LE v AP [2018] NZLCRO 75 (20 August 2018)

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	LCRO 124/2016
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 [X]
BETWEEN	LE Applicant
AND	AP and MC _Respondents

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

[1] Mr LE has applied for a review of a decision by the [Area] Standards Committee [X] (the Committee) to take no further action in respect of his complaint concerning conduct on the part of Mr MC and Mr AP (the lawyers) and their fees.

[2] In late April 2014, Mr LE instructed the lawyers to represent his interests in an appeal against improvement and prohibition notices issued by WorkSafe New Zealand (WorkSafe) to Mr LE and his company GDB Ltd. The lawyers drafted and sent a settlement proposal to WorkSafe, inviting them to withdraw the Notices by noon on 5 May

2014. When that did not happen, as indicated in the settlement proposal, the lawyers filed a Notice of Appeal that afternoon. WorkSafe then withdrew the Notices the following afternoon.

[3] Mr LE was thoroughly dissatisfied and wanted WorkSafe to cover his costs, legal and otherwise. The appeal came before Judge Y, who later noted that the substance of the appeal had been avoided because “the issues between GDB Ltd and WorkSafe were believed to be resolved except for one remaining issue, that of costs”.1

His Honour timetabled the filing of submissions in September 2014. On Mr LE’s instructions, the lawyers filed submissions accordingly. WorkSafe filed submissions in reply with a supporting affidavit. Both sets of submissions included reference to the deadline for the filing the appeal. It seems the Court file was then misplaced and not all of the materials that had been filed reached their destination. The matter resurfaced in Judge Y’s list early in 2016. His Honour requested a further copy of the submissions the lawyers had filed for Mr LE in September 2014 so the costs issue could be determined.2

[4] The lawyers charged Mr LE fees in 2014, about which he complained to the New Zealand Law Society (NZLS). That complaint was determined and the lawyers pursued a claim against Mr LE through the Disputes Tribunal. Shortly before the Tribunal issued its decision in 2016, Mr LE made a further complaint to the NZLS. The latter complaint is the subject of the decision that is under consideration in this review.

[5] Mr LE says the appeal was not necessary and was poorly handled by the lawyers. He says, in reliance on submissions filed by WorkSafe, that the lawyers miscalculated 5 December 2014 as the last day on which he could file an appeal, did not file the appeal correctly and the Court rejected it. He contends Mr AP’s work was completely worthless and if WorkSafe had not withdrawn the Notices as they did, Mr LE would have incurred loss. He says the lawyers’ handling of matters on his behalf has left his company “exposed to WorkSafe”.

[6] Mr LE says he wants the lawyers to apologise to him, give him a full refund, and pay compensation to him “for the grief this has caused” and cover any “subsequent loss” to him.

[7] Mr LE’s complaint was dealt with through the NZLS Early Intervention Process (EIP). His earlier complaint about fees was noted, the Committee determined his complaint on the basis that further action was not necessary or appropriate pursuant to s 138(2) of the Lawyers and Conveyancers Act 2006 (the Act).

[9] Mr LE repeats his complaints in his application for review and adds an allegation that the lawyers misled NZLS throughout the complaints process. The outcome Mr LE seeks is “a fair account for the work that was required not for a misfiling of an appeal that was not required and then costs that [the lawyers] ran up unnecessarily”.

(a) he engaged Mr AP to help get the Notices retracted by WorkSafe on the basis they were invalid;

(g) Mr AP should have asked the Court for an extension of time for him to file his appeal;

(h) WorkSafe retracted the Notices on 6 May 2014, which was in fact the last day for filing an appeal;

(i) as the appeal was deficient he would have been out of time to file an appeal if WorkSafe had not withdrawn the Notices on 6 May 2014;

(j) he obtained a second opinion from another lawyer, at further cost to him, which concurs with his view that 6 May 2016 was the last day for filing the appeal;

(k) Mr AP mounted his own “crusade” and did not keep him informed; (l) Mr AP’s bill is not transparent;

(m) the lawyers “refused to meet with [him] to discuss this issue directly with”

(o) he had to resort to making a request under the Local Government Information and Meetings Act 1987 (LGOIMA) to obtain information the lawyers should have given to him;

(q) the lawyers were precluded from pursuing recovery of their fees through the Disputes Tribunal because he had indicated an intention to lay a complaint with NZLS;

[11] Mr LE says he was rushed into making a hasty decision without having all the relevant information available to him, but does not say what decision that was. He was adamant that the practitioners’ files would disclose professional wrongdoing.

[12] Mr LE’s application dated 17 May 2016 came before me for directions in June

2016. Given the parties’ history, the Committee’s earlier decision on costs and the fact that the present complaint was dealt with by EIP, I wrote to the parties expressing a preliminary view. A cursory look at the materials was sufficient to be able to say with some confidence that there was no obvious reason to depart from the Committee’s view that further action was not necessary or appropriate and that there did not seem to be any compelling reason to seek further information from either party.

[13] Mr LE was invited to consider withdrawing his application for review. The parties’ attention was drawn to the discretion in s 210 of the Act to order either party to pay costs on review and a copy of the LCRO’s Costs Orders Guidelines was supplied.

[14] Mr LE remained adamant that the practitioners’ files should be made available on review because he was certain they would reveal evidence of wrongdoing on the part of the lawyers that could and should be considered in full by this Office. Mr LE wanted

to be heard in person on review. He maintained the lawyers had misled the Committee and there was evidence on their files that would prove it.

[15] This was Mr LE’s second complaint about the same lawyers. It had been processed through EIP with no inquiry made by the Committee. He had been offered an opinion on his prospects of success on review and given an opportunity to consider whether he should withdraw his review application with advice that consideration would be given to costs orders being made pursuant to the Guidelines. Given Mr LE’s absolute certainty that the lawyers’ files would contain damning evidence and support the serious allegation that the lawyers had misled the Committee, the lawyers were asked to produce their files for consideration on review.

[16] The lawyers provided their entire file and a fulsome response to Mr LE’s complaint. They say that the Disputes Tribunal ordered GDB Ltd to pay the unpaid balance of their fees on 27 May 2016, only days after Mr LE made the complaint that is at the heart of this review.

[17] The lawyers explained the services they had provided to Mr LE and responded in detail to each of the allegations he had made about their conduct. In summary, the lawyers maintain that there is no basis for an adverse finding. They describe Mr LE’s complaint and application for review as “incorrect, misleading and/or misconceived”. They do not accept they misled the Committee.

[18] The lawyers’ response sets out in detail how the retainer proceeded, includes an explanation of how Mr AP formed the view that the last day for filing the appeal “was potentially 5 May 2014”, records that Mr LE approved filing of the appeal on that day and confirms the Court accepted the appeal for filing but delayed allocating a hearing date to accommodate the parties’ endeavours to resolve the position on costs.

[19] The lawyers provided a copy of the costs ruling given by Judge Y on 31 August

2016. His Honour’s view, supported by submissions from WorkSafe and unopposed by the lawyers, was that GDB Ltd had until 6 May 2014 to file its appeal. His Honour said the argument that the appeal was invalid could not proceed because WorkSafe had withdrawn the Notices, so the Court was obliged to treat the appeal as filed on 5 May

2014. His Honour noted that WorkSafe accepted liability for some, but not all, of GDB

Ltd’s costs, considered quantum and awarded increased costs against WorkSafe, requiring it to also pay a contribution to GDB Ltd’s costs on the application for costs.

[20] Correspondence from Mr LE’s new lawyers confirms that WorkSafe paid the costs as ordered.

[21] At Mr LE’s request an applicant only review hearing was scheduled in Palmerston North on 20 April 2018. He attended. The lawyers were not required to attend and did not exercise their right to do so.

[22] 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.

[23] 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.

[24] The approach on this review has been to consider all of the materials that are available on review. In some cases those materials have been made available for the first time on review, notably the practitioners’ files, so were not considered by the Committee.

[25] I have formed my own view of the fairness of the substance and process of the Committee’s determination and have eliminated the possibility that the complaint or any part of it should be referred back to the Committee for reconsideration. Having carefully considered all of the available materials in detail, I have also provided an independent opinion relating to the lawyers’ conduct.

[26] The short answer to Mr LE’s complaint and to his application for review is that none of the materials available on review, including the lawyers’ files which contain a complete and coherent record of the retainer, disclose any evidence that supports the contention that the lawyers’ conduct was unsatisfactory. The files are a complete answer to the serious allegation that the lawyers misled the Committee. They did not. What is more troubling is that it is apparent from the materials that Mr LE knew that before he applied for a review.

[28] On 15 June 2014, Mr LE instructed Mr AP to pursue costs from WorkSafe, which he did. Mr AP sent Mr LE terms of engagement which referred to hourly rates and the work that would be done. There was no estimate, no fee cap and no suggestion that fees would be conditional on outcome.

[29] There followed some correspondence between both parties and the Court, copied to Mr LE, which resulted in the Court receipting the filing fee, processing the Notice of Appeal on 15 July 2014 and issuing a Notice of Callover date on 25 August

[30] Mr AP explained to Mr LE that with WorkSafe having withdrawn the Notices, the only remaining issue was as to costs on the appeal. Mr AP gave some advice on what Mr LE might realistically expect to recover by way of court ordered costs, and sent the first of his two invoices.

[31] Mr LE confirmed his instructions were that he wanted Mr AP to hold WorkSafe to account.

[32] As WorkSafe had by then accepted liability to pay some costs to Mr LE, Mr AP attended Court on 25 August 2014 prepared to argue that the Judge should order WorkSafe to pay Mr LE’s costs of around $4,000 there and then. Judge Y declined because the lawyer who attended Court for WorkSafe was not prepared for that argument. His Honour issued a Minute timetabling the filing of submissions and indicating a decision on costs would be made in chambers. Mr AP reported to Mr LE accordingly and on 3 September 2014 received Mr LE’s instructions to put WorkSafe on notice that Mr LE was seeking indemnity and increased costs and costs on the application for costs.

[33] WorkSafe indicated it would leave matters for the Court to determine. Mr AP filed submissions on 9 September 2014 seeking indemnity costs, increased costs and costs on costs. WorkSafe’s submissions in reply followed.

[34] Mr LE emailed Mr AP in October and December asking for updates on the application for costs and, inexplicably, asking if he had to pay the lawyers’ bill. Mr AP advised that he was awaiting the Court’s decision and would contact Mr LE when he had that. On 29 and 30 January 2015 Mr AP tried phoning Mr LE without success. Correspondence between Mr AP and Mr LE over the unpaid bill and the still- undetermined application for costs followed in February and March 2015 with Mr AP enclosing a further invoice, confirming his expectation that Mr LE would pay his bills and that the file would shortly be taken over by the firm’s credit controller. Mr LE requested a fee breakdown. That was provided.

[35] With no payment having been made by May 2015, Mr AP requested a payment proposal. Mr LE did not provide one but requested an update on the costs decision. Mr AP passed that on to the Court, which confirmed no decision had been issued, or was likely to issue, before July 2015.

[36] On 23 June 2015 Mr MC, the firm’s litigation partner, wrote to Mr LE confirming his expectation that Mr LE would pay the firm’s fees, and that the costs decision was a separate matter that made no difference to Mr LE’s responsibility for paying Mr AP’s fees. At that stage, the firm claimed a total of $10,113.99 including GST and disbursements. Mr LE’s responses on 7 July 2015 are indicative of an increasing level of exasperation on his part and included an indication that he intended to make a complaint to NZLS. He followed up with demands for justification of the time recorded, claims that Mr LE had done most of the work himself, allegation that Mr AP misled Mr LE over fees and reference to an “estimate” Mr LE says Mr AP gave him over the phone. Mr LE said he would pay the estimated amount and dispute the rest.

[38] Correspondence continued with Mr LE saying he would pay $2,000 and Mr MC politely rejecting that suggestion, saying Mr LE had not been given an estimate and confirming no decision on costs had been received from the Court. Mr LE accused the lawyers of extortion. Mr MC confirmed he remained open to a meeting to discuss a way forward.

[39] Mr AP followed up with the Court on 28 January and 23 February 2016, latterly asking whether the Court required a formal application for removal as lawyers of record for Mr LE. The Court then sent Mr AP a copy of Judge Y’s Minute of 12 February 2016, which does not appear earlier on the lawyers’ file. Mr AP responded confirming that he was no longer acting for Mr LE, and suggested the Court might contact Mr LE to obtain the submissions he had filed for Mr LE in September 2014, because he provided those to Mr LE along with everything else that was relevant. The file then moved on to debt recovery.

[40] Nowhere on the file is there any evidence that either of the lawyers breached any duties owed to Mr LE, nor is there evidence of any act or omission on the part of either lawyer that could be connected in any way with loss suffered by Mr LE or his company. The lawyers did the work. No professional standards were breached. It has been known for some time that the fee was fair and reasonable. The lawyers are entitled to be paid a fair and reasonable fee. There are no circumstances that could justify ordering the lawyers to pay statutory compensation to Mr LE. There is absolutely no information to suggest the lawyers misled the Committee about anything they had done, or failed to do.

[41] As Mr LE says, he engaged Mr AP to help get the Notices retracted by WorkSafe on the basis they were invalid. Mr AP did that, with some support from the information Mr LE supplied.

[42] Mr AP did not miscalculate 5 May 2014 as the last day for filing the appeal. Mr AP calculated the two possible options, 5 and 6 May, and selected the one that best served Mr LE’s interest in definitively preserving his right to appeal and securing an ability to seek costs against WorkSafe. If there was no appeal there was no basis on which to apply for Court ordered costs. It is accepted that there was another day’s leeway. If there is more than one alternative, which there plainly was, it was better to err on the side of caution which Mr AP did. No conduct issue is raised. If he had filed the appeal on the 6th and later found it was out of time, Mr LE would have lost the statutory right of appeal and the right to seek Court ordered costs against WorkSafe.

[43] It is abundantly clear from Mr AP’s timesheets that his costs were not, as Mr LE contends, minimal on 5 May 2014. By 5 May 2014, Mr AP had taken Mr LE’s instructions, considered the relevant regulations, researched the HSEA, calculated the timeframe for filing the appeal, drafted correspondence to WorkSafe, finalised and sent that, perused and considered correspondence from WorkSafe and done more research, drafted and finalised the Notice of appeal and filed that. Service was effected on WorkSafe the same day. All of the attendances captured in the timesheets, at an hourly rate of $300 worked out to a value of $3,150.

[44] As Judge Y later said, the argument that Mr AP “misfiled” the appeal on 5 May

2014 without the appropriate Notices attached cannot be advanced. The proposition cannot be tested because the appeal did not proceed. This Office cannot determine that issue on review.

[45] It is difficult to understand why Mr LE believes Mr AP should have asked the Court for an extension of time for him to file his appeal. The appeal was filed well within time. No extension was necessary. Furthermore, applying for an extension if the appeal had been filed late would have cost Mr LE considerably more, and attracted the risk of failure given there is often no flexibility with statutory filing dates.

[46] There is no doubt that WorkSafe retracted the Notices on 6 May 2014. Whether that was the last day for filing an appeal has not been argued in the proper forum. It is not accepted that the appeal was deficient or that any deficiency could not have been remedied before the statutory deadline. A second opinion from another lawyer may be right or wrong. The argument cannot be advanced on review.

[47] The contention that Mr AP mounted his own “crusade” and did not keep Mr LE informed is, quite simply, unsupportable. Mr AP’s file contains numerous examples of him telling Mr LE what was going on, seeking instructions and requesting confirmation from Mr LE as to whether he wanted to continue. Sometimes Mr LE was hard to reach, sometimes Mr AP was not immediately available. No conduct issue arises. Mr LE told Mr AP on several occasions that he wanted WorkSafe to pay. His application was successful. While success is not the only measure of the quality of representation, it can be, and in this case is, a reliable indicator.

[48] Mr LE’s fee complaint was determined by a Committee in the earlier decision. The statutory jurisdiction under the Act is exhausted. As no determination of unsatisfactory conduct can now be made in respect of the lawyers’ fees, there is no statutory basis on which to reduce them. As the fee complaint has been determined, whether or not Mr AP’s bill is transparent is largely irrelevant. However, having looked

at the materials supplied to Mr LE in relation to fees it is fair to observe that the information he had was detailed, clear and is well supported by Mr AP’s time records. Mr LE has had those for quite some time.

[49] Mr LE’s assertion that the lawyers refused to meet with him to discuss the issues he raised directly with him is patently untrue. Mr AP’s notes contain a clear record of open communication with Mr LE, even after he must have begun to suspect Mr LE may not pay his bill. Virtually all of the communications between Mr MC and Mr LE over several months are to the effect that, if Mr LE wanted to meet, Mr MC was open to that suggestion. Amongst the last of the correspondence on Mr AP’s file is an email from Mr MC in October 2015 confirming to Mr LE that he had always been open to meet with him and remained so, even if it probably would not be helpful. There is no basis on which to contend Mr MC was even slightly unwilling to meet.

[50] Mr LE says he asked the lawyers for information they did not provide but he does not say what he is referring to. If he is talking about information that was in the lawyers’ files, that information was copied to him as the matter progressed. If that is not what Mr LE is referring to, the proposition is too vague to be advanced.

[51] Mr LE says he had to resort to making a LGOIMA request to obtain information the lawyers should have given to him. As there is no basis on which to say that lawyers are subject to LGOIMA, it is difficult to translate this into a valid criticism of them, even if, as he says the reply to his LGOIMA request did not include the Judge’s decision. The retainer had come to an end long before the Court issued the decision. As a party, Mr LE could have requested a copy from the Court.

[52] Mr LE says the lawyers were precluded from pursuing recovery of their fees through the Disputes Tribunal because he had indicated an intention to lay a complaint with NZLS. This is not correct. The lawyers’ recovery of their fees would have been stayed by s 161 of the Act until the complaint was determined. Recovery is not stayed by the threat of a complaint. It is stayed by a Standards Committee giving notice to a lawyer that it has received a complaint pursuant to s 132(2) about the amount of a bill of costs rendered by that lawyer. As the fee complaint had already been finally disposed of under the Act, the statutory stay had run its course. It, too, was exhausted.

[53] There is no evidence anywhere of Mr AP having disregarded any of his obligations of client care to Mr LE. There is no evidence of Mr AP or Mr MC having misled NZLS “around the misfiling and incorrect premature filing of the appeal”.

[54] Mr LE says he was rushed into making a hasty decision without having all the relevant information available to him. That criticism is too vague to be advanced.

[55] Mr LE’s conviction that the practitioners’ files would be a fount of evidence of professional wrongdoing is baseless. Worse, given the communications he had with and from the lawyers, the allegation is misleading. The evidential obstacle Mr LE cannot overcome is the fact that he did not instruct the lawyers to withdraw the appeal after they had filed it because he wanted to reserve his position on his commercial losses and recover costs from WorkSafe. Without the appeal, there was no basis for Mr LE to pursue an application against WorkSafe for costs. Court ordered costs cannot be pursued in a vacuum.

[56] A careful review of the lawyers’ file discloses absolutely no evidence of any conduct on the part of either lawyer that could possibly be said to fall below a proper professional standard. There is no evidence that supports Mr LE’s contentions to that effect. There is also no evidence whatsoever that the lawyers misled the Committee.

[57] There is no evidential or other basis on which to depart from the Committee’s

[58] Section 210 of the Act provides an LCRO with discretion to order Committees and parties to contribute towards the costs of reviews. The costs of the complaint and disciplinary mechanisms under the Act are otherwise met through a levy paid by all New Zealand lawyers. The Guidelines to which the parties were referred by this Office are relevant to the exercise of that discretion. They include the following as one in a list of considerations that may be relevant in deciding whether to make a costs order on review:

[59] As mentioned above, Mr LE made a complaint about the lawyers’ fees. That was determined. He came back with a second complaint about the lawyers’ conduct and the services they had provided which was also an attack on their fees. The Committee dealt with the second complaint in a summary fashion, through EIP. Not satisfied with that decision, Mr LE exercised his right to seek a review. He was given an opinion to the effect that his complaint appeared baseless and he might wish to reconsider or face the risk of a costs order being made on review. None of this is particularly unusual in the complaint and review jurisdiction.

[60] What marks Mr LE’s conduct out in the course of the review process that followed is his adherence to the assertion that the lawyers had deliberately been misleading in their dealings with the Committee over the complaint, when he knew that was not the case.

[61] Mr LE knew that there was the potential for uncertainty over the deadline for filing the appeal because Mr AP had given him advice and he had instructed Mr AP to file on the 5th. Mr LE knew WorkSafe had withdrawn the Notices because WorkSafe sent notification of withdrawal directly to him in the afternoon of 6 May 2014. Mr LE knew the lawyers were obliged to proceed with the costs claim because he had instructed them to file the appeal and had instructed them to continue.

[62] Mr LE knew Mr AP had not mounted his own “crusade” without keeping him informed because, as Mr AP’s file clearly demonstrates, he and Mr AP had been in touch regularly in the lead up to the filing of submissions. Mr LE also knew that the lawyers had not refused to meet with him at any stage. Even as matters deteriorated, it is clear Mr LE knew Mr MC was willing to meet, albeit there may have been little point, because he replied to the email in which Mr MC told him that. Mr LE knew his costs were not minimal on 5 May 2014 because by the time he levelled that allegation, he had seen the lawyers’ timesheets.

[63] It was misleading for Mr LE to say that Mr AP had completely disregarded his obligations of client care. Mr AP had regard for his obligations of client care throughout the retainer.

[64] The lawyers describe Mr LE’s complaint and application for review as “incorrect,

[65] It is rare for this Office to make costs orders against a lay complainant on review. However, the circumstances set out above are unusual. Preliminary views are not commonplace, but should be an efficient way of disposing of a review when it is tolerably clear from a cursory look at the materials that were before a Committee that further action is unlikely to be necessary or appropriate.

[66] An allegation that lawyers have misled a Committee is a serious allegation to make. Such allegations should only be made and pursued where there is a clear, firm evidential basis. Mr LE knew from all of his dealings with the lawyers, that his complaint that it had misled the Committee lacked a proper evidential basis.

[67] In the circumstances, an order that Mr LE contribute $500 to the costs of this review is made. That is less than half the Guideline amount for a straight forward review

where there has been a hearing in person, in recognition of the fact that Mr LE is a lay person, not a lawyer.

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

LE v AP [2018] NZLCRO 75 (20 August 2018)