QT v UF [2018] NZLCRO 78 (24 August 2018)

	Home \| Databases \| WorldLII \| Search \| Feedback New Zealand Legal Complaints Review Officer

	LCRO 144/2016
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	QT Applicant
AND	UF _Respondent

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

[1] Mr QT, a lawyer, of [Law Firm A] (the firm) has applied for a review of two decisions by the [Area] Standards Committee [X] (the Committee).

[2] In its first decision, as to conduct (the 6 May conduct determination), the Committee found that Mr QT first, had a conflict of duties when he acted for Ms UF, as the lender on a loan transaction as well as acting for the borrower and covenantor, and, secondly, had not provided Ms UF with competent advice. In doing so, Mr QT had contravened the relevant rules in the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (the rules) which constituted unsatisfactory conduct.

[4] In September 2008, Ms UF was in a relationship with Mr RP, who owned a business which traded under the name of [Company A]. Mr QT had acted for both Mr RP and [Company A] for a number of years.

[6] On 10 October 2008, both Mr RP and Ms UF attended at Mr QT’s office for the purpose of documenting the loan. Mr QT had prepared a term loan agreement which Mr RP signed on behalf of [Company A] as a director and in his personal capacity as a covenantor.

[7] The following month, on 5 November 2008, Mr RP, both on behalf of [Company A] and as a covenantor, signed a purchase security agreement pursuant to which [Company A] provided Ms UF with security for the loan over two motor vehicles and a trailer.

[9] At the foot of the term loan agreement Ms UF signed an acknowledgement drafted by Mr QT:

I do not want to see another lawyer but within 14 days [Mr RP] [Company A] will either reduce the debt or give further security of another vehicle – failure of that reduce the term from one year to one month.

[10] Ms UF says that [Company A] paid interest on the loan “for the first few months” and it was “not until the payments stopped that [she] was aware of [Mr RP] having money problems with his trucking business” which “went into liquidation”.

[11] In November 2009, Ms UF sought legal advice. Her lawyer at that time requested the loan documents from Mr QT, which he produced after Ms UF had paid his invoice issued to [Company A] and Mr RP in respect of his preparation of the term loan and security agreements.

[13] She complained that Mr QT should not have acted for her, as well as for [Company A] and Mr RP, on the preparation of the loan and security agreements. She claimed that instead, Mr QT ought to have referred her to another lawyer for independent advice.

[14] She stated that in reliance on Mr QT’s advice to her on 10 October 2008, she had proceeded with completion of the loan and security documents. She says a year later, when she became aware that [Company A] had gone into liquidation, she commenced proceedings to recover the loan.

(a) Mr RP “made arrangements” for her “to visit” Mr QT on 10 October 2008 “to sign a loan agreement and to set up the charges to protect [her] investment”;

(b) at the meeting that day Mr QT asked Mr RP to leave the room. A member of the firm took Mr RP’s place whilst Mr QT explained the loan agreement to [Ms UF] and advised her that she “would have first charges on [Mr RP’s] assets to protect [her] investment”;

(c) she “signed a purchase security agreement”. Mr QT told her “that the security charges would be sorted and [she] would be sent the paperwork”;

(d) whilst the personal property securities registry had notified her of the charges, Mr QT did not send her copies of the loan and security documents; and

(e) she paid Mr QT’s invoice issued to Mr RP and [Company A] to uplift the loan documents from Mr QT.

[16] In the 6 May conduct determination, the issues identified by the Committee were first, whether Mr QT was acting for Ms UF and secondly, if not, then what duties did he owe Ms UF?

[17] The Committee found that Mr QT had acted for Ms UF for the following reasons:

(a) Had he not been acting “there would have been no need to get [Ms UF] to sign a document confirming that she had been offered the chance to see an independent lawyer”, namely, “a waiver of independent legal advice”.

I was very clear with Ms UF that it was very questionable as to whether the security would be effective. I explained to [Ms UF and Mr RP] that where security is given for a past advance, the security can be avoided.

(c) Mr QT’s requirement, in his response to Ms UF’s request to him in November 2009 for the loan and security documents, that she pay his invoice relating to the preparation of those documents before he would release them to her. In the Committee’s view, because Mr QT “did not claim that the documents and file belonged” to [Company A] or Mr RP his “right to withhold the documents could only be on the basis that he was acting in the transaction for Ms UF”.

[18] The Committee made the further finding that because Mr QT “could never have been in a position to discharge his obligations to both parties” he had contravened rr 6, and 6.1.1 In support of that conclusion the Committee noted that Mr QT had acknowledged in his submissions first, he knew [Company A] “was in financial difficulty”; secondly, Ms UF’s “decision to lend money to [[Company A] was] foolish”; and thirdly, in such circumstances Ms UF would have had little chance of recovery of the loan.

[19] The Committee also found that, in contravention of r 3, Mr QT had not provided competent advice to Ms UF insofar as Mr QT ought to have, first, advised Ms UF “not to sign the [loan] documents”, and secondly, provided “further advice to endeavour to obtain additional security or take action to recover the loan funds”.

[20] Having called for and received submissions from the parties on appropriate orders, the Committee issued its penalty determination dated 16 June 2016.2

[21] In reaching its decision to order both a fine and compensation, the Committee stated that it took into account Mr QT’s “previous disciplinary history, noting that he [had] previous findings of unsatisfactory conduct against him” and “a fine [was] necessary to

[22] The Committee ordered that Mr QT pay a fine of $7,500, reduced from $10,000, for the reasons first, in October 2008, at the time of Mr QT’s conduct, the rules had been in force for just over two months, and secondly, many lawyers were still “coming to grips with the higher standards imposed by rule 6.1”, and “assumed that prior informed consent was sufficient to cure any conflict issues”.

[23] Because Ms UF had advanced the loan to [Company A] before she met with Mr QT and Mr RP on 10 October 2008, and did not obtain independent legal advice as suggested by Mr QT, the Committee did not consider that Mr QT’s conduct was “the direct cause of the losses [Ms UF] suffered”, or that it was possible “to determine whether [Ms UF] would have been able to recover her money or obtain better security”.

[24] However, the Committee did consider Ms UF was “entitled to be compensated”:3

(a) $2,500.00 for stress and anxiety suffered by her “as a result of Mr QT’s inadequate advice”; and

[25] Mr QT forwarded his application for review of both determinations, in which he seeks to overturn the Committees findings, to this Office by email on 21 June 2016. The following day, 22 June 2016, this Office received from him both the original of his application, and the filing fee of $50.

[26] He claims that by having emailed his application to this Office on 21 June 2016 he had complied with the statutory 30 working days time limit within which an application for review of a Standards Committee’s decision must be filed in this Office.4

(b) did not provide her with incompetent advice because she did not sign either the term loan agreement or the purchase security agreement.

[28] He disagrees with the Committee’s reasoning that his request to Ms UF that she pay his invoice addressed to Mr RP and [Company A] also supported the Committee’s finding that he acted for Ms UF.

(a) alleges bias by the Committee on the grounds that he had assisted a former client of one member of the Committee, Mr JK, to make a complaint against Mr JK. He requests that the Committee’s determinations “be set aside, declared voidable or void”;

(b) contends that the “quantum of compensation and the fines and costs were excessive having regard to the circumstances”; and

(c) claims it was unfair of the Committee first, not to inform him “what disciplinary history the Committee was going to take into account” in its consideration of the appropriate orders, and secondly, not to give him the opportunity to respond or explain. He says as at October 2008 he had been in practice for “just over 37 years” and had “had no disciplinary action taken against [him] for any matter”.

[30] Mr QT submits that his invoice in respect of his preparation of the term loan agreement and the purchase security agreement, which was addressed to [Company A] and Mr RP for whom he was acting exclusively, is evidence that he was not acting for Ms UF. He says Ms UF’s lawyer did not protest when in November 2009 [Mr QT] requested payment of that invoice before [Mr QT] handed over those documents to Ms UF.

[31] In her response dated 3 July 2016, Ms UF states that if Mr QT had advised her not to proceed with the loan documentation without first obtaining separate legal advice, then she would have seen another lawyer who would have advised her “not to sign the documents”. She says she could then have had Mr RP “repay the loan” by selling “two trucks”.

[32] Ms UF says she paid Mr QT’s invoice in respect of his preparation of the loan and security agreements. She says “the stress and anxiety caused from losing [her] financial security [had] been a lesson in life”.

[33] Referring to her meeting with Mr RP and Mr QT on 10 October 2008, she says that:

(a) she informed Mr QT that she trusted he would give her “good legal advice” because he had acted for Mr RP “for a number of years so he knew the business well”; and

(b) Mr QT explained the loan agreement to her. [34] From her own inquiries, Ms UF says that:

(a) the purchase security agreement which Mr QT prepared to document the security for the loan was not the correct form of security;

(b) the security agreements were provided and dated after the loan was made, and a month after the loan agreement had been entered into; and

(c) the security agreement, which was intended to provide security over the two motor vehicles, and the trailer, did not provide “any form of valid security” over [Company A] itself.

[35] This review was progressed by way of an applicant only hearing in Auckland on

[36] 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.

[37] 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.

[38] 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.

(a) Did Mr QT file his application for review of the 6 May conduct determination within the 30 working days statutory time limit which commenced from the date of service of that determination on him?

(b) Was Mr JK disqualified, because of bias, from participating in the Committee’s deliberations on Ms UF’s complaint. If so, ought the determinations be set aside and the matter returned to the Committee for re-consideration?

(ii) compensation first, of $2,500 for stress and anxiety suffered by Ms UF, and secondly, $1,026.25 to reimburse Ms UF for having paid Mr QT’s invoice issued to Mr RP and [Company A]?

(b) be lodged with the Legal Complaints Review Officer within 30 working days after a copy or notice of the determination, requirement, or order made, or the direction given, or the performance or exercise of the function or power, by the Standards Committee (or by any person on its behalf or with its authority) is served on, given to, or otherwise brought to the attention of, the applicant for review (which, in the absence of proof to the contrary, is presumed to have occurred on the fifth working day after

[41] There are two important aspects to s 198. First, that applicants have adequate time to file an application for review; and secondly, applicants are required to file their

applications promptly. This is consistent with the statutory objective of having complaints dealt with expeditiously.7

[42] To ensure that there is sufficient time for an application for review to be lodged, the section provides that the 30 working days period runs from the day after the determination is “served on, given to, or otherwise brought to the attention of” an applicant.

[43] The second part of s 198(b), the presumption of service, need only be addressed if it is not clear when the applicant was provided with a copy of the determination in circumstances where the determination has not been served on, or given to the applicant.8

[44] The requirements of s 198 are mandatory. Other than the ability for applicants to rebut the presumption that the decision was “served on, given to, or otherwise brought to the attention of” them within five working days after the decision was “made, given, or performed or exercised” there is no statutory discretion to relax the time limit.

[45] The responsibility to make an application within the 30 working days period rests with the applicant. This position is emphasised in previous decisions of this Office. A Review Officer has no discretion to extend that time limit.

[46] It is also important to note that an application for review is not lodged unless it is in the prescribed form and accompanied by the necessary filing fee. This means that both must be lodged within the 30 working days period.

30 working days after the determination...”, together with the fee. There can be no lodgement of documents after the closing time of the Registry, which is generally recognised to be between the normal working hours of

5:00 p.m. on a business day would not be effective (although in the circumstances considered by the Court service by facsimile prior to 5:00 p.m. was effective.) In this case the review application was lodged with this office the following day, when staff were in a position to receive and date stamp it, this being 19 April.

8 See discussion of the history of s 198 in QB v PC LCRO 205/2017 (19 December 2017) at [14]–

[48] Two issues arise in respect of Mr QT’s claim that he filed his application for review of the 6 May conduct determination in this Office within the stipulated 30 working days period for doing so. First, whether that determination is reviewable independent of the later 16 June orders determination. Secondly, on what date was the 6 May conduct determination served on, given to, or otherwise brought to the attention of Mr QT, and as a consequence, when did the 30 working days’ time limit expire?

[50] Standards Committees are empowered to make determinations on matters including unsatisfactory conduct, referral of a matter to the Disciplinary Tribunal, to take no further action, or in respect of orders.10

[51] Standards Committees must give notice of determinations to the relevant persons concerned who may apply to this Office for a review.11

[52] It follows that rights of review existed in respect each of the 6 May conduct determination and the 16 June penalty determination independent of the other and not together as one determination.

[53] Mr QT’s position is that because he had been out of his office “for a good part”

of 6 May, he did not see the 6 May conduct determination until the following Monday, 9

[54] As noted above, the Committee’s 6 May conduct determination, in which it made findings of unsatisfactory conduct against Mr QT, was sent by the Lawyers Complaints Service to Mr QT by email on 6 May 2016 at 10.06 am accompanied by an explanatory letter of the same date. A paper copy of both the determination and the letter was posted

_{to Mr QT that day and was received by him, as he acknowledges, on 9 May
2016.}

11 Sections 158 and 193–194; See also Lydd v Maryport LCRO 164/2009 (19 October 2009) at [17], [30]; Duncan Webb, Kathryn Dalziel, Kerry Cook, Ethics, Professional Responsibility and the Lawyer (3rd ed, LexisNexis, Wellington, 2016) at [4.4.2], 139.

[55] The Committee’s 16 June penalty determination was sent to Mr QT by the Lawyers Complaints Service that same day. As with the 6 May conduct determination, a copy of the 16 June penalty determination, accompanied by a letter from the Lawyers Complaints Service of the same date, was posted to Mr QT that day and received by him, as he also acknowledges, on 17 June 2016.

(a) the Law Society had advised that the 6 May conduct determination had been served on Mr QT by email that same day;

(b) it followed that the 30 working day time period for filing an application for review commenced on the following working day, Monday 9 May 2016; and

(c) although Mr QT’s “incomplete application” was received on 21 June 2016, his complete application, which included the filing fee, was received on Wednesday, 22 June 2016. That was 2 working days outside the 30- working day time limit which commenced on 9 May 2016 and expired on Monday, 20 June 2016.13

[57] The following day, 23 June 2016, this Office informed Mr QT that first, although his application had been filed out of time in respect of the 6 May conduct determination, it was within time in respect of the 16 June penalty determination and secondly, his $50 filing fee would be applied towards a review of that determination.

[58] This Office subsequently confirmed to Mr QT on two occasions that his application had been filed out of time, and his argument that there was “only one determination [was] not accepted”.

[59] Increasingly, email has become the main means of written communication, no less between lawyers and their clients, between lawyers, and between lawyers and other members of the business community. The Act imposes no impediment on either the Lawyers Complaints Service or this Office using email as the prime means of notifying

12 Calculation of the 30 working days period which commenced on Monday 9 May 2016 and expired at 5.00 pm on Monday 20 June 2016 accounts for the Queen’s birthday public holiday on Monday 6 June 2016, which is not a working day: Interpretation Act 1999, s 29.

13 As noted earlier although this Office received Mr QT’s application by email on 21 June 2016,

the parties of the progress of proceedings, and the eventual outcome of the complaint and review processes respectively.

[60] I expect it is for that reason Mr QT does not take issue with the manner in which he was served with the 6 May conduct determination. Whilst he acknowledges he received that determination by email that day, as noted, he says he was out of his office for part of that day and “did not see” the email until Monday 9 May.

[61] However, even though he was out of his office for part of 6 May, it is more probable than not that if he did not have external access to his email, at various times during the day, he would have been in communication with his colleagues in the firm who would have kept him appraised of communications received in his absence.

[62] The result is that I consider Mr QT was served with the 6 May conduct determination by email on 6 May 2016. It follows that because his application for review

— comprising both his completed application form, and filing fee — was not received by this Office until 22 June 2016, it was filed 2 working days out of time. I must therefore decline jurisdiction to consider Mr QT’s application for review in respect of the 6 May conduct determination.

[63] Even if I was to accept, which I do not, Mr QT’s argument that he was served on Monday 9 May, because his application, comprising both the application itself and the filing fee, was not received by this Office until 22 June 2016, he still missed the 30 working days deadline by 1 working day.

[64] The “test for apparent bias” has been described by the High Court as:14

the governing principle that, subject to qualifications relating to waiver or necessity, a Judge is disqualified ‘if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide.

14 Saxmere Company Ltd v New Zealand Wool Board Disestablishment Co Ltd [2009] NZSC 72, [2010] NZLR 35 at [3] per Blanchard J.

gives effect to the requirement that justice should both be done and be seen to be done, ... which reflects the fundamental importance of the principle that the tribunals ... be independent and impartial.

[66] This ensures “public ... confidence in [the judicial system] and the judiciary who serve in it”.16

[67] Mr QT alleges bias by Mr JK, a member of the Committee, because Mr QT had advised a former client of Mr JK concerning a complaint made by that former client against Mr JK.

(a) because Mr JK was “in charge of the [former client’s] file” it was not therefore possible for [Mr JK] to have “brought a dispassionate and objective view to the determination” of Ms UF’s complaint against him;

(b) it is “unnecessary to establish the presence of actual bias”, and “a reasonable person acquainted with the outward appearance of the hearing would have reasonable grounds for suspecting bias”; and

(c) if “one member of a Tribunal is subject to disqualification for the likelihood of bias, then the proceedings should be set aside, notwithstanding that the other adjudicators were not so disqualified”.

[69] In response to a request by this Office to the Law Society for comment by Mr JK

(a) having received the Committee’s 6 May conduct determination, Mr QT “rais[ed] a protest about [Mr] JK being a member of the Committee that determined the complaint against him”;

(b) prior to considering the parties’ submissions on penalty, the Committee considered Mr QT’s concerns about Mr JK being involved in the Committee’s deliberations on Mr QT’s matter. The outcome was that the Committee “did not consider that the allegations met the Saxmere ... test

_{for bias”, and therefore, as recorded in the Committee’s
minutes, “it did}

(d) whilst Mr JK “acknowledges that Mr QT may have advised [Mr JK’s] [former] client in relation to the formulation of the complaint”, [Mr JK] “[did] not consider the matter is a personal issue and assumed that Mr QT would have brought a dispassionate and objective view to his advice to [Mr JK’s] former client”; and

(e) as a lawyer and a member of a Standards Committee, Mr JK’s concern was whether the rules had been contravened as alleged by Ms UF. He was “confident that he would have brought a dispassionate and objective view” to Ms UF’s complaint against Mr QT.

[70] Mr QT’s argument that Mr JK could not have brought a dispassionate and objective view to [Mr JK’s] participation in the Committee’s consideration of the 16 June penalty determination suggests that Mr JK’s views were perhaps coloured by some ill will, or resentment on his part towards Mr QT for having assisted Mr JK’s former client to make a complaint against Mr JK.

[71] However, as Mr JK has himself stated, it was not Mr QT who made the complaint against Mr JK, but Mr JK’s former client. The circumstances of that complaint had neither a connection with, nor anything to do with, Ms UF’s complaint about Mr QT’s conduct either in fact, or in time.

[72] In a previous decision of this Office it was pointed out that, “[i[t would be expected that practitioners appointed to Committees would have a good awareness of, and indeed an acute sensibility to, conflict issues and any bias”.17 Equally, Standards Committees “must exercise and perform [their] duties, powers, and functions” in accordance with the rules of natural justice.18 For that reason any Committee which made a determination without complying with the rules of natural justice would leave

[73] It must also be noted that this Office plays no part in the appointment of Standards Committee members. Because decisions related to such appointments do not constitute a determination, order or direction, there is no right of review in this Office pursuant to s 194 of the Act.

[74] For these reasons, I am not persuaded by Mr QT’s claim that “a fair minded lay observer might reasonably apprehend” that Mr JK “might not bring an impartial mind” to the Committee’s deliberations. It is my view that the fact Mr QT assisted Mr JK’s former client in these particular circumstances would not have disqualified Mr JK from participating in the Committee’s deliberations on matters concerning the 16 June penalty determination.

[75] It follows that in the absence of any other evidence produced by Mr QT, no question arises that any other member of the Committee, or the Committee as a whole was similarly disqualified by the circumstances of Mr QT’s assistance provided to Mr JK’s former client.

[76] Having made a finding of unsatisfactory conduct, section 156 of the Act includes among the orders that a Standards Committee can make, orders in the nature of penalty. In this regard, the functions of penalty in the disciplinary context have been described by the Court of Appeal as:19

[77] The starting points for penalty are the seriousness of the conduct and culpability of the lawyer concerned. Mitigating and aggravating features, as applicable, are also taken into account. Acknowledgement by the lawyer of error, and acceptance of

[78] The fundamental obligations of lawyers underscore that subject only to a lawyer’s overriding duties as an officer of the High Court, a lawyer has an obligation to protect clients’ interests.20 This obligation is carried through into the rules, in particular r 6, which imposes a duty on lawyers when acting for clients “within the bounds of the law and [the] rules [to] protect and promote the interests of the client to the exclusion of the interests of third parties”.

[79] In the circumstances of this review Mr QT has been found by the Committee to have contravened rr 6 and 6.1, which emphasises that obligation and duty by prohibiting a lawyer from acting:

for more than 1 client in any circumstances where there is a more than negligible risk that the lawyer may be unable to discharge the obligations owed to one or more of the clients.

[80] The maximum fine available under the Act is $15,000.21 Although in setting a penalty for Mr QT’s contraventions the Committee took into account that the rules, in particular r 6.1, had been in force for barely two months, nonetheless the Committee regarded the contraventions as sufficiently serious to order a substantial fine of $7,500.

(a) his conduct occurred seven years before Ms UF made her complaint to the Law Society;

(c) Ms UF was “confused because she said she signed a purchase security agreement (which she did not)”. The term loan agreement was signed by [Company A] and Mr RP, not by Ms UF;

(d) because Mr RP had informed Mr QT “there were problems over the availability of the vehicles” which were “already under security on 5

(e) by 10 October 2008, when Mr RP instructed Mr QT to document the loan, Ms UF had already advanced the loan to [Company A];

(f) [Company A] and Mr RP had no additional property to offer Ms UF as security for the loan; and

(g) because the loan was a term loan, not an upon demand loan, there was no opportunity for Ms UF to call up the loan unless [Company A] was unable to provide further security.

[82] Again, I am not persuaded by Mr QT’s argument. In my view, mindful as he was of [Company A]’s financial difficulties it ought to have been obvious to him that there was a risk, way above “a more than negligible risk”, that he would not be able to discharge his professional duties to Mr RP and [Company A] on the one hand, and Ms UF on the other hand, if he was also to advise Ms UF, which the Committee found he did. I observe that there would have been a clear conflict between Mr QT’s duty of confidence owed to Mr RP and [Company A] on the one hand, and his duty to Ms UF on the other hand to disclose to her their information that was “relevant to the matter”.22

[83] Mr QT also claims he was not treated fairly by the Committee because the Committee did not, before making the orders, first disclose to him his disciplinary history which the Committee considered before making its 16 June orders determination.

[84] In his submissions, Mr QT stated that by October 2008 he had “been in practice for just a little over 37 years”, and “believe[d] that at [that] time ... [he] had no disciplinary action taken against [him] for any matter”. At the hearing, he said although he was aware of three Standards Committee findings against him in respect of which he had applied to this Office for reviews, he remained unaware of his disciplinary history taken into account by the Committee.23

[85] Since the hearing, the Law Society has informed this Office that it has no record of any adverse disciplinary findings against Mr QT as at October 2008. I can only presume that the findings to which the Committee refers in the 16 June penalty

23 Mr QT referred to two Standards Committee decisions of no further action having been upheld by this Office, and the third partly upheld by this Office.

[86] For that reason, to the extent that the Committee took into account “previous findings of unsatisfactory conduct” against Mr QT, it is appropriate that I make allowance for the fact that as at October 2008 Mr QT did not have any adverse findings noted against his disciplinary record.

[87] Section 156(1)(d) of the Act provides that an order for compensation may be made where it appears that any person has suffered loss by reason of any act or omission of a lawyer.

[88] I note that the ability to compensate for anguish and distress in the lawyer-client relationship has been recognised by the courts, and by this Office which has accepted that orders to provide compensation for personal stress and anguish may be made pursuant to that section.24

[89] The circumstances in which compensation on this basis has been awarded vary widely, but in general terms, there must be something more than the stress associated with the complaint itself. For example, in the first of the previous decisions of this Office referred to, the lawyer’s firm had acted for both parties in the sale and purchase of a business in circumstances where the lawyer was held to have had a clear conflict of duties owed to each client. In the second decision, the lawyer concerned had wrongfully terminated a retainer. Compensation was ordered in respect of the stress suffered by the complainant in having to arrange new representation in the litigation in which he was involved, and the general disruption to his business and personal affairs. 25

[90] There is no punitive element to an award of damages for anxiety and distress. Such an award is entirely compensatory.26

— an award of $2,500; Wandsworth v Ddinbych & Keith LCRO 149 & 150/09 (5 March 2010) — an award of $1,200. An award of compensation would be appropriate for anxiety and distress where it can be shown to have occurred, and is consistent with the consumer protection purposes of the Act: s 3(1)(b).

[91] Ms UF refers to the stress and anxiety she has suffered, not just as a consequence of “losing” her “life savings ... and financial security”, but also from the knowledge gained from making her complaint against Mr QT that, as he has acknowledged, he knew at the time he prepared the term loan and security documents that [Company A] “was in financial difficulty”.

[92] Mr QT submitted to the Committee that he was not the cause of Ms UF’s loss. However, he has not made any specific comments directed towards the Committee’s order of compensation for stress and anxiety suffered by Ms UF as a consequence of his contravention of the rules.

[93] In such circumstances, and also for the reason, as found by the Committee, that Mr QT acted for more than one client in circumstances where the rules prohibited him from doing so, and provided Ms UF with inadequate advice, I make no interference to the Committee’s order that Mr QT pay Ms UF compensation in the sum of $2,500 for anxiety and distress held by the Committee to have been suffered by Ms UF.

$1,026.25 in respect of “preparing and registering security instrument in favour of [Ms] UF”. This comprised Mr QT’s fee of $850 plus GST of $106.25, registration (including GST) of $70.

[95] Mr QT says that in November 2009 he received an authority from Ms UF’s lawyer to uplift the loan documents from him. He says he requested Mr RP first, to pay the outstanding invoice, and secondly, for his permission to hand over the documents to Ms UF’s lawyer. He says Mr RP informed him that if Ms UF paid the invoice then [Mr QT] could provide her with the documents.

[96] The term loan agreement provided for payment by Mr RP and [Company A] of costs in relation to preparation of that document and registration of any security interest, costs on default and Ms UF’s legal costs. The invoice was issued to Mr RP and [Company A]. It was not Ms UF’s responsibility to pay the invoice.

[97] No evidence has been produced that Ms UF incurred any costs with Mr QT in this matter in respect of which he issued an invoice to her. In my view, it follows that Mr QT was not entitled to require that Ms UF pay the invoice issued to Mr RP and [Company

A] on that matter as a pre-condition to her obtaining a copy of the documents, which as a party to them, she was already entitled.27

[98] The Committee ordered that pursuant to s 156(1)(d) Mr QT pay to Ms UF by way of compensation the sum of $1,026.25 paid by her to him. However, in my view, s 156(1)(h)(i) which empowers a Standards Committee, and this Office on review, to order a lawyer “to rectify, at [the lawyer’s] own expense, any error or omission” is the more appropriate authority.

[99] Mr QT’s error was in requesting Ms UF to pay the invoice in circumstances where she was not responsible for payment.

[100] For the above reasons pursuant to s 211(1)(a) of the Act, the 16 June penalty determination of the Standards Committee is:

(a) modified as to the Committee’s order that Mr QT pay a fine to the Law Society of $7,500.00 by reducing that fine to $4,500.00 to be paid to the Law Society within 30 working days of the date of this decision: section

(b) confirmed as to the Committee’s order that Mr QT pay to Ms UF compensation of $2,500.00 for stress and anxiety to be paid to Ms UF within 30 working days of the date of this decision: section 156(1)(d).

(c) reversed as to the Committee’s order that Mr QT pay to Ms UF compensation of $1,026.25 representing her payment to Mr QT of his invoice issued to Mr RP and [Company A], and substituted with the order that Mr QT rectify his error of requesting and receiving that money from Ms UF, and pay that money to her by way of reimbursement within 30 working days of the date of this decision: section 156(1)(h)(i).

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

27 Lawyers and Conveyancers Act (Lawyers Conduct and Client Care) Rules 2008, r 4.4.1.

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

Ms UF as the Respondent [Area] Standards Committee [X] The New Zealand Law Society

New Zealand Legal Complaints Review Officer

QT v UF [2018] NZLCRO 78 (24 August 2018)