoice was not fair and reasonable for his advice provided to Ms BL in his 11 July 2016 letter, and by charging that fee Mr JC contravened r 9 which

29 New Zealand Law Society “Charge-out Rates for Employed Solicitors” (27 July 2016)

[119] Ms BL claimed in her reply to Mr JC’s response to her complaint that Mr JC did not inform her of the basis of his fees before he provided his 11 July 2016 advice. She said his terms of engagement accompanied that advice instead of being provided to her beforehand.

[120] Mr JC did not provide a response. The Committee did not consider this issue.

[121] Rule 3.4 requires that before a lawyer, who is not a barrister sole, commences work for a client the lawyer “must, in advance, provide in writing to a client information on the principal aspects of client service including” the information specified in paragraphs (a) to (d).30 That includes “the basis on which fees will be charged”.

[122] Concerning the words “in advance”, footnote 3 to the rule recommends that lawyers “provide the information set out in rule 3.4 prior to commencing work under a retainer”.31

[123] A further requirement in r 3.5 is that a lawyer “must, prior to undertaking significant work under a retainer provide in writing to the client” the information specified in paragraphs (a) to (c) of that rule.32 That information includes “a copy of the client care and service information set out in the preface to [the] rules”, and “the name and status of the person or persons who will have the general carriage of, or overall responsibility for, the work”.

[124] Concerning the requirement that this information be provided before “significant work” is undertaken, it appears to be “sufficient if the lawyer provides the relevant information as soon as possible”. Whilst:33

some minor steps will have already been taken in respect of the retainer ... it is

... expected that in most cases information in respect of both rules (3.4 and 3.5)

30 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules rr 3.4, 3.4A, 3.5,

31 Footnote 3 refers to s 94(j) – “the requirements for [lawyers] to provide clients in advance with

32 Rule 3.5 — a lawyer other than a barrister sole — applies from 1 July 2015.

[125] In practice, to ensure compliance, the information required by these rules is provided to clients ahead of work commencing on a retainer.34 The mode of provision of this information is frequently by a letter of engagement, information for clients and standard terms of engagement documents which are frequently referred to collectively as “the letter of engagement” sent to clients electronically.35

[126] Rule 3.7 contains four exceptions to these requirements each in the alternative.

[127] The second exception, in r 3.7(b), is “if it is, in the circumstances, impracticable for the lawyer to provide the information referred to in those rules”. In this context the word “impracticable”, which is not defined in the Rules, suggests “unable to be carried out ... or done; practically impossible”.36

[128] In a decision from this Office it was observed that this sets “a high threshold and should probably be narrowly interpreted given the [consumer] purposes of the [Act]”; it “does not equate to inconvenient or administratively burdensome”; and “simply because” a lawyer and the lawyer’s client “[do] not consider the provision of information to be particularly useful does not mean that compliance with the rule is not practicable”.37

the policy behind the requirements for letters of engagement specified in r 3.4 is to fully inform clients of important matters including fee levels, and fee payment arrangements, indemnity insurance and fidelity fund arrangements, and complaints mechanisms.

[130] In that matter, the lawyer concerned, who had acted for clients on the purchase of a residential property, had not provided his letter of engagement to them until approximately three weeks after he had received the clients’ copy of the agreement for sale and purchase.

35 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules, rr 1.6, 1.7.

38 McGuire v Manawatu Standards Committee [2016] NZHC 1052 at [64] — during that time the lawyer’s attendances included discussions with the clients about his fee and receipt of bank mortgage instructions.

[131] The issue identified by the Court was whether any “mischief ... occurred ... from what might be thought to be only a short delay which occurred in [the lawyer] providing this information/letter of engagement to the [clients]”.39 The Court’s view, was that “any delay that did occur here might be seen at most as a technical breach of r 3.4 and nothing more”. The Court observed that “little if any mischief was caused”, and the “delay was not a significant target in the [client’s’] complaints” against the lawyer concerned.40

[132] As to whether the words ‘in advance’ were “a recommendation” or “a mandatory requirement”, and relatedly, “whether any work can be undertaken by a lawyer before a letter of engagement is provided”, the Court stated that “the better view” was that both the Committee and this Office “misapplied the law relating to r 3.4 by failing to apply the right legal test”.41

the requirement for a letter of engagement in advance is mandatory and there had been a purely technical breach of that rule here, the fact that this has resulted in serious findings of unsatisfactory conduct against [the lawyer] ... with all the consequences that follow from that, is flawed and wrong [with] ... significant consequences for [the lawyer] and his future professional reputation that a cautious approach was required ....

[134] Mr JC acknowledges he did not provide his 4 July 2016 letter of engagement to Ms BL until he provided his letter of advice to her one week later on 11 July 2016. By that time, he had undertaken his review of the electricity supply easement over area E and reported to Ms BL.

[135] However, following the approach taken by the High Court in Maguire, if by not sending his letter of engagement to Ms BL upon receipt of her instructions Mr JC may have contravened rr 3.4 and 3.5, then I consider such contravention does not warrant an adverse finding against him in these particular circumstances.

(a) Mr JC provided appropriate advice, in relation to the initial purchase of the property in January–March 2016 concerning the title and registered

		easements, is reversed and substituted with the finding that Mr JC did not at that time provide Ms BL and Mr SF with details of the electricity supply easements, in particular, the easement over area E on adjoining Lot 1 in favour of the property thereby contravening rr 3 and 7.1 which constitutes unsatisfactory conduct under s 12(c) of the Act.
	(b)	Mr JC provided appropriate advice in response to Ms BL’s request for advice about that easement in July 2016 is confirmed.
	(c)	The Committee did not have jurisdiction to consider Mr JC’s 13 March 2014 invoice which included his review of easements, and his 12 July 2016 invoice concerning Ms BL’s request for advice about the electricity easement over area E on adjoining Lot 1, is reversed, and substituted with a finding that by charging a fee to Ms BL in his 12 July 2016 invoice that was not fair and reasonable Mr JC contravened r 9 which constitutes unsatisfactory conduct under s 12(c) of the Act..
[137]	For	the above reasons, pursuant to s 211(1)(a) of the Lawyers and

Conveyancers Act 2006, in respect of Ms BL’s complaint, not addressed by the Committee that Mr JC did not provide client care and service information to Ms BL before he provided his 11 July 2016 advice letter to her, for the above reasons, and having regard to all the circumstances of that matter, any further action is unnecessary or appropriate.

[138] In giving consideration as to whether it is appropriate to order a penalty, I refer to the guidance provided by the Disciplinary Tribunal which has stated that the:43

predominant purposes [of orders] are to advance the public interest (which include ‘protection of the public’), to maintain professional standards, to impose sanctions on a practitioner for breach of his/her duties and to provide scope for rehabilitation in appropriate cases

[139] In disputing the scope of work and the appropriateness of [Mr JC’s July 2016] fees” Ms BL seeks a reduction of his 12 July 2016 invoice “to an equivalent of half an hour of a standard fee rate by a similar size legal firm”.

43 Daniels v Standards Committee (2) of the Canterbury-Westland Branch of the New Zealand Law Society [2013] NZHC 349, [2013] NZAR 416. See also s 3 of the Lawyers and Conveyancers Act — the consumer protection purposes.

[140] Mr JC’s 13 March 2014 invoice included a fee of $1,400 plus GST (total of

$2,930 plus GST) for his “review of easements and providing ... explanation of same”. His 12 July 2016 invoice for his advice on the electricity supply easement over area E on adjoining Lot 1 was $800 plus GST and disbursements.

[141] Section 156(f) of the Act authorises a Standards Committee, or this Office on review, to:

order [a lawyer] ... to cancel his, her ...fees for any work (being work which has been done by the [lawyer] ...and which is the subject of the proceedings before the Standards Committee [or this Office on review]).

[142] In my view, for his failure or omission in January 2014 to provide Ms BL and Mr SF with details and an explanation of the easements the property was subject to, and had the benefit respectively, I consider a fair approach is to require Mr JC to cancel his

12 July 2016 invoice, and if already paid, refund that money to Ms BL and Mr SF.

[143] Pursuant to s 211(1)(a) of the Act Mr JC is ordered to cancel his 12 January

2016 invoice, and assuming that invoice has been paid by Ms BL and Mr SF (or by an entity related to them), refund and repay that money to Ms BL and Mr SF (or such related entity they nominate) by the 31st day of January 2019: s 156(1)(f), (g).

[144] Where an adverse finding is made, costs will be awarded in accordance with the Legal Complaints Review Officer (LCRO) Costs Orders Guidelines. It follows that [lawyer] is ordered to pay costs in the sum of $1,200 to the New Zealand Law Society by the 31st day of January 2019 pursuant to s 210(1) of the Act. Pursuant to s 215(3)(a) of the Act, the costs order may be enforced in the District Court.

[145] Pursuant to s206(4) this decision is to be made available to the public with the names and identifying details of the parties removed.

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

New Zealand Legal Complaints Review Officer

BL v JC [2018] NZLCRO 140 (30 November 2018)