AD v FR [2018] NZLCRO 81 (31 August 2018)

Last Updated: 30 October 2018

	LCRO 283/2014
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	AD Applicant
AND	FR and OR Respondent

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

DECISION

Introduction

[1] Mr AD has applied for a review of a decision by the [Area] Standards Committee

[X] (the Committee) which made a finding of unsatisfactory conduct against him, arising from a complaint made by Ms FR and Ms OR.

Background

[2] Ms FR and Ms OR [details removed], worked together as real estate agents. For convenience, I will refer to Ms FR and Ms OR throughout this decision as “the agents”.

[3] In January 2013, the agents acted for a vendor on the sale of an apartment situated in a [suburb] apartment complex.

[4] A 24-hour gymnasium was operating in the complex. A number of the apartment owners were experiencing problems with noise that was emanating from the gymnasium. Concerns were being raised that the gymnasium was disturbing the owners’ quiet enjoyment of their apartments.

[5] It was the purchasers’ view that the agents acting on the sale were aware of the problems with the gymnasium, but failed to disclose that there were issues with the property prior to the sale.

[6] The purchasers consulted their solicitor who, in turn, referred the purchasers to Mr AD.

[7] Mr AD wrote to the agents on 18 March 2014.

[8] The letter was addressed to the real estate company that the agents worked for, but was forwarded by email to the agents in their personal capacity.

[9] In his correspondence of 18 March 2014, Mr AD set out his clients’ concerns regarding the noise issue and submitted that the agents had been aware, at the time the sale was negotiated, that there were problems with the gymnasium causing unacceptable noise. At paragraph 11 of that correspondence, Mr AD said the following:

My clients have grounds to file a complaint with the Real Estate Agents Authority (“the Authority”) in respect to your breaches of the Rules and are considering doing so. However my clients are conscious of the time involved in preparing and filing a complaint and in responding to same for both parties. Accordingly, in the interests of both parties, and on a without prejudice basis, my clients would be willing to agree to permanently refrain from filing a complaint with the Authority in respect to your breaches, subject to you providing to my clients the sum of

$50,000 in recognition of the stress anxiety and loss of sleep my clients continue to suffer due to the noise issues (“the offer”).

[10] On receipt of Mr AD’s correspondence, the agents took advice both from their branch manager and from their Head Office.

[11] They then decided to file a complaint. It was Mr AD’s suggestion in his correspondence that complaint may be made to the Real Estate Agents Authority (REAA), that prompted the agents to lodge their complaint with the New Zealand Law Society Complaints Service (the Complaints Service). Their complaint was filed shortly after receiving Mr AD’s correspondence.

[12] Mr AD was not instructed to take any further steps, however his clients decided to file a complaint against the agents with the REAA.

[13] At the review hearing the agents advised that the complaint against them had been referred to a Complaints Assessment Committee, which had, after conducting inquiry into the complaint, made unsatisfactory conduct findings against the agents.

[14] The agents confirmed that they were ordered to pay $4,000 in total, but I am uncertain as to whether that sum was directed to be paid as a fine or a compensation payment.

[15] The agents appealed the Complaints Assessment Committee decision to the Real Estate Disciplinary Tribunal which delivered its decision on the appeal, on 8 March 2017.

[16] The Tribunal upheld the Complaints Assessment Committee decision.

The complaint and the Standards Committee decision

[17] The agents lodged a complaint with the Complaints Service on 27 March 2014. The substance of their complaint was that:

• (a) Mr AD’s correspondence contained elements of threat and blackmail, and had brought the legal profession into disrepute;
  
• (b) Mr AD had disclosed confidential information;
  
• (c) Mr AD had made accusation that they had behaved improperly, when there had been no inquiry into their conduct — he had essentially acted as “judge, jury and executioner”;
  
• (d) Mr AD had breached a number of the Lawyers and Conveyancers Act (Lawyer: Conduct and Client Care) Rules 2008 (the Rules) specifically rr 1.4(c) (negligence), 2.3 (use of legal procedures for improper purpose),

2.7 (threat); and

[18] After the complaint had been filed, the agents advised the Complaints Service that Mr AD had, in correspondence of 8 July 2014, written to them on a without prejudice basis making offer to make payment to them in the sum of $1,000.00 in compensation, if they agreed to withdraw their complaint.

[19] In that correspondence, Mr AD indicates his view that “the Standards Committee will not make a finding that [his] actions have breached the Lawyers and Conveyancers Act 2006”.

[20] The agents were concerned about the approach from Mr AD. They considered that Mr AD was “attempting to subvert due process by offering us $1,000.00 to withdraw our complaint”.

[21] The Committee determined to initiate an own motion inquiry in respect to Mr AD’s offer to settle the complaint. At hearing, I was advised that the Committee, having completed that inquiry, had determined to take no further steps.

[22] That matter does not form part of this review and I need reference it no further.

[23] Mr AD was given the opportunity to respond to the complaint. In his response of 22 July 2014, he submitted that:

• (a) the letter of 18 March 2014 was sent for a proper purpose;
  
• (b) he denied he has breached any Rules, specifically rr 2.3 and 2.7, as complained of;
  
• (c) his letter was sent on his clients’ instructions;
  
• (d) the offer made was no different to any other settlement offer where a party advises it is prepared to waive a right to pursue a matter and/or is prepared to make the settlement full and final on acceptance of the offer by the other party;
  
• (e) the agents’ complaint was filed as a retaliatory action, with a collateral purpose to discourage his clients from making a complaint about them through the Real Estate industry complaints process; and
  
• (f) as a matter of public policy, lawyers should be encouraging clients to make reasonable attempts to resolve or settle matters prior to litigious steps being taken and complaints about settlement offers should not be upheld.
  

[24] The Committee distilled from the complaint filed, the following issues to be determined:

• (a) whether Mr AD’s actions, in threatening to refer the complainants to the REAA unless $50,000 was paid to his clients, constituted a breach of rr

2.3 and 2.7;

(b) if Mr AD’s conduct breached rr 2.3 and 2.7, whether that breach constituted unsatisfactory conduct under s 12(c) of the Lawyers and Conveyancers act 2006 (the Act).

[25] The Committee delivered its decision on 7 November 2014. It determined that:

• (a) there had been unsatisfactory conduct by Mr AD in terms of s 12(c) of the Act and that it was appropriate to enter an unsatisfactory conduct finding;
  
• (b) pursuant to s 130 of the Act, they would open an own motion investigation into Mr AD’s conduct relating to the correspondence of 8 July 2014;
  
• (c) Mr AD be directed to apologise in writing to the agents; and
  
• (d) that Mr AD pay a fine of $5,000.00 and costs of $1,000.00.
  

[26] In reaching that decision the Committee concluded that:

• (a) Mr AD’s letter of 18 March 2014 breached r 2.7, as it contained a threat to refer the agents’ to a quasi-judicial body unless $50,000.00 compensation was paid;
  
• (b) it was highly unlikely that Mr AD’s clients would have stood to gain compensation of anywhere near $50,000.00;
  
• (c) while it was legitimate for lawyers to threaten civil litigation unless a financial settlement is reached, it was not appropriate for a lawyer to use a threat to refer another party to a professional standards authority as a lever to extract a benefit on behalf of a client;
  
• (d) while no means determinative, the issuing of a demand for such an unrealistic sum, further supported the Committee’s finding that Mr AD acted with an improper purpose;
  
• (e) Mr AD should have referred the matter to the Authority if he felt it warranted a disciplinary response and it was not for him to co-opt that public body’s own processes to advance his clients’ interests; and
  
• (f) the fact of Mr AD acting on his clients’ instructions is immaterial as a lawyer should decline to act if following a client’s instruction would lead to a breach of the lawyer’s professional obligations.

Application for review

[27] Mr AD filed an application for review on 9 December 2014.

[28] In support of his application, Mr AD has filed two sets of relatively detailed submissions, one accompanying his application for review, and further submissions with an affidavit and bundle of case law filed prior to the hearing. Mr AD submits (and I record here the essence of his submissions while having careful regard to the entirety of them):

• (a) the Committee had erred in its decision;
  
• (b) his correspondence of 18 March 2014 represented a genuine and appropriate attempt at settling a dispute;
  
• (c) the letter was sent on his clients’ instructions;
  
• (d) he accepts it did contain a threat, but it was not a threat for an improper purpose;1
  
• (e) he did the right thing in raising the issue with the agents’ company/employer;
  
• (f) the fine imposed of $5,000.00 was excessive;
  
• (g) the Legal Complaints Review Officer (LCRO) should exercise a discretion and make findings that the letter of 18 March 2014 did not amount to unsatisfactory conduct;
  
• (h) Mr AD’s personal affidavit speaks to the professional and personal consequences which flowed from the filing of the complaint;
  
• (i) in writing to the agents in the terms that he did, he was following the process recommended by the REAA, which encouraged/required, parties who wish to pursue a complaint against a real estate agent, to communicate at first step with the agent and attempt to resolve the dispute;
  
• (j) in following a client’s instructions to issue a demand for compensation to be paid, prior to commencing proceedings, he was following a
  

1 Note: In Mr AD’s correspondence of 18 March 2014, he submits it could not properly be characterised as a “threat”, and in his submissions of 5 April 2018 he argues that rather than accepting it was a threat, it may have been a statement of fact.

conventional and entirely appropriate approach, frequently adopted by lawyers;

(k) in the event the LCRO was to uphold the unsatisfactory conduct finding, it would be appropriate for the Review Officer to exercise his discretion to take no further action.

[29] Mr AD advised that in the event his application was successful, he sought costs against the New Zealand Law Society however, at the conclusion of the hearing he indicated that he wished to withdraw his costs claim.

[30] In addition to his submissions, Mr AD filed a personal affidavit which spoke to the professional and personal consequences for him of having disciplinary finding on his previously unblemished disciplinary record.

[31] The agents were invited to provide response to Mr AD’s review application. They submitted that:

• (a) Mr AD’s application was a “red herring”;
  
• (b) as they were not aware of any dispute with Mr AD’s clients until receipt of his correspondence, they could not accept that his correspondence could be characterised as an attempt to settle a dispute;
  
• (c) they had not been provided with an opportunity to provide response to the allegations made and the correspondence from Mr AD proceeded from an assumption that they were “guilty”;
  
• (d) Mr AD had corresponded with them after they laid their complaint, offering them a compensatory payment of $1,000 if they agreed to withdraw their complaint. It was inappropriate of Mr AD to attempt to have them settle their complaint in this fashion; and
  
• (e) Mr AD had argued that responding to the complaint had been a stressful and costly exercise for him, but they too had been extremely distressed by the process and had been required to expend a considerable amount of time dealing with the complaint.
  

The hearing

[32] The matter was heard on 7 May 2018, with both parties in attendance.

[33] At the conclusion of the hearing, I summarised for both parties, the arguments they had advanced on review, and invited them to confirm that the points summarised, provided accurate record of their positions.

Nature and scope of review

[34] 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.

[35] 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.

[36] 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.
  

2 Deliu v Hong [2012] NZHC 158, [2012] NZAR 209 at [39]–[41].

3 Deliu v Connell [2016] NZHC 361, [2016] NZAR 475 at [2].

Analysis

The Relevant Law

[37] The commencing point for the Committee, was a consideration as to whether Mr AD had breached either r 2.3 and/or r 2.7.

[38] Rule 2.3 provides that:

A lawyer must use legal processes only for proper purposes. A lawyer must not use, or knowingly assist in using, the law or legal processes for the purpose of causing unnecessary embarrassment, distress, or inconvenience to another person’s reputation, interests or occupation.

[39] Rule 2.7 provides that:

A lawyer must not threaten, expressly or by implication, to make any accusation against a person or to disclose something about any person for any improper purpose.

[40] The Committee’s decision is silent on the issue as to whether Mr AD had breached r 2.3, and I take it from that silence that it did not consider that Mr AD’s correspondence to the agents was indicative of an intention on his part to use legal processes for the purpose of causing unnecessary embarrassment, distress, or inconvenience to the agents’ reputation, interests or occupation.

[41] Attention then turns to r 2.7. At the nub of the Committee’s determination that the rule had been breached, was its conclusion that:4

while it is a legitimate course for lawyers involved in contentious matters to threaten civil litigation unless a financial settlement is reached, it is not appropriate for a lawyer to use a threat to refer another party to a professional standards authority as a lever to extract a benefit on behalf of a client. In doing so Mr AD acted with an improper purpose.

[42] However, the Committee did not rely solely on r 2.7, noting that Mr AD had a responsibility to uphold the rule of law and to facilitate the administration of justice. This obligation is captured by r 2 of the Rules, which directs that a lawyer is “obliged to uphold the rule of law and to facilitate the administration of justice”.

[43] This rule, in its description of the more wide-ranging obligations assumed by lawyers as officers of the Court, reinforces but one of what are described in s 4 of the Act as the fundamental obligations of lawyers.

[44] The Rules themselves are based on the fundamental obligations of lawyers set out in s 4 of the Act, and the scope and reach of those rules have been described as “not

4 Standards Committee determination 7 November 2014 at [19].

an exhaustive statement of the conduct expected of lawyers. They set the minimum standards that lawyers must observe and are a reference point for discipline”.5

[45] In bringing to any examination of complaint that a lawyer has breached a conduct rule, it is important to consider the conduct in context and to keep in mind that conduct rules are to be applied as specifically as possible,6 but also to be applied as sensibly and fairly as possible.7

The Arguments

[46] Whilst Mr AD’s submissions traversed a number of arguments (and I have considered them all), his primary submission was that there was nothing at all untoward or improper about his correspondence of 18 March 2014, and certainly nothing in the correspondence which could remotely raise any potential conduct issue.

[47] In advancing this argument, he emphasised that putting the agents on notice of his clients’ willingness to refrain from filing a complaint with the Real Estate Authority, was doing no more than following his client’s instructions, which were, in every respect, conventional. His clients were simply endeavouring to negotiate a settlement.

[48] In his first response to the complaint, dated 22 July 2014, Mr AD described his position thus:

the offer is no different to any other settlement offer where a party advises that it is prepared to waive its right to pursue the matter and/or is prepared to make the settlement full and final on acceptance by the other party of the particular offer.

[49] In that response, Mr AD rejected suggestion that his correspondence contained a threat, however in his submissions to the LCRO of 9 December 2014, he conceded that his correspondence did contain a threat, but argued that the threat was not made with an improper purpose. He submitted at hearing, that it was common practice for a lawyer to issue threat to refer a party to a professional body.

[50] I agree with Mr AD that lawyers frequently make demands for compensation on behalf of their clients, accompanied by threat to commence proceedings if the compensation sought is not paid. He described this as a conventional and entirely appropriate approach, and I accept that to be the case.

5 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, preface to the Rules.

6 Q v Legal Complaints Review Officer [2012] NZHC 3082, [2013] NZAR 69 at [59] and Stewart v

Legal Complaints Review Officer [2016] NZHC 916, [2016] NZAR 900 at [62].

7 Wilson v Legal Complaints Review Officer [2016] NZHC 2288 at [43].

[51] When a client instructs their lawyer to seek compensation or to resist a claim for compensation, the compensation being sought or resisted will inevitably be linked to a dispute between the parties. The dispute may for example be contractual, based in tort, arise out of an employment relationship or be one of any number of other types of legal disputes in which people become embroiled. Frequently, a claim for compensation will be at the heart of a legal dispute.

[52] Parties involved in disputes are primarily concerned about their own interests. Compensation is sought as a remedy for an interest that has been breached.

[53] Disputes are resolved either by the parties reaching a settlement, or by an independent third party (such as an arbitrator or judicial decision maker) making a binding decision. The independent decision maker listens to each side and makes a decision about the issue that has brought the parties into dispute.

[54] In Mr AD’s case, he was instructed by purchasers who were alleging that the agents had misrepresented aspects of the apartment they were purchasing; it was contended that the agents knew that there were noise problems from the gymnasium but did not pass that on; this was a misrepresentation by omission.

[55] It is not the function of this Office to offer any comment about the merits of the claim advanced, however, instructions of this nature are not uncommon and a conventional approach would be to write to the agents concerned, raise the legal issue and seek compensation for that breach and advise that if agreement could not be reached, proceedings would follow.

[56] On occasions, the conduct of parties engaged in a dispute may be governed by, and subject to, the discipline of a professional or regulatory body. Lawyers are regulated by the New Zealand Law Society. Real Estate Agents are governed by the Real Estate Agents Act 2008. Some trades are also overseen by a disciplinary body. Membership is often compulsory.

[57] Mr AD goes further and says that as part of making a conventional demand for compensation, it is common practice for a lawyer to issue threat of referring a party to a professional body. I am troubled by that submission.

[58] Disciplinary regimes of all types exist to ensure the integrity and competence of their members. In this way, minimum standards of conduct and competence are guaranteed and members of the public who engage those services are said to be protected. The focus, in other words, is on consumer protection. This is an important societal value.

[59] Disciplinary regimes, therefore, perform a separate function from conventional arbitral or judicial decision making. The overarching functions of a disciplinary regime are industry standards and consumer protection. Breaches of those industry standards can result in an order for compensation, but that is secondary to the issue of whether (in this case) the agents have fallen below the standards set for them and which are designed to afford consumer protection.

[60] I have carefully considered the authorities provided by Mr AD and note in particular the decisions from this Office he provides which have considered the scope of r 2.7.

[61] None of the authorities relied on by Mr AD provide example of cases where a lawyer has used the threat of referral to a regulatory authority as leverage to secure a financial settlement for his or her client. Nor in my view, do the cases relied on have a similar factual context to that which provides the backdrop to this case.

[62] In ND v VD, conclusion was reached that the correspondence issued by the lawyer which was at the heart of complaint that a threat had been made, did not in fact, constitute a threat, but was simply an assertion of fact.8 In that case, the lawyer’s client was disputing liability to pay an account. In this case, I am satisfied, for the reasons set out at [77–91] below, that issuing notice of intention to file a professional complaint, if payment of a significant sum of money was not made, constituted a threat.

[63] In RC v ZN, a Committee’s finding of unsatisfactory conduct consequent on its finding that a lawyer had breached r 2.7, was reversed by the LCRO, on grounds that the LCRO did not consider that the alleged threat could properly be characterised as a threat, if the statement purported to have been made by the recipient of the alleged threat, was accurate.9 In that decision, the Review Officer referenced a Standards Committee decision that had been reported in the LawTalk issue 357, where a Committee had determined that a lawyer’s threat to make a disclosure to the Securities Commission if a payment was not made to his client, constituted a threat for an improper purpose, i.e. to facilitate the settlement of a civil claim.10

[64] As noted, I have considered all of the authorities provided by Mr AD.

[65] It is useful to consider how the issue of issuing threat to make complaint to a professional body is considered in the legal environment.

8 ND v VC LCRO 7/2012 (15 June 2012).

9 RC v ZN LCRO 74/2012 (21 July 2012).

10 At [15].

[66] Rule 2.10 provides that:

A lawyer must not use, or threaten to use, the complaints or disciplinary process for an improper purpose.

[67] Central to both rr 2.7 and 2.10, is the element of improper purpose.

[68] In SC v JT, a decision which comprehensively considered the scope and extent to which a lawyer could be compromised by issuing threat to make a professional complaint against a colleague if that colleague failed to comply with a demand made, it was noted that:11

[78] .... an improper purpose in threatening to make a complaint will arise when, in making the threat, a lawyer makes a connection between the threat and an unrelated strategic advantage that the lawyer is trying to accomplish.

[81] It is also unreasonable, and unrealistic, to expect that a legitimate threat of a complaint will be entirely devoid of some motive. After all, the lawyer’s chief concern is the interest of his or her client. However, the threat to make complaint must not, on any objective analysis, give indication that the practitioner was using threat of complaint to achieve a strategic advantage with his or her client, or indication that the complaint is being used as leverage in the underlying matter. It is the element of leverage which is a misuse of the complaints procedures, and which makes a threat improper. The hallmark of an improper purpose is the use of a complaint to secure an advantage, rather than to ensure compliance with professional standards.

[69] Considered from the perspective of Conduct Rules being applied in the context of a disciplinary inquiry engaging a legal practitioner, it has been held then that a threat to make complaint to a regulatory body (in that instance the Lawyers Complaints Service) takes on an element of improper purpose if the threat is invoked as leverage to achieve a particular outcome.

[70] Put another way, if a threat to make complaint to the regulatory body is driven not by concerns about the enforcement or upholding of professional standards, but rather by a desire to achieve a tactical advantage, the complaint is likely to be considered improper.

[71] It is not of course the case that Mr AD’s conduct is being considered from the context of him facing complaint that he had breached r 2.10, but in examining the approach that has been adopted to disciplinary cases involving r 2.10, similar principles are engaged.

[72] Issuing a threat to make professional complaint, with proviso that the complaint will not be made if payment is forthcoming, carries an expectation that the threat to make a professional complaint will persuade the recipient to comply with the demand made. In

11 SC v JT LCRO 382/2013 (30 June 2017).

advancing a demand in that fashion, the party making the demand is calculating that the recipient of the demand may make an assessment that the consequences of facing a professional complaint could be potentially be more damaging than agreeing to the demand made.

[73] Those consequences could likely include (but not be limited to) professional embarrassment, reputational damage, financial cost and personal inconvenience, and risk of exposure to the penalties able to be imposed by the regulatory body.

[74] Mr AD argues that the threat was not made for improper purpose, and as a consequence, no disciplinary issues could arise.

[75] The word “improper” is defined in Black’s Law Dictionary as, “incorrect, unsuitable or irregular, fraudulent or otherwise wrongful”.12

[76] In my view, it was improper of Mr AD to convey a threat to file a complaint with the REAA and I do not consider that Mr AD was absolved of responsibility for the comment made, by argument that he was acting on the instructions of his client. It fell to Mr AD to advise his clients that it was improper to couch the demand in the fashion he did.

[77] Indication to the agents that a complaint would be filed, if payment was not made, constituted a threat. The word “threat” is defined in Black’s Law Dictionary as “a communicated intent to inflict harm or loss on another or on another’s property, especially one that might diminish a person’s freedom to act voluntarily or with lawful consent”.13

[78] The definition of “threaten” in the Oxford English Dictionary is “to press, urge, try to force or induce: especially by means of menaces”.14

[79] Central to the element of a threatening comment, is suggestion that there will be unfortunate consequences for the recipient of the threat, if a particular demand is not acceded to. In this case, demand is made for payment of a substantial sum of money.

[80] Mr AD correctly argues that it is commonplace for lawyers to issue a demand accompanied by indication of adverse consequence to follow if the demand is not met. The example he cites as commonplace, is those circumstances where a lawyer will issue threat to issue court proceedings.

12 Bryan A Garner Black’s Law Dictionary (9th ed, Thomson Reuters, St Paul, 2009) at 826.

13 At 1618.

14 Oxford English Dictionary <www.oed.com>.

[81] Mr AD’s argument, in my view, pays insufficient regard to the fact that the threat made to the agents was a threat to subject them to a professional disciplinary inquiry. In advancing the threat, he was attempting to assert leverage over the agents by, as the Committee described it, co-opting a public body’s processes to advance his clients’ interests.

[82] The impropriety of the demand flows from the attempt to achieve financial compensation by threat of utilising a professional regulatory body as leverage to achieve the financial outcome sought.

[83] It is not, in my view, analogous to equate the threat of making professional complaint, to that of threat to file proceedings in a court.

[84] Proceedings filed in a civil court focus on the merits of the respective parties’ positions, the particular facts of the case and the relevant law.

[85] Complaint of professional failing does not have, as its primary focus, the task of determining civil disputes with objective to compensate a successful complainant.

[86] The Real Estates Agents Act 2008 is said to achieve its purpose, as set out in section 3 of that Act, by:

• (a) regulating agents, branch managers, and salespersons;
  
• (b) raising industry standards; and
  
• (c) providing accountability through a disciplinary process that is independent, transparent, and effective.
  

[87] If Mr AD’s clients had genuine concerns that the agents’ conduct was deserving of referral to their professional body, then they could, and should, have simply filed a complaint.

[88] But in qualifying their apparent concerns by advising that no complaint would be made if a substantial payment was received, Mr AD’s clients were giving clear indication that their primary concern was less about professional conduct than it was about financial compensation.

[89] This is not to diminish or to be critical of Mr AD’s clients’ belief that they had been let down by the agents, nor to question their conviction that they were entitled to be compensated for the inconvenience and disruption they considered they had suffered.

[90] But it would be reasonable to conclude that a claim of the nature advanced by Mr AD’s clients, (particularly considering the substantial sum of compensation sought) would need to be litigated in the courtroom, where evidence (likely including the input of expert witnesses) would be called to establish not just the question as to whether Mr AD’s clients were denied information that was the responsibility of the agents to provide them prior to purchase, but the extent of the disruption to the purchasers.

[91] The Committee concluded that it was “highly unlikely” that Mr AD’s clients would have stood to gain compensation of anywhere near $50,000 and noted that “while by no means determinative, that Mr AD issues a demand for such an unrealistic sum further supports the Committee’s finding that he acted with an improper purpose”.15

[92] With respect to the Committee, I do not agree with this aspect of its decision. Issue as to whether compensation in the sum claimed presented as reasonable or exorbitant, could only be determined in a forum such as the District Court, where evidence could be called and scrutinised. The impropriety of the demand is not demonstrably established by the quantum sought, but by the issuing of threat to make complaint to the REAA as the agents’ disciplinary body. In fairness to the Committee, it must be emphasised that whilst it formed a view that making demand for what it considered to be an unrealistic sum contributed to its finding of an improper purpose, that factor was emphasised as being by no means determinative in its finding.

[93] Mr AD argued that in forwarding correspondence to the agents, he was doing no more than what is recommended by the REAA, that is taking steps to raise his clients’ concerns and exploring possibility of resolution. Mr AD referenced the Authority’s website which recommends to parties who may have concerns about an agent the following:16

We encourage you to talk about your complaint to the real estate agency concerned as this may be the quickest and easiest way to resolve the issue. You can either raise your complaint with us or take it up with the agency first and contact us if you are not satisfied with the outcome.

[94] I do not agree that Mr AD’s correspondence was an attempt to explore the possibility of reaching a resolution, or reflected an approach consistent with that recommended by the Authority. The agents were not aware there was a problem until they received Mr AD’s letter. Nor were they given an opportunity to put their point of view. They were presented with an ultimatum.

15 Standards Committee determination, above n 4, at [19].

16 Real Estate Authority “Make a Complaint” <www.rea.govt.nz>.

[95] Mr AD, directed me to the decision of B v Medical Council, (an appeal from a decision of the Medical Council) and its reinforcement of the principle that not every professional error demands a disciplinary response.17

[96] Mr AD argued that if he had made an error, it was not of sufficient gravity to merit a disciplinary sanction. Mr AD emphasised that he had an unblemished professional record of which he was justifiably proud. It was his view that the Committee’s finding of unsatisfactory conduct was a disproportionate response and presented as an underserved stain on his good reputation.

[97] I have given careful consideration to that submission, but am reluctant to interfere with the Committee’s decision. Standards Committees are made up of a number of experienced lawyers, as well as at least one lay person. Lawyers are appointed to sit on Standards Committees on the basis of, amongst other things, their “skill, experience and judgement to deal with and make appropriate decisions in respect of complaints”. Lawyer members must also have practised as a lawyer for not less than five years.

[98] It is my considered view after having, as I am required to do, independently and robustly considered the conduct, that the Committee was correct in determining that an unsatisfactory conduct finding was appropriate.

[99] Turning to the penalty imposed, Mr AD submitted that a fine of $5,000 was excessive.

[100] Determining an appropriate level of a fine to be imposed, engages an element of the discretion exercised by Committees.

[101] There is no formula by which to calculate the appropriate level of a fine. As such, this Office would have to have good reason to interfere with the exercise of that discretion. That said, the expectation of this Office is that it will form its own independent opinion.

[102] The maximum fine a Committee or this Office can order a practitioner to pay pursuant to s 156(1)(n) of the Act is $15,000. A fine at that level is reserved for the most serious of cases of unsatisfactory conduct.

[103] The Committee ordered Mr AD to pay a fine of $5,000.

17 B v Medical Council [2005] 3 NZLR 810 (HC).

[104] The objectives of the imposition of a penalty in a disciplinary context include acting as a deterrent and reflecting the public’s and the profession’s disapproval of the unsatisfactory conduct.18

[105] It has been held by this Office, that in cases where unsatisfactory conduct is found as a result of a breach of applicable rules (whether the Rules of Conduct and Client Care, regulations or the Act) and a fine is appropriate, a fine of $1000 would be a proper starting place in the absence of other factors.19

[106] I consider the fine of $5,000 imposed to be excessive. The twin objectives of deterrence and appropriate reflection of disapproval of the conduct are, in my view, adequately met by a fine of $2,000.

Publication

[107] Pursuant to s 206(4) of the Act I direct that this decision be published so as to be accessible to the wider profession in a form anonymising the parties and bereft of anything as might lead to their identification.

Costs

[108] Where a finding of unsatisfactory conduct is made or upheld against a practitioner on review it is usual that a costs order will be imposed. I see no reason to depart from that principle in this case.

[109] Taking into account the Costs Guidelines of this Office, the practitioner is ordered to contribute the sum of $1,200 to the costs of the review, that sum to be paid to the New Zealand Law Society within 30 days of the date of this decision.

Decision and Orders

(a) The order that Mr AD pay a fine of $5,000 to the New Zealand Law Society is reversed and substituted with an order that Mr AD pay a fine of $2,000 to the New Zealand Law Society, (s 211(a) of the Lawyers and Conveyancers Act 2006).

(b) Mr AD is ordered to contribute the sum of $1,200 to the costs of the review, that sum to be paid to the New Zealand Law Society within 30 days of the

18 Wislang v Medical Council of New Zealand [2002] NZCA 39; [2002] NZAR 573 (CA).

19 Workington v Sheffield LCRO 55/2009 (26 August 2009).

date of this decision, (s 210(1) of the Lawyers and Conveyancers Act 2006).

(c) Pursuant to s 215 of the Lawyers and Conveyancers Act 2006 the order for costs may be enforced in the civil jurisdiction of the District Court.

(d) In all other respects, the decision of the Standards Committee is confirmed.

DATED this 31st day of August 2018

R 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:

Mr AD as the Applicant

Ms FR and Ms OR as the Respondents [Area] Standards Committee [X]

The New Zealand Law Society