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New Zealand Legal Complaints Review Officer |
Last Updated: 30 March 2018
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LCRO 44/2017
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CONCERNING
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an application for review pursuant to section 193 of the Lawyers and
Conveyancers Act 2006
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AND
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CONCERNING
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a determination of the [Area] Standards Committee [X]
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BETWEEN
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JJ
Applicant
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AND
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IO, UZ & [Law Firm A] (now [Law Firm D])
Respondents
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The names and identifying details of the parties in this decision have been changed.
Introduction
[1] JJ (Ms JJ) has applied for a review of a decision by the [Area] Standards Committee [X] (the Committee) to take no further action in respect of her complaints concerning the conduct of IO, UZ (Ms UZ) and [Law Firm A] ([Law Firm A]).1
[2] The complaints concerned an enduring power of attorney relating to property (the EPA) granted to Ms JJ by her father in law, the late AJ (AJ), in January 1997.
Background
[3] The events principally in question occurred in July 2010 when the extant practice was [Law Firm A]. When the EPA was prepared and completed in 1997, [Law Firm B], which merged with [Law Firm A] in 2007, had acted.
1 A practice which has since passed to [Law Firm D].
[4] On 31 March 2010 AJ, by now elderly and unwell, was admitted to hospital. From there he was transferred to a rest home.
[5] AJ had not appointed a welfare attorney. But the hospital and the rest home were seemingly content to act on family directions. That indicates that it must have been obvious to all concerned that AJ was in no fit state to manage his affairs.
[6] By 2010, thirteen years on from the creation of the EPA, Ms JJ and her husband LJ (one of AJ’s two sons) had forgotten that Ms JJ held a property EPA for AJ. That is obvious from a letter LJ wrote to his mother MJ, and his brother CJ on 7 May 2010, proposing that he and Ms JJ cover elder care costs up to $35,000 as an interest free loan. In the end LJ expended close on $39,000 on that account.
[7] MJ consulted [Law Firm A] (which as successor to the practice of [Law Firm B] held the deeds of AJ and MJ) on 10 July 2010. She saw Ms UZ, a lawyer employed by [Law Firm A]. MJ made Ms UZ aware that there was dispute between her and LJ as to AJ’s health care needs.
[8] Ms UZ says of this consultation that:
- (a) MJ wanted to know what decisions she could make on AJ’s behalf.
- (b) She told MJ that AJ had completed a property EPA and that MJ was not the grantee, but in doing so did not reveal who was.
- (c) However, when MJ was given a copy of her own property EPA, she remembered that she and AJ had both appointed Ms JJ as grantee.
- (d) It did not at this point occur to Ms UZ that Ms JJ might have forgotten the fact of her appointment.
- (e) Ms UZ advised MJ that she could apply for court orders under the Protection of Personal and Property Rights Act 1988 (PPPR).
[9] The course of that consultation, and the fact that MJ was accompanied by a Ms XZ, who is described as the then Elder Abuse and Neglect Prevention Co-ordinator for [Organisation A], would have been indication enough to Ms UZ that AJ apparently had significant mental capacity problems.
[10] MJ saw Ms UZ again two days later:
- (a) At this consultation MJ handed her the 7 May 2010 letter from LJ. It said that there was no valid property EPA. She told MJ that was not correct.
MJ advised she was ... concerned about [Ms JJ’s] appointment as AJ’s attorney in relation to his property. We advised that there was ... an option whereby somebody could apply to the court to have Ms JJ removed ...
(e) She then says that:
Following this meeting, once we had received more information from MJ on the family situation and MJ had advised she did not wish [Ms JJ] to be AJ’s attorney under his EPA, we were then concerned that we may be in a conflict of interest situation. At that stage, we had agreed to assist MJ with the preparation of new enduring powers of attorney for herself and had provided a letter of engagement accordingly, but did not wish to act for any members of the [this] family in relation to any other matter.
(f) Thus:
On 15 July 2010, we advised MJ ... that if she wished to proceed with PPPR orders removing [Ms JJ] as attorney under AJ’s enduring power of attorney in relation to property, we could not be involved ... as this may be a conflict of interest, [Law Firm B] had acted for AJ and MJ in the past, and [Law Firm A] had acted for [Ms JJ] and LJ in the past. ... we recommended YP at [Law Firm C] as an appropriate solicitor. ...
[11] During the handover to [Law Firm C], Ms UZ confirmed to them that, as MJ had by then worked out, AJ had appointed Ms JJ under the property EPA.
[12] However, she took no steps then or later to remind Ms JJ of her appointment. That information was not disclosed to Ms JJ or LJ by any of the respondents until several years after AJ’s death.
[13] In early 2011, LJ made application to the Family Court for representation orders under the PPPR, but those proceedings had not been resolved when AJ died in July 2011.2
2 It appears that MJ herself never filed any such proceedings. The materials before me do not canvas any of the detail and history of LJ’s proceedings.
[14] LJ later brought proceedings against AJ’s estate seeking to recover his costs he had incurred in meeting the costs of AJ’s care. His claim was successful. On 24 March 2016, [Judge] gave him judgment for the care costs he had met — $39,000 odd.3
The complaint
[15] Ms JJ lodged a complaint with the New Zealand Law Society Complaints Service (NZLS) on 17 August 2016. The remedy sought was financial compensation such as would cover expenses or losses falling outside the compass of the District Court recovery, including legal costs incurred in the pursuit of the PPPR proceedings that came to an end when AJ died.
[16] Ms JJ submitted that:
- (a) [Law Firm A] had wrongfully failed to notify her of the existence of the EPA in 2010.
- (b) That had deprived her of the chance to exercise it by using AJ’s property to meet from his resources the extra care expenses met at the time by LJ.
- (c) That had also led to the expenditure involved in other (the PPPR) court proceedings.
- (d) The failure had involved a breach of a duty [Law Firm A] owed to AJ.
The Committee decision
[17] The Committee delivered its decision on 25 January 2017.
[18] The Committee decided, 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.
[19] In reaching that decision the Committee:
- (a) determined that ultimate responsibility for recalling the fact of the EPA lay with Ms JJ;
3 [Case citation removed]. The judgment incorporates a detailed history of the relevant events and indicates that the resources of AJ and MJ were well equipped in 2010 to meet the expenditure incurred by LJ. It appears from the judgment that MJ would have been reluctant to see AJ transferred to the rest home where high needs costs would be and were incurred.
(b) held that it was not the lawyers’ responsibility to remind her that AJ had appointed her as his property attorney; and
(c) recognised that in July 2010, [Law Firm A] was aware that there was a family dispute and that court proceedings were a strong possibility, but said that “it would have been inappropriate for [Law Firm A] to have taken active steps to intervene in the dispute, in the absence of clear instructions to do so”.
Application for review
[20] Ms JJ filed an application for review on 10 February 2017. She sought a finding that [Law Firm A] should have activated AJ’s EPA upon becoming aware of his situation in July 2010. She may be taken to mean that, in the interests of AJ, her attention should have been drawn to the EPA at that time.
[21] She submitted that:
- (a) As successor to [Law Firm C] and given the fact of the EPA, [Law Firm A] had a duty to be mindful of AJ’s interests, should he one day be unable to make decisions for himself and protect those interests accordingly. [Law Firm A] held the EPA and other deeds. The family did not.
- (b) MJ’s visit, for the purpose of which [Law Firm A] (in the person of Ms UZ) had looked at the EPA, not only brought to their attention AJ’s plight, but also that there was dissension within the family such as might put his interests in jeopardy.
- (c) The committee’s view that it would have been “inappropriate for the practitioner and/or [Law Firm A] to have taken active steps to intervene in the dispute in the absence of clear instructions to do so” ignored the reality that AJ was in no position to give instructions.
Response to review
[22] The substantive response to Ms JJ’s complaint is found in a 30 August 2016 letter signed by Ms UZ, and by IO and HG as the former directors of [Law Firm A]. The contents of this letter were subsequently confirmed to be their response to the review.
[23] In that response they submit that:
- (a) [Law Firm B] had merged with [Law Firm A] at the beginning of 2007;
- (b) [Law Firm B] had previously acted for MJ and AJ, but there had been no contact or instructions during the eight years preceding MJ’s July 2010 approach;
- (c) on 10 July 2010, [Law Firm A] had advised MJ that she could apply to the Court for a welfare guardian appointment for AJ’s benefit;
- (d) on 14 July 2010, [Law Firm A] had again advised MJ that such a court appointment would be required if AJ did not have sufficient mental capacity to make new EPAs himself;
- (e) given the family dynamic, and MJ’s concern about Ms JJ’s appointment, MJ had been advised that application could be made to have Ms JJ removed and a replacement property manager appointed;
- (f) after that meeting, [Law Firm A] had received further information from MJ about the family situation and MJ had confirmed that she did not wish Ms JJ to be AJ’s attorney; and
- (g) at this point [Law Firm A] became concerned about conflict of interest issues and that led to the reference to [Law Firm C].
[24] [Law Firm A] (Ms UZ included) further submitted that:
- (a) they were not acting for AJ in 2010 or thereafter;
- (b) it would not have been appropriate for them to “interfere with the court process and remind [Ms JJ] ... of her appointment as (property attorney) if PPPR Proceedings were pending”;4
- (c) they were under no duty to remind Ms JJ of her appointment when they were not acting, and had no instructions to act, for AJ;
- (d) they owed no duty to Ms JJ either personally or as AJ’s property attorney; and
4 No such proceedings were then on foot.
(e) absent any EPA in relation to personal care and welfare, if LJ wished to make healthcare decisions on AJ’s behalf a court application was unavoidable.
Ms JJ’s response
[25] Ms JJ wrote on 12 September 2016 that:
- (a) [Law Firm B] had acted for her and LJ on occasions between 1995 and ([Law Firm B] was by then [Law Firm A]) March 2007 when, after IO cited a conflict of interest in a dispute with neighbours, they took their legal business to [City A] lawyers;
- (b) at that time, her parents-in-law were assured that [Law Firm A] would continue to act for them;
- (c) the fact that the 30 August 2016 letter stated that “there had been disputes between MJ and her son LJ as to AJ’s healthcare requirements” showed that Ms UZ knew there was potential for AJ’s well-being to be at risk and that he could be suffering hardship;
- (d) the purpose of an EPA was to provide for circumstances where the donor could not look after their own affairs and [Law Firm A], having been made aware of AJ’s incapacity, should have taken steps as could have given effect to the EPA because, obviously enough, AJ himself was unable to give instructions;
- (e) there was no conflict of interest issue because by July 2010, Ms JJ was no longer a client of [Law Firm A];
- (f) [Law Firm A]’s unwillingness to act further for MJ, particularly on a PPPR application, demonstrated that they knew they had a duty to AJ; and
- (g) effectively leaving any disclosure decision over to [Law Firm C] had no point because the firm plainly had no obligation to AJ or, for that matter, Ms JJ.
[26] The rejoinder then turns, and at some length, to subsequent events as viewed or identified from Ms JJ’s perspective and in terms that presuppose the existence of the disputed duty to AJ.
Review on the papers
[27] The parties have agreed to the review being dealt with on the papers. This review has been undertaken on the papers pursuant to s 206(2) of the Act, which allows a Legal Complaints Review Officer (LCRO) to conduct the review on the basis of all information available if the LCRO considers that the review can be adequately determined in the absence of the parties.
[28] I record that having carefully read the complaint, the response to the complaint, the Committee’s decision and the submissions filed on review, there are no additional issues or questions in my mind that necessitate any further submission from either party. On the basis of the information available I have concluded that the review can be adequately determined in the absence of the parties.
Nature and scope of review
[29] The nature and scope of a review have been discussed by the High Court, which said of the process of review under the Act:5
... 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.
[30] More recently, the High Court has described a review by this Office in the following way:6
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.
5 Deliu v Hong [2012] NZHC 158, [2012] NZAR 209 at [39]–[41].
6 Deliu v Connell [2016] NZHC 361, [2016] NZAR 475 at [2].
[31] Given those directions, the approach on this review, based on my own view of the fairness of the substance and process of the Committee’s determination, has been to:
- (a) consider all of the available material afresh, including the Committee’s decision; and
- (b) provide an independent opinion based on those materials.
Analysis
[32] This review raises the question of whether unsatisfactory conduct, in the form of the contravention of an exception to r 8.4 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (CCCR) that deals generally with the duty of a lawyer to hold all information concerning a client or former client in strict confidence, has occurred.
[33] The exception is r 8.4(c) which says that a lawyer:
may disclose confidential information relating to the business or affairs of a client to a third party where ... it is necessary to protect the interests of the client in circumstances where, due to incapacity, the client is unable effectively to protect his or her own interests.
[34] That provision first of all recognises that a departure from the confidentiality norm may be justified as necessary to protect client interests if incapacity stands in the way of self-protection.
[35] Where the lawyer discloses information under this exception it “should be only to the appropriate person or entity and only to the extent reasonably necessary for the permitted purpose”.7
[36] If disclosure (by way of a reminder) of the EPA to Ms JJ was necessarily the lawyers’ obligation to AJ in the circumstances as they knew them — which in effect is Ms JJ’s argument — then disclosure to her would have been within r 8.6. But could such an obligation have arisen?
7 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, r 8.5.
“May” can mean “must”
[37] Generally speaking, may carries a permissive, rather than an injunctive, meaning, but it may require to be read as must. As Windeyer J put it in the High Court of Australia:8
... the particular context of words and circumstance make it not only an empowering word but indicate circumstances in which the power is to be exercised - so that in those events the "may" becomes a "must". Illustrative cases go back to 1663 : R. v. Barlow [1741] EngR 139; (1663) Carth, 293 (90 ER 773); 2 Salk 609 (91 ER 516). Today it is enough to cite Julius v Bishop of Oxford (1880) 5 App Cas 214; and add in this Court Ward v Williams [1955] HCA 4; (1955) 92 CLR 496, at pp 505-506.
[38] That passage was cited with approval by Richardson P in the New Zealand Court of Appeal, who then said at [74] that:9
All statutory duties and powers have to be exercised in good faith and for their proper purpose. A given context may mandate a course of action even though the power is expressed to be a discretion, as in “may”.
So the New Zealand position matches that of Australia.
Ms JJ’s case
[39] Ms JJ’s argument can be distilled down to this:
- (a) In the light of MJ’s approaches in July 2010, [Law Firm A], through Ms UZ, became aware that AJ was in no position to act in, and appropriately deal with, his property interests or, at least, that was quite likely the case.
- (b) It was logical and proper for her to assume that when AJ gave the EPA to Ms JJ, 13 years before, that had been a considered decision on his part at a time when he was fit to make a sensible choice of grantee — one evidencing that he had particular faith and confidence in Ms JJ.
- (c) So, in discharge of a later arising duty owed to AJ to render the EPA of utility, Ms UZ ought to have drawn Ms JJ’s attention to her appointment in case she had in fact forgotten about it.
8 Finance Facilities Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia
[1971] HCA 12; (1971) 127 CLR 106.
9 Tyler v Attorney General [1999] NZCA 217; [2000] 1 NZLR 211 (CA).
Discussion
[40] At first blush there may seem to be some strength in that argument. Had Ms UZ reminded Ms JJ of the EPA then a costly saga might, in some degree at least, have been avoided. But on further consideration it is an argument that turns out to be flawed because:
- (a) There is nothing in the narrative up to and including the first half of July 2010 pointing to AJ’s property interests being in jeopardy and it was those, rather than issues of personal welfare, that were covered by the EPA.10
- (b) In any event, and had its existence affected Ms UZ and [Law Firm A]’s obligations, the fact MJ had brought with her Ms XZ of [Organisation A] and her job description could well have served to allay any concern about AJ’s welfare being in any way in a state of jeopardy that might go unattended.
- (c) Had Ms UZ contacted Ms JJ who, with LJ was by 2010 no longer a client of [Law Firm A], she would have betrayed the confidence that MJ had approached [Law Firm A] for advice about a family dispute in which all concerned were entangled.
- (d) After MJ’s second visit, Ms UZ says that:
once we had received more information from MJ on the family situation and MJ had advised she did not wish Ms JJ to be AJ’s attorney under his EPA, we were then concerned that we may be in a conflict of interest situation.
(e) Then, accepting no further instructions beyond the preparation of a new EPA for MJ, Ms UZ, and thus [Law Firm A], bowed out in favour of [Law Firm C].
(f) In so doing she can be identified as having with reasonable promptitude taken a path that avoided any risk of being found in retrospect to have given an unprofessional advantage to MJ.
10 It appears from the materials that the property EPAs were prepared and completed in 1997 when MJ and AJ, who had emigrated from the United Kingdom, bought a house property in New Zealand.
[41] In any event, there is a strong case to conclude that r 8.4 (the only rule that has any potential for application), in the singular circumstances of this case, has no application.
[42] I say that because the rule as a whole relates simply and only to confidential information. And as between AJ and Ms JJ the characteristic of confidentiality was missing, because when the EPA was created the form by which that was accomplished was, in terms of the 1988 Act, one requiring not only AJ’s signature but also (to signify assent to her appointment) that of Ms JJ too.
[43] My overall conclusion is that r 8.4 has no application in this case and since I do not see any other basis upon which the conduct in question might be held unsatisfactory that must be the end of the matter.
[44] I would however note that Ms JJ’s complaint does bring immediately to the forefront, the question as to the extent that a lawyer carries a responsibility for advising parties of the obligations those parties have willingly and responsibly assumed, when they agree to take on the role of an attorney.
[45] Ms JJ concedes in her initial complaint, that she had “completely forgotten that she had an EPOA for my father in law”. I accept that recalling distant events can be difficult. But when a party is entrusted with responsibility for managing a family member’s affairs in the event that the family member becomes incapable of doing so, it could be expected that if the family members health deteriorated to the point where there was serious concerns regarding their capacity, that the situation would prompt the immediate family members to give thought as to whether arrangements had been put in place to cover the circumstances they were confronted with and that this would prompt them to recall if steps had been taken to ensure that appropriate legal mechanisms were in place.
[46] Ms JJ is critical of the lawyers for failing to alert her to, or remind her of, the responsibilities she had taken on, but in my view, it is not unreasonable to suggest that Ms JJ herself must carry a degree of responsibility for the consequences that arose as a consequence of her failure to recall the obligation she had taken on.
Observation
[47] The law rightly avoids ruling on the hypothetical and it is impossible to identify in advance the complete range of circumstances that might justify or demand resort to r 8.4(c).
[48] But I would venture that any consideration in a professional disciplinary context of the application of r 8.4(c) in cases akin to the present one, would need to have two features that are missing in the present case. Firstly, the lawyer would need to be provided with compelling evidence to indicate that the activation of an existing EPA was essential for the protection and preservation of the property of the donor. Secondly, the lawyer would need to be confident that alerting the donee on that account would not jeopardise the integrity of a lawyer’s or legal firm’s obligations to any other client.
Result
[49] My conclusion is that this review must be dismissed.
Decision
Pursuant to s 211(1)(a) of the Lawyers and Conveyancers Act 2006 the decision of the Standards Committee is confirmed.
DATED this 15th day of March 2018
Rex Maidment
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 JJ as the Applicant
Ms UZ, Mr IO and Law Firm D (successor to [Law Firm A]) as the named Respondents [Area] Standards Committee [X]
The New Zealand Law Society
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