KP v VN [2018] NZLCRO 67 (31 July 2018)

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	LCRO 215/2016
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
BETWEEN	KP Applicant
AND	VN _Respondent

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

[1] Mr KP has applied for a review of a decision by the [Area] Standards Committee (the Committee) to take no further action in respect of his complaint concerning conduct on the part of Ms VN.

[2] Mr KP is concerned that Ms VN knows too much about him and his ways to be able to act professionally against his interests. The complaint made by Mr KP’s lawyer, Mr IK, to the New Zealand Law Society (NZLS) on Mr KP’s behalf is framed as one of conflict of interest. Mr KP says Ms VN and the firm of which she was then a partner, [Law Firm A] (the firm) acted for him in 1996. He says Ms VN thereby came to possess information that was confidential to him.

[3] In 2016, Ms VN accepted instructions to act for [Law Firm B] in a mediation to resolve a dispute between [Law Firm B] and Mr KP.

[4] Mr KP says that as Ms VN acted for him in 1996 she cannot now act against him without her obligations to him coming into conflict with her obligations to [Law Firm B]. Mr KP says that while he might like to instruct Ms VN again some time, he would like this Office to impose a permanent bar prohibiting Ms VN from ever acting against him again.

[5] NZLS dealt with Mr KP’s complaint through its Early Intervention Process (EIP). The EIP call log records receipt of the complaint and phone contact with Mr IK and Ms VN. Ms VN was advised the complaint had been received, and of the Committee’s preliminary view that it would take no further action and its reasons. Ms VN was offered the opportunity to respond and was “content not to”.

[6] The Committee then determined Mr KP’s complaint without the benefit of a written response from Ms VN. At the heart of its decision is the precept that, whatever Ms VN may or may not have known in 1996 was, by 2016, lost in the mists of time.

[7] The Committee was not convinced that Mr KP had actually been a client of Ms VN’s or her former firm although it noted, incorrectly as it later turned out, that she had acted for [Company A], a company owned by Mr KP and his brother TY. It seems [Company A] had been involved in litigation in 1996 and Ms VN had received instructions from those claiming against [Company A], not for Mr KP’s father as recorded in the Committee decision. A complaint had been made to the local District Law Society at the time alleging conflict of interest and Ms VN withdrew, she later said, out of respect for Mr KP’s father who was a client of the firm. It seems no formal decision was made on the complaint made in 1996.

[8] The Committee considered the standards issue more recently raised by Mr KP was less an allegation of conflict of interest and more an allegation that Ms VN failed to respect the confidentiality of Mr KP’s information in breach of r 8.7.1 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (the Rules). The Committee applied that rule to the conduct alleged.

[9] The Committee considered what constitutes confidential information, which included information about the client’s personality, personal characteristics including weaknesses, fears and reactions, business affairs and interests of a client, lending, borrowing, information about assets, and the relevance of that to the matter in which the lawyer was acting against the former client. The Committee noted the principles set out in Prince Jefri Bolkiah v KPMG (a firm) which made it was necessary for a plaintiff who

wished to restrain his former solicitor from acting in a matter for another client, as Mr KP

(a) that the solicitor is in possession of information which is confidential to him and the disclosure of which he has not consented; and

(b) that the information is or may be relevant to the new matter in which the interest of the other client is or maybe adverse to his own.

[10] The Court added that the burden of proof that rested on the plaintiff would not be heavy: relevance will often be obvious and possession of confidential information “may readily be inferred”. The Committee said Mr KP had not provided evidence from which it could conclude that Ms VN had confidential or relevant information from 1996, when she acted for [Law Firm B] in mediation with Mr KP in 2016.

[11] The Committee did not accept that Mr KP had been a client of Ms VN in the estate litigation, although he claimed an interest in the outcome of it. It noted Mr KP had not been a client of Ms VN at any time in the previous 20 years and found that Ms VN had not been in receipt of any general or specific information about Mr KP or his company over that time. The Committee was satisfied that Ms VN had no knowledge of Mr KP’s business affairs and interests or his personal characteristics as a result of her having been a partner at the firm or when she was instructed to act for [Company A] (which she was not).

[12] In the circumstances, the Committee’s view was that Ms VN did not owe obligations of a fiduciary nature, such as loyalty and confidence to Mr KP.

[14] Mr KP is adamant that he was a client of Ms VN and the firm in 1996. Mr KP says Ms VN acted for him, as well as his father and siblings, in estate litigation in 1996. He maintains that after he raised concerns with Mr HS, who was the President of the local District Law Society at the time, Ms VN withdrew from acting against him in litigation. He describes her withdrawal as “bitterly contested”. Mr KP obtained a letter from Mr HS setting out his recollections and refers to other occasions on which other lawyers at the firm acted. He recalls meetings with Ms VN at [Town] District Council and during an “Iwi

[15] Mr KP says his “family and our advisors maintain there was and is a conflict of interest”. He believes the “issues have not diminished because of the passage of time” and concludes that through disclosure of his affairs to [Law Firm B] including “all manner of [his] personal and commercial issues, the problem of the conflict of interest is manifest”.

[16] Ms VN says there is no basis for Mr KP’s concerns. She says she has never acted for Mr KP or any of his companies and had never met Mr KP until they both attended mediation in 2016. Ms VN recalls “having something to do with the [Mr KP’s family] over 20 years ago”. She accepts as a possibility that she may have acted for Mr KP’s mother and says she may have met his father. She also had a “vague recollection of representing the [Town] District Council against a member of the [Mr KP’s family]”. Ms VN says when she was with the firm she was asked to act in litigation against [Company B], a company owned by Mr KP and his brother TY. Ms VN says the firm agreed not to act in that litigation only as a courtesy to Mr KP’s father. In the circumstances, Ms VN considers it inconceivable that any conflict could occur.

[17] Ms VN obtained a letter from Mr HS in which he confirmed his understanding that Ms VN was acting for “a Mr BV and others” against [Company A], which was represented by another local firm. Mr HS confirmed his recollection that the firm had acted for members of the [Mr KP’s family], but had “absolutely no idea” whether Ms VN had ever met or acted for Mr KP.

[18] Ms VN also obtained a letter from Mr RH of the firm who had obviously been asked to check the firm’s records to find out whether there was any record of anyone at the firm, including Ms VN, having acted for Mr KP. Mr RH drew a blank. Files had “long since been destroyed” or not retained.

[19] Ms VN says it is abundantly clear that she has never acted for Mr KP and confirms she has acted against him in the past. Based only on information provided by Mr RH, Ms VN accepts that the remote possibility of her having been peripherally involved in estate litigation in 1996 cannot be completely excluded, although she has no recollection of having been involved in any way.

[20] Ms VN says that while [Law Firm B] had, and has, considerable knowledge of Mr KP’s affairs, she did not. Ms VN says her part has been to assist [Law Firm B] in resolving disputes with Mr KP. She denies the conflict of interest allegation, and says she has not acted unethically in any way.

[21] Mr KP, however, remains adamant that Ms VN acted for him, and then against him in 2016, despite her being prevented from doing so by a conflict of interest. He said

at the review hearing that if he needed representation in future he may instruct Ms VN. However, he says he does not want Ms VN to act for anyone whose interests are opposed to his. Furthermore, he says, he does not want to have to spend money having her removed as counsel if he finds her on the opposing side in future.

[22] Mr KP believes that NZLS has failed to produce information to him, says the Committee did not consider relevant information, had clandestine phone conversations with Ms VN and side-stepped his concerns. Those concerns arise from Mr KP’s complaint being dealt with through the EIP, and beyond saying that his concerns highlight some of the limitations that are inherent in that process, no further comment will be made on those aspects of concern to Mr KP.

[23] Mr KP attended a review hearing by phone on 24 July 2018. Ms VN did not exercise her right to attend.

[24] The nature and scope of a review have been discussed by the High Court, which said of the process of review under the Act:2

... 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.

[25] More recently, the High Court has described a review by this Office in the following way:3

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.

[26] The complaint expressed by Mr KP’s lawyer, Mr IK, and by Mr KP throughout the processes of complaint and review is that of a conflict of interest. However, Mr KP’s complaint is really a conflation of two rules, neither of which is engaged without there having been a relationship between Ms VN and Mr KP as lawyer and client. It is not the case that no lawyer can ever act against a former client; that is too broad a sweep.

[27] Mr KP calls two aspects of the rules in aid: conflict and confidentiality. Rules 6,

6 In acting for a client, a lawyer must, within the bounds of the law and these rules, protect and promote the interests of the client to the exclusion of the interests of third parties.

6.1 A lawyer must not act for more than 1 client on a matter in any circumstances where there is a more than negligible risk that the lawyer may be unable to discharge the obligations owed to 1 or more of the clients.

8 A lawyer has a duty to protect and hold in strict confidence all information concerning a client, the retainer, and the client’s business and affairs acquired in the course of the professional relationship.

[28] At the heart of Mr KP’s complaint are two key contentions. First, that he was a client of Ms VN and the firm in the mid-1990s and is therefore entitled to all of the protections that relationship brings. Second, that it cannot be ethical for Ms VN to have obtained information that was confidential to him while she was acting for [Law Firm B] when he is a former client of hers. As Mr KP says, he does not want Ms VN using anything she knows about him or his business and affairs against him. If Ms VN is to be anywhere, Mr KP wants her on his side.

[30] Ms VN has no record and no recollection of Mr KP or any of his companies being her client. She is absolutely certain she has never acted for him. If she is correct, the whole basis of Mr KP’s complaint falls away.

[31] While Mr KP is adamant, that is not enough. He contends he has provided sufficient documentary evidence in support of his recollections to demonstrate that he was a client of Ms VN and the firm in the mid-1990s. Mr KP has set out his recollections, which include attending meetings with Ms VN and his father when the estate litigation

was under way and before Mr KP’s father terminated his retainer with the firm in 1996. Mr KP also refers to “iwi/Council/company mediation and the subsequent settlement involving the Wahi Tapu protected site [Address]” which he is certain Ms VN must recall him being involved in. Mr KP has also selected some documents from the mid-1990s and provided those to this Office, although he did not supply all of those to the Committee.

[32] There are many good reasons for this Office to decline to consider fresh information on review that could and should have been provided to the Committee that made the decision under review. The process of review should not be treated as an opportunity to shore up a case, or plug evidential gaps. However, as this matter was disposed of by EIP, and Ms VN has gone to the effort of obtaining information to rebut the various iterations of Mr KP’s complaint in the process of review, all of the further information has been considered, in part so that a decision can be made as to whether Mr KP’s complaint can be disposed of on review, or whether some or all of it should be directed back to a Committee for reconsideration.

(a) Four pages of a Deed creating the [Trust A]. The front page bears the name of Mr RH, the date 24 November 1995, Mr KP’s father’s name as settlor and one of the three trustees, with Mr KP and Mr RH named as the other two trustees. The three appear to have signed the Deed at page 8. The signatures of Mr RH and Mr KP’s father were witnessed by a legal assistant of [Town]. Mr KP’s signature was witnessed by someone else, a solicitor of [Town]. Both witnesses’ names are not readily legible.

(b) Correspondence to and from Mr RH in 1997 referring to, and in some cases copied to, Mr KP’s father. A letter from the firm to [Law Firm C] dated 23 June 1997 repeats an earlier request for documents relating to [Trust A], and refers to documents requested by [Law Firm C] at paragraph 4., “Copy of Guarantee [Mr KP’s father] to [Bank] in respect of KP dated 2 April 1990”.

1997 seeking the Law Society’s intercession, including correspondence from Mr HS dated 8 August 2016 on which Mr KP places significant reliance. Mr HS confirms he was a member of the District Law Society in

The basis of the complaint was that there was a conflict between that firm and Ms VN as being a former partner of the firm, the conflict being such as to prevent them from acting against Stepping Stones Nurseries and various members of the [Mr KP’s family].

I record that in consequence both [Law Firm A] and Ms VN stepped aside from acting from the various parties for whom they were, at that time, acting. We understand that Mr TM of [Law Firm D] was then subsequently instructed.

We understand that the matter then proceeded on the basis that [Law Firm A] and Ms VN were unable to represent the various contractors and suppliers in their litigation with both Stepping Stones Nurseries Limited and the [Mr KP’s family].

[34] Considering each of those categories of information in turn, it is relevant to note that Mr KP has not provided most of the pages of the Deed. The part of the Deed he has provided is silent as to whether he was a beneficiary of the [Trust A]. While the Deed demonstrates that Mr KP’s father was a client of the firm, it is not clear evidence that Mr KP was a client of Mr RH or of the firm.

[35] Mr KP’s contention that he was a client in the estate litigation jointly with his father seems to be primarily based on the proposition that Mr KP and his brother TY stood to benefit from their father’s estate. If that is the basis for his reasoning that he was the firm’s or Ms VN’s client, it is flawed.

[36] The only reference to Mr KP in the correspondence to and from Mr RH in 1997 relates to a copy of a guarantee Mr KP’s father gave to [Bank] dated 2 April 1990. There is no dispute that the firm acted for Mr KP’s father. It is logical to assume that if the firm was holding paperwork in relation to a guarantee given by father for son, the firm was holding that because of its relationship with Mr KP’s father. It does not follow that the firm acted for them both. Indeed, given the conflict between the interests of guarantor and borrower, the firm may well not have acted for them both. That correspondence does not definitively prove that Mr KP was a client of the firm, or of Ms VN.

[37] Mr KP says he does not have a copy of any final ruling or determination from the Law Society on the complaint he made in 1996, although he requested a copy from NZLS. No such document appears in the file the Committee has provided for review. It is understood from Ms VN and Mr HS’ correspondence that there was no such ruling.

[38] Mr KP says the firm and Ms VN “subsequently withdrew” and another lawyer assumed conduct of the matter. Ms VN says the firm decided it would “voluntarily desist from acting” in litigation against [Company B] after Mr KP’s father communicated his unhappiness at a member of the firm acting against Mr KP’s company. The latter is consistent with there being no ruling from the District Law Society.

[39] With the greatest of respect to Mr HS and his recollections, little weight can be placed on his evidence about the complaint laid about Ms VN and the firm in 1996. Mr HS was entirely reliant on what he was being told by lawyers positioning their clients in litigation. Mr HS’ evidence must be given significantly less weight than Ms VN’s and Mr RH’s. They must be taken to know more about their own business than Mr HS does.

[40] There is evidence from several sources to the effect that Ms VN accepted instructions to act against [Company A] in the mid-1990s. While not conclusive, that tends to suggest Ms VN was unaware at the time she accepted instructions that there was any kind of connection between [Company A]/Mr KP and the firm that might have prevented her from acting.

[41] Other than the inconclusive documentary evidence he has provided, Mr KP relies on his recollection of events in 1996. The further information he has provided is selective, self-serving and rationally unpersuasive. It does not provide a definitive answer to the key question, which is whether Mr KP was Ms VN’s client.

[42] All of this creates a seemingly insurmountable problem for the position Mr KP seeks to adopt over conflict of interest and for any concerns he may have over his confidence being breached by Ms VN. Those duties and obligations do not arise in the absence of a lawyer and client relationship.

[43] To put it another way, a lawyer/client relationship between Mr KP and Ms VN prior to her engagement by [Law Firm B] is prerequisite to the engagement of the rules around conflict of interest and protection of client confidence.

[44] On the evidence, there is no risk whatsoever that Ms VN may have been unable to discharge the obligations she owed to [Law Firm B], her one and only client in the

2016 mediation. Nor is there any prospect that Ms VN breached, or might breach, an apparently non-existent obligation of confidence owed to Mr KP that is said, without support, to have its genesis in events in 1996.

[45] The Committee’s approach, understandably given Mr KP’s complaint, was to focus on the obligation of confidence. That obligation was referred to as an aspect of the fiduciary duty owed by a lawyer to his or her client that was discussed by Justice Susan Glazebrook in a paper Mr KP provided called “Conflicts of Interest: The New

4 Susan Galzebrook “Conflicts of Interest: The New Zealand Perspective” (11 August 2006) Courts of New Zealand <www.courtsofnz.govt.nz>.

[46] Like conflicts of interest, duties of confidence are an incident of a professional relationship between lawyer and client. Without satisfactory evidence that such a relationship existed between Mr KP and Ms VN and/or the firm, it is not possible to say with certainty that the rules in Chapter 8 of the Rules were engaged.

[47] It is impossible to reconcile Mr KP’s position with the information available on review. Having carefully considered all of that information, including giving careful consideration to Mr KP’s comments at the review hearing, it has not been possible to identify any reason to reverse or modify the Committee’s decision. Even with the benefit of further information, the evidence does not definitively support the conclusion that Mr KP was a client of Ms VN or the firm. On the evidence, Ms VN did not owe Mr KP obligations of a fiduciary nature, such as loyalty and confidence.

[48] As the evidence does not support a finding that Ms VN’s conduct fell below any professional standard, there is no basis on which it could be said that further action is necessary or appropriate. There is no reason to reverse or modify the decision. That is confirmed.

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

Ms VN as the Respondent [Area] Standards Committee The New Zealand Law Society The Secretary for Justice

New Zealand Legal Complaints Review Officer

KP v VN [2018] NZLCRO 67 (31 July 2018)