HA v TY [2018] NZLCRO 18 (2 March 2018)

Last Updated: 16 March 2018

	LCRO 137/2016
CONCERNING	an application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006
AND
CONCERNING	a determination of [City] Standards Committee [X]
BETWEEN	Ms HA Applicant
AND	Ms TY Respondent

_{COSTS DECISION}

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

Introduction

[1] In the decision dated 25 January 2018 (the findings decision), the determination by [City] Standards Committee [X] (the Committee) to take no further action in respect of Ms HA’s complaints against Ms TY, was confirmed. At paragraph [34] of the decision the parties were invited to make submissions as to costs.

[2] Counsel for both parties have provided helpful submissions.

General

[3] Section 210(1) of the Lawyers and Conveyancers Act 2006 (the Act) provides a discretion to the Legal Complaints Review Officer (LCRO) to “make such order as to the payment of costs and expenses as the Legal Complaints Review Officer thinks fit”. The Costs Orders Guidelines published by this Office provide direction as to the principles applied by this Office when considering an application for costs. Paragraph [13] provides:

A costs order may be made against a party to review (whether a practitioner or a lay person) in favour of the other party where there has been some improper conduct in the course of the review. Such conduct may exist where a party has acted vexatiously, frivolously, improperly, or unreasonably in bringing, continuing, or defending the review. ...

[4] While the guidelines do not refer to the possibility of an award of costs against a lay applicant to be paid to this Office, that option exists, given the broad discretion provided by s 210(1). I accept that Ms HA was not alerted to the possibility of costs to be paid to this Office. However, she was on notice from the outset that Ms TY sought costs against her.

[5] It is appropriate that I should at an early stage dismiss the submission by Ms HA that there should be no order for costs in favour of Ms TY, as her costs are likely to be covered by her insurer. As a counter to this, it is noted that Ms TY and her counsel suspect that Ms HA’s complaint and review application were funded by a litigation funder.

[6] Neither of these suspicions/allegations are relevant to this decision.

Discussion

[7] As noted by Ms UC (counsel for Ms HA), with reference to both the Guidelines issued by this Office and previous decisions, the power to award costs against a lay applicant is exercised sparingly. The principle reason for this is that the right to apply for a review is a statutory right provided by the Act.

[8] Ms UC submits this represents a “high threshold” to be attained before an award is made against her client. She submits that threshold has not been reached “because there was no improper conduct [by Ms HA] in the course of the LCRO’s review”.

[9] That submission overlooks the reference to conduct (vexatious, frivolous or otherwise) in “bringing, continuing or defending” the review application referred to in paragraph [13] of the Guidelines.

[10] That brings the comments made in the findings decision into perspective and in particular, the comment made in paragraph [32]:

There is no reason why [the comments by the Chief Judge of the Employment Court] should not have been accepted as a definitive decision on the allegations” [raised before the Standards Committee and again on review].

[11] Ms UC advises that evidence with regard to the discovery process was not before the Employment Court. She says:

For example, Ms HA was concerned that Ms TY could not have reviewed all her client’s ([ABCD]New Zealand Limited) privileged documents. Ms TY claimed to have spent 38.61 hours (2,376 minutes) reviewing 11,837 documents which would have resulted in a review time of just 12 seconds per document.

[12] Rule 13.9 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (the Rules) imposes an obligation on a lawyer to ensure that the lawyer’s client is fully informed of disclosure obligations. There is no duty on a lawyer to personally review all documents to be discovered. Ms UC’s submission would impose a greater obligation on a lawyer than is provided for in the Rules.

[13] Judge [XX] specifically referred to the “serious allegations of professional failure and misconduct”. He said:

The evidence to support those allegations is, at best, meagre and in most instances non-existent.

[14] He also passed comment on the need to bring some sense of proportion into the matter.

[15] Ms HA ignored the Judge’s comments and lodged her complaint. The Committee addressed the complaint and determined to take no further action. That should have caused Ms HA and her advisers to carefully consider the requirements of the Rules, instead of continuing to argue the issue which had been before the Employment Court on numerous occasions and then dealt with by the Committee.

[16] Ms UC also refers to Ms HA’s limited financial resources and the fact that the costs award of $10,000 against her by the Employment Court has put further stress on those resources. This should have acted as a restraint on Ms HA pursuing the review, particularly when Ms TY’s counsel made it clear from the outset that she sought a costs order against Ms HA.

[17] Ms HA has not acted prudently and limited her exposure to costs.

[18] The matters referred to above all lead to a decision that Ms TY should be awarded costs. However, as referred to in the findings decision, it was within Ms TY’s control to “put a speedy end to the complaint and this review”.1 Production of the communication to her client, in which the client’s discovery obligations were outlined, would have rebutted Ms HA’s allegations. Instead, privilege was claimed to decline to

_{present this evidence, and, although recognising a client’s right to claim privilege it is}

1 Findings decision at [23].

“difficult to comprehend how [ABCD] would be detrimentally affected by waiving privilege to any such communication”.2

[19] In addition, as noted in [24] of the findings decision, the affidavit provided by the [ABCD] employee (Ms BD), in response to a specific request from this Office for evidence that [ABCD] had been requested to waive privilege and had declined to do so, did not provide the evidence requested.

[20] The position arrived at in the review was that, while there was insufficient evidence to support an adverse finding against Ms TY, she did not definitively rebut Ms HA’s allegations.

_{An exercise in discretion}

[21] The power to award costs involves the exercise of a discretion. The factor that tips the scales against Ms HA in support Ms TY’s application for costs, are the very firm comments made by Judge [XX] referred to in the findings decision. Ms UC’s explanation that evidence which came to light after the Employment Court proceedings to support the allegations made in the complaint, only serve to support an incorrect interpretation of r 13.9.1.

[22] Having considered all of the matters referred to above, I have reached the view that there must be some recognition of the “needless costs” that Ms TY has been exposed to by Ms HA continuing to pursue her complaints through to this review.

[23] Although there would be grounds to consider an order that Ms HA pay costs to this Office, I step back from making such an order, recognising she was not on notice as to that possibility.

Quantum

[24] When considering the quantum of costs to award, the comment made by the

LCRO in Client O v Lawyer S is particularly apt:3

The order is intended to focus Client O’s attention on costs needlessly incurred by others while also taking into account any uncertainty about his financial circumstances.

_{[25] That sentence sums up the approach taken in this decision.}

2 At [23].

3 Client O v Lawyer S LCRO 35/2009 (2 June 2009) at [28].

[26] Ms TY advises that her actual costs in relation to this review are in the order of

$18,700. In the alternative, Ms CA submits that costs on a 2B basis calculated as being

$7,800 would be an appropriate measure to apply.

[27] To make an order of the magnitude sought by Ms TY would break new ground for this Office and magnify the departure from the principle of only “sparingly” awarding costs against a lay person.

[28] This is not a situation where such a departure is warranted.

[29] The amount to be awarded is acknowledged to be somewhat arbitrary and designed (as noted by the LCRO in Client O) to cause Ms HA to focus on the needless costs caused to Ms TY. Recognising the arbitrary nature of these calculations, I have determined to follow the course adopted by the LCRO in Client O, but increased the amount awarded in that decision to take account of the fact that some 9 years have passed since that decision was made.4

Decision

[30] Pursuant to s 210(1) of the Lawyers and Conveyancers Act 2006 Ms HA is ordered to pay the sum of $500 to Ms TY, payment to be made by no later than 2 April

2018.

[31] Ms TY may communicate her account details directly to Ms HA at

[e-mail] for payment to be made.

Publication

[32] It is appropriate that the facts of this case (both the findings decision and this costs decision) are published. Pursuant to s 206(4) of the Lawyers and Conveyancers Act 2006 both the findings decision and this costs decision are to be published removing all identifying details.

4 Increased by 4% p.a.

_{DATED this 2}nd _{day of March 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:

Ms HA as the Applicant

Ms TY as the Respondent

Ms UC as Applicant’s Representative

Ms WO as Respondent’s Representative

[City] Standards Committee [X] The New Zealand Law Society