LO v RT [2019] NZLCRO 10 (4 February 2019)

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	LCRO 202/2017
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	LO Applicant
AND	RT _Respondent

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

[1] Ms LO has applied for a review of a decision by the [Area] Standards Committee [X] (the Committee) to take no further action on her complaint about the conduct of the respondent, RT and Mr GM. For ease of convenience, I will refer throughout this decision to both RT and Mr GM as “RT”.

[2] Ms LO entered into an agreement to purchase a property in a development that was being completed ([Property 1]).

[6] Her position was, and remains, that RT, which acted for the developer, should compensate her for her loss suffered, because in one way or another its conduct contributed to her loss.

[7] This review arises from a second complaint that Ms LO had pursued against RT.

[8] On 29 May 2014, [Area] Standards Committee [X] declined to take any further action on her original, 26 October 2013, complaint.

(a) prepared a first right of refusal contractual agreement, when the proposed development lacked resource consent;

[10] The Committee’s May 2014 decision to take no further action on the October 2013 complaint was made pursuant to ss 138(1)(f) and 138(2) of the Lawyers and Conveyancers Act 2006 (the Act) and was expressed as grounded on the following:1

... Ms LO had an adequate remedy or right of appeal that would be reasonable for her to exercise and, after having regard to all the circumstances, no further action was either necessary or appropriate.

[11] That explanation follows approximately the statutory wording. What in essence the Committee could be taken to have meant was that the proper place to pursue any remedy was in a court of competent jurisdiction.

[12] The Committee had noted that the Serious Fraud Office (SFO) was in the process of investigating the failing development and observed that:

... should the Serious Fraud Office or any other agency make a finding of fraud in relation to RT Law, then it would remain open for the Standards Committee to revisit the complaint.

[14] Ms LO did not seek a review of the 29 May 2014 Standards Committee decision.

[15] Ms LO’s more recent complaint was lodged with the New Zealand Law Society

_{Complaints Service (Complaints Service) on 28 September
2016.}3 _{She asked that the}

Complaints Service “facilitate a complete refund plus 4.5 years interest from (the RT) Trust

(a) acknowledged the fact of the earlier October 2013 complaint and May 2014 decision; and

[17] Ms LO contended that her complaint should be looked at again, as she had, subsequent to her first complaint being determined, acquired further information which was relevant to her complaint and corroborated the concerns she had raised in her initial complaint. She advised that she:

(b) that correspondence indicated that RT was promoting the development for its client; and

(c) moreover, agents promoting the development in [Area] Standards Committee [X] had been penalised by the relevant [Area] Standards Committee [X] authority.

[18] The Committee delivered its decision on 20 September 2017 and determined, pursuant to s 138(2) of the Act that no further action on the complaint was necessary or appropriate.

[19] Referencing what is set out in [10] above, the Committee explained that its purpose in the May 2014 decision had been to convey to Ms LO that she could bring a fresh complaint if the SFO made an adverse finding against RT’s client, but it now appeared that it had declined to investigate further.4

[20] What the Committee meant by the SFO making an “adverse finding” in relation to RT in its May 2014 decision is not clear, given that the SFO is a prosecutorial rather than a decision-making entity. “Adverse findings” may only be made by the Court after any prosecution by the SFO.

[21] I infer that the Committee was suggesting that if, as a result of the intervention of the SFO, matters came to light which substantiated the concerns that Ms LO had raised about RT, she would be free to bring her concerns back to the Complaints Service.

[22] It should be noted, that the first Committee decision did not confine the circumstances in which Ms LO could revisit her complaint, exclusively to those in which the SFO had completed inquiry. The first decision records that:

Should the Serious Fraud Office Act or any other agency make a finding of fraud in relation to RT, then it would remain open for the Standards Committee to revisit the complaint.

(a) Ms LO had not provided “sufficient evidence to justify reviewing or reopening her complaint against (RT)”; and

(b) there was no evidence to support a finding that RT had acted in bad faith or breached any duty owed to Ms LO.

[24] Ms LO filed an application for review on 20 October 2017. The outcome sought is that orders be made that she be refunded the sum of NZ$42,541, together with interest.

[25] The thrust of Ms LO’s review application is that RT had assisted its client in criminal or fraudulent activity in breach of r 2.4 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (LCCCR).

(b) provided a copy of a High Court judgment in a case in which neither she nor RT were parties but which obviously arose out of the failure of the development; and

(c) drew attention to a media release by the [Area] Council for [Agency 1] referring to the penalising of a real estate agent for falsely representing to a client that a deposit paid in the [Property 1] development would be kept safe in RT’s trust account.

[28] RT provided a response to the application for review on 19 June 2017. They submitted that:

(a) the current complaint did not raise any issues outside of those that featured in the October 2013 complaint; and

(b) section 152(4) of the Act provides that subject to the right of review conferred by s 193 and to s 156(4), every determination made under subsection (1) and every order made under ss 156 or 157 is final.

[29] The parties have agreed to the review being dealt with on the papers. This review has been undertaken on the papers pursuant to s 206(2) of the Act, which allows a Legal Complaints Review Officer (LCRO) to conduct the review on the basis of all information available if the LCRO considers that the review can be adequately determined in the absence of the parties.

[30] I record that having carefully read the complaint, the response to the complaint, the Committee’s decision and the submissions filed in support of and in opposition to the application for review, there are no additional issues or questions in my mind that necessitate any further submission from either party. On the basis of the information available I have concluded that the review can be adequately determined in the absence of the parties.

[31] 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.

[32] 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.

[33] 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:

[34] As noted, this application for review follows a second complaint brought by Ms LO against RT. Both complaints arise out of her concerns regarding RT’s involvement in the [Property 1] Development.

[35] The first question to consider is whether Ms LO’s second complaint replicates her first. This requires a brief discussion of the law concerning repeat claims or complaints. In general, it is not open to a complainant who has been unsuccessful with their complaint, to start the process again by the filing of a second complaint that rehashes the ground covered by the first. The general description of claims or complaints which are repetitive, is that they are an abuse of process.

[36] Lord Reed, the current Deputy President of the United Kingdom Supreme Court, has explained that:7

The power to dismiss a case summarily as an abuse of process was first employed in England in 1875, in a case brought by Thomas Castro, the Tichborne claimant. After he had been held to be an impostor and imprisoned for perjury, he sought to challenge his conviction by a civil procedure which required the consent of the Attorney General. When the clerk declined to seal the writ, as the Attorney General had not given his consent, Castro sued the clerk for half a million pounds in damages. The defendant immediately applied to the Court of Exchequer to have the action stayed. After consulting all the Barons, the court decided that it had the power to

7 Lord Reed “Lies, Damned Lies: Abuse of Process and the Dishonest Litigant” (lecture at the

University of Edinburgh, Fifth Annual Lecture at the Centre for Commercial Law, 26 October 2012).

dismiss the action summarily. Baron Bramwell said that the action was absolutely groundless, and was one in which the court, in the exercise of its discretion, ought to stop the proceedings as being an abuse of the process of the court ... By the early twentieth century, the power to stay or dismiss actions which were an abuse of process was regarded in England as an aspect of the inherent jurisdiction of the court: that is to say, the powers which the court possesses simply by virtue of being a court, because they are essential to its proper functioning.

[37] Our Supreme Court has endorsed a statement of Lord Bingham that in deciding whether further proceedings are abusive a court makes a broad, merits based judgment which takes account of the public and private interests involved and of all of the facts of the case, focusing attention on the crucial question whether in all the circumstances a party is misusing or abusing the process of the court.8

[38] The fact that the current complaint may have been made in good faith, without an actual intent to abuse the disciplinary process, is not the crucial point. The end focus is on the effect on the party who is the subject of the complaint.

[40] In delivering his judgment in R (Coke-Wallis) v Institute of Chartered Accountants in England and Wales, Lord Collins remarked that:10

In Australia it was held that a doctor who had been censured by a Medical Board could not subsequently be the object of a second inquiry into alleged infamous conduct: Basser v Medical Board of Victoria [1981] VicRp 88; [1981] VR 953. See also in New Zealand Dental Council of New Zealand v Gibson [2010] NZHC 912 (dentist bound by findings of disciplinary tribunal). In some cases the same result has been achieved by finding that the disciplinary tribunal is functus officio after the first decision: Chandler v Alberta Association of Architects [1989] 2 SCR 848 (Canadian Supreme Court). In the United States, in Florida Bar v St Louis, 967 So 2d 108 (Fla 2007) and Florida Bar v Rodriguez, 967 So 2d 150 (Fla 2007) the Supreme Court of Florida accepted that res judicata principles applied to successive complaints brought by the Bar ...

But it has also been said that res judicata or double jeopardy principles may not apply to disciplinary bodies because their “disciplinary requirements serve purposes essential to the protection of the public, which are deemed remedial, rather than punitive”: Spencer v Maryland State Board of Pharmacy, 846 A 2d 341, 352 (Maryland Court of Appeals, 2003); cf Re Fisher, 202 P 3d 1186, 1199 (Sup Ct, Colorado, 2009).

10 R (Coke-Wallis) v Institute of Chartered Accountants in England and Wales [2011] UKSC 1, [2011]

[42] RT relies on s 152(4) of the Act in support of its argument that the Committee’s May

2014 decision represents the final word on Ms LO’s complaint and that she is precluded

Subject to [the right of review to this Office and a right to recover damages] every

[44] Section 152(4) is a statutory embodiment of the common law principles set out above.

[45] At first blush, RT’s argument that s 154(2) prevents further complaint by Ms LO is compelling.

[46] Complaint about the conduct of a lawyer can in most cases be stated in reasonably straightforward terms. A retainer between a client and their lawyer will have a beginning and an end, between which advice will have been offered, instructions given and action taken. A chronology of events will usually establish the key areas of concern and the lawyer offered opportunity to comment and provide their explanation of events, including providing relevant documents and correspondence.

[47] The Committee inquiry process provides opportunity for each party to fully air both the complaint and any response to it. As well, the Committee itself has power to require the production of further information. Committees are made up of practising lawyers and lay people, all chosen for their judgment and skill, and in the case of lawyers, their relevant experience.

[48] Committees are adept at identifying conduct issues and seeking comment from parties about those issues. Non-lawyer complainants are offered every opportunity to explain their complaint and encouraged to provide as much detail as necessary.

[49] Occasionally a Committee will identify issues of concern about a lawyer’s conduct,

[50] A Committee’s decision on a complaint, even if expressed briefly, will be the result of thorough analysis. When consumer protection underpins the process, careful attention is paid to the conduct of the lawyer complained about.

[51] It is expected then, that a Committee inquiry will ensure that there is a thorough inquiry into all of the concerns that a complainant has raised.

[52] However in Ms LO’s case, it is understandable, considering the approach the Committee adopted to its first enquiry, that she considers it both appropriate and necessary, that she bring the new information she considers significant to the attention of the Complaints Service. An earlier decision which had given her indication that her complaint could be considered further if fresh information came to light, would understandably have given her encouragement to proceed further, when she believed that she had acquired additional information relevant to her initial complaint.

[53] It must be emphasised, (as illustrated by the decisions discussed above) that if a Committee is to reconsider a complaint that has already been the subject of a Committee determination, there must be compelling reasons advanced to merit any further enquiry.

[54] In rare cases a person may relitigate an earlier complaint. Those uncommon cases are generally confined to those circumstances where a party uncovers further and relevant evidence that was not available at the time that the first complaint was made.12

[55] In those cases, it would fall initially to the Committee charged with making inquiry into the second complaint, to consider whether the fresh information that had come to light, was relevant, and information that the Committee considered should have been produced, or was not able to have been produced, when the first complaint was under consideration.

[56] But it is critical to emphasise, that the complaints process is not a process which provides opportunity to parties to bring complaints against the lawyer on an evolving basis. The need for finality, and the requirement for complaints to be dealt with expeditiously, would be seriously compromised, if parties were able to respond to findings adverse to them, by simply filing further complaints.

[57] Nor is it acceptable for complaints to attempt to avoid allegation of filing repetitive complaints, by “tweaking” their complaints in an attempt to convince that new matters have been raised.

[58] As has been noted, it can be reasonably expected for the most part, that parties who have concerns about a lawyer’s conduct, are able to identify and articulate those concerns and garner all relevant evidence, at the time the concerns arose.

[59] The question to consider is, whether the “fresh” information relied on by Ms LO, is of sufficiently compelling force to merit further enquiry being made into her complaint

12 See Rae v International Insurance Brokers (Nelson Marlborough Ltd) [1998] 3 NZLR 190 (CA) at

192 where the court said: “The conventional requirements are that the further evidence must be fresh, it must be credible and it must be cogent. Evidence is not regarded as fresh if it could with reasonable diligence have been produced at the trial.”

[60] I turn to consider the grounds now relied upon by Ms LO in lodging her September

[61] What she now proffers comprises, as was noted earlier: (a) the 17 February letter;

(b) a copy of a High Court judgment in a case in which neither she nor RT were parties, but which obviously arose out of the failure of the development; and

(c) a media release by the [Area] Council for [Agency 1] referring to the penalising of a real estate agent for falsely representing to a client that their deposit paid in the [Property 1] development would be kept safe in RT’s trust account.

[62] In my view, the information submitted by Ms LO does not establish the case she seeks to make against RT.

[64] There is no evidence of any dealings between her and RT before she parted with her money.

[65] Turning firstly to the correspondence on which Ms LO places reliance, it is directed to a third party and would have been unlikely, in my view, to have influenced Ms LO’s decision to invest.

[66] In any event the letter does not evidence the involvement of RT as a fraudulent participant in the promotion of a fraudulent development. It merely conveys information based, presumably on client instructions, to the third party.

[67] Fraud is a dishonest activity that causes a financial loss to an individual, company or corporation. For fraud to exist, there must be an intention to deceive at the time of the acts or omissions in question.

[68] What Ms LO brings forward falls well short of evidence of fraud by RT, whether as a principal or a party.

[69] There is nothing in what she offers that evidences a breach of r 2.4 of the LCCCR

A lawyer must not advise a client to engage in conduct that the lawyer knows to be fraudulent or criminal, nor assist any person in an activity that the lawyer knows is fraudulent or criminal. A lawyer must not knowingly assist in the concealment of fraud or crime.

[70] The High Court judgment was one decided between parties involved in the development and promotion of [Property 1] and related to a buyout agreement.13 Its only present utility is that it gives a history of the [Property 1] development and confirms that monies paid by Ms LO was not, in terms of the FRR she and others signed, required to be held in trust.14

[71] The judgment does not identify RT as a participant in the development enterprise, but records that RT prepared documentation for their client. The fact that RT drafted documentation does not establish that RT had acted improperly. Much more is required to establish Ms LO’s contention that the RT had been a party to, and involved in, actions taken by their client which set out to mislead parties who invested in the development project, than mere accusation that RT was involved in the drafting of documents that she and others signed.

[72] The [Area] Council for [Agency 1] press release version of its decision could not assist Ms LO either, and certainly offers nothing to make a case against RT.

[73] It simply bears upon the inadequacy of one of its member’s due diligence in relation

[74] There is no evidence that RT was responsible for the Resource Consent problems. If it is Ms LO’s contention that RT, as the lawyer for the developer, had an obligation to ensure that all necessary consents were obtained before the development was marketed, that argument would, as the first Committee noted, need to be litigated in another forum.

[75] The evidence advanced by Ms LO does not persuade me that RT breached any duties or obligations owed to Ms LO. Ms LO was not RT’s client. The extent of the duties owed to Ms LO were limited.

[77] Pursuant to s 211(1)(a) of the Lawyers and Conveyancers Act 2006 the decision of the Standards Committee is confirmed.

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

LO v RT [2019] NZLCRO 10 (4 February 2019)