TJ v DM [2019] NZLCRO 117 (26 September 2019)

Last Updated: 21 November 2019

LCRO 261/2016

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 TJ

_Applicant

AND DM and

ZP

_Respondent

DECISION

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

[1] Ms TJ has applied to review a decision by the [Area] Standards Committee [X] to take no further action in respect of her complaint concerning the conduct of the respondents, Mr DM and Ms ZP (the lawyers).

Background

[2] Ms TJ separated from her husband around August 2011.

[3] In September 2011 Ms TJ instructed [Law Firm 1] to act for her on relationship property matters.

[4] Mr DM initially had responsibility for the carriage of the file but was subsequently assisted by Ms ZP.

[5] Ms TJ executed a letter of engagement, confirming her instructions to [Law

Firm 1] to act on her behalf.

[6] The parties had resided overseas with their children before Ms TJ returned to

New Zealand with two of their young children. A third child was already studying in

New Zealand. Mr TJ remained in Laos. He was employed by an international organisation based outside New Zealand. He received a tax-free income, paid from the United States.

[7] In April 2012, Ms TJ’s lawyers made an application to the Family Court for spousal and child maintenance. An agreement was reached that Mr TJ would provide financial support for an interim period. Following further proceedings, orders were made extending the time that Mr TJ was required to make maintenance payments to Ms TJ.

[8] In May 2013, the Court issued directions that Mr TJ was to pay costs towards the maintenance of the family home, contribute to the costs of dental fees for one of the children, and make contribution to Ms TJ’s costs.

[9] Mediation was arranged in an attempt to settle the relationship property issues.

[10] On 19 September 2013, the parties reached a settlement which was formalised in a settlement agreement.

[11] [Law Firm 1] rendered fees of $165,904.45 (inclusive of GST and disbursements) which were subsequently reduced to $150,000.

The complaint and the Standards Committee decision

[12] It is necessary to comment briefly on the manner in which Ms TJ has advanced her complaint and review applications, before identifying the grounds of complaint.

[13] Ms TJ lodged her initial complaint with the New Zealand Law Society’s Lawyers Complaints Service (the Complaints Service) on 26 March 2015. Her complaint was comprehensive, running to some 15 pages.

[14] The lawyers responded to the complaint on 17 May 2015.

[15] On 18 April 2016, the Complaints Service wrote to the parties advising that the Standards Committee had considered the submissions filed, had reviewed the practitioner’s files, and had reached a preliminary view that the fees charged were appropriate and that there was no substance to the various conduct complaints. In that correspondence, the Committee identified the specific grounds of complaint that it had distilled from the material provided by Ms TJ.

[16] Ms TJ was informed that she had opportunity to provide a response to the

Committee’s indication. She did so on 2 July 2015 in an extensive submission of some

49 pages. In that submission she identified 205 points that she argued needed to be addressed by the Committee. There was a degree of repetition in the points raised.

[17] The Committee delivered its decision on 27 October 2016. At [8]–[10] of that decision, the Committee identified 10 specific areas of concern that it considered Ms TJ had raised. Those matters could, in the Committee’s view, be adequately addressed under two headings:

(a) Were the fees rendered to Ms TJ fair and reasonable for the work undertaken on her behalf?

(b) Did Mr DM or Ms ZP breach any of their professional obligations in relation to the services provided to Ms TJ?

[18] On review, Ms TJ objected to the approach adopted by the Committee. It was her view that the Committee had, in reducing her 205 points to 2 issues, failed to adequately address a number of her concerns.

[19] It is inevitable and unavoidable when a Committee is considering a complaint submission as extensive as that filed by Ms TJ, that a degree of distillation of the material is necessary in order to ensure that the issues can be effectively and efficiently addressed.

[20] The Committee noted that it had given careful consideration to all of the issues raised by Ms TJ in her complaints and indicated that it did not consider it necessary to respond to all of the matters raised. The Committee cited case authority to support its position.1

[21] Ms TJ saw little merit in the authority relied on, observing that the case was “old” and expressing surprise that the Committee could not reference more recent authority to support its argument.

[22] I would simply note that the case cited could not be described as a particularly “old” case in legal terms, but in any event the authority of a case is not diminished with the effluxion of time. The relevance of a case may be lessened or diminished when a Court of equal or superior standing to the Court in which the decision is issued,

_{challenges or overturns elements of the earlier decision.}

1 R v Nakhla (No 2) [1974] 1 NZLR 453 (CA) at 456.

[23] I would simply clarify for Ms TJ, that the principle that the Committee was referencing when citing Nakhla (No 2) was not that a decision-making body could, when considering multiple complaints, choose to ignore or overlook any particular complaint, but rather that a decision maker was not required to respond to each and every complaint made. The fact that the Committee did not refer to a specific complaint, did not mean that it had failed to consider it.

[24] I have carefully read all the submissions and have had the benefit (unlike the

Committee) of hearing directly from Ms TJ.

[25] I consider myself well placed to identify the conduct issues of significance for Ms TJ and will advance my analysis in this review on the basis of my identification of the issues which I consider when addressed in their totality, will adequately cover all the relevant matters raised by Ms TJ.

[26] I do not propose to summarise the issues identified by the Committee which are set out clearly in its decision nor to provide account of the lawyers’ response. That response will be addressed, where necessary, when the review issues are considered.

[27] The Committee determined, pursuant to s 138(2) of the Lawyers and Conveyancers Act 2006 (the Act) that no further action on the complaint was necessary or appropriate.

[28] In reaching that decision the Committee concluded that: (a) the fees charged were fair and reasonable.

(b) Mr DM and Ms ZP had provided appropriate representation and advice.

(c) The complaint had not raised any issues that warranted any disciplinary action or further investigation.

Application for review

[29] Ms TJ filed an application for review on 25 November 2016.

[30] I do not propose, for the reasons set out above, to summarise the Review grounds addressed, except to note that I have carefully considered the application and reiterate that the specific points addressed later in this decision, traverse the main issues of concerns raised by Ms TJ.

[31] Invited to provide response to Ms TJ’s review application, the lawyers advised that they relied on the submission they had provided to the Standards Committee.

Hearing

[32] An applicant only hearing proceeded on Thursday, 8 August 2016.

Nature and scope of review

[33] 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.

[34] 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.

[35] 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].

Discussion

[36] The issues considered on review will be addressed as follows: (a) General Comments.

(b) Should the lawyers have assisted Ms TJ to make an application for legal aid?

(c) Did the lawyers fail to take sufficient steps to identify the assets owned by or under the control of Mr TJ?

(d) Did the lawyers fail to ensure that agreements entered into adequately protected Ms TJ in the event of Mr TJ defaulting on his obligations?

(e) Did the lawyers fail to take steps to freeze assets?

(f) Did the lawyers fail to keep Ms TJ informed on significant matters?

(g) Should the lawyers have taken steps to ensure that Ms TJ was provided with details which would enable her to make contact with Mr TJ?

(h) Should the lawyers have taken Ms TJ’s concerns about her safety more

seriously?

(i) Did the lawyers’ conduct contribute to delay in resolving matters? (j) Did the lawyers fail to achieve any outcome of worth for Ms TJ?

(k) Was Ms TJ pressured into signing an agreement she was unhappy with? (l) Were the fees charged fair and reasonable?

General Comments

[37] Underpinning Ms TJ’s raft of complaints, is concern that despite the considerable fees incurred, the outcome achieved by her lawyers was dismal. Pressed on this in the course of the review hearing, she steadfastly stuck to the view that her lawyers had achieved nothing for her at all.

[38] Her comprehensive submissions provide detailed account of the perceived deficiencies in the representation provided. She makes accusation that her lawyers were incompetent in virtually all aspects of the work completed. She paints a picture of lawyers persistently failing to act on her instructions, acting without her instructions,

failing to attend competently to basic tasks, and ultimately, failing to adequately protect her interests. To add insult to injury, she complains that the lawyers frequently made much to her of how skilled and experienced they were.

[39] That unhappy account is countered by the lawyers with argument that they considered they had provided Ms TJ with excellent representation and had achieved a very satisfactory outcome for her.

[40] The parties’ recollection of what happened during the course of the retainer is at polar opposites. From the significant to the mundane, the parties’ accounts of what transpired are distinguished by the extent to which they diverge.

[41] Some of the concerns identified by Ms TJ directly raise the spectre of negligence.

[42] Negligence is a cause of action that is well-understood by traditional civil courts. Its ingredients include a duty of care, a breach of that duty, and a measurable loss that has been caused by the breach of duty. Findings of negligence may only be arrived at after comprehensive – sometimes expert – evidence has been given. Issues that often arise in claims of negligence include whether a person has breached their duty of care, or whether there is a connection between the alleged loss and the breach of duty. Complex arguments often arise about whether any loss has been suffered.

[43] Neither a Standards Committee nor the LCRO is equipped to make findings of negligence. The default position for a Standards Committee is to conduct their hearings on the papers. A negligence analysis is simply not possible with that process.

[44] A Standards Committee can determine that a practitioner’s conduct fell short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer.

[45] Section 12 of the Act relevantly provides:

Unsatisfactory conduct defined in relation to lawyers and incorporated law firms

In this Act, unsatisfactory conduct, in relation to a lawyer or an incorporated law firm, means—

(a) conduct of the lawyer or incorporated law firm that occurs at a time when he or she or it is providing regulated services and is conduct that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer; ...

[46] That provision sits alongside r 3 of the Lawyers and Conveyancers Act

(Lawyers: Conduct and Client Care) Rules 2008 (the Rules) which says that:

In providing regulated services to a client, a lawyer must always act competently and in a timely manner consistent with the terms of the retainer and the duty to take reasonable care.

[47] A lack of competence or diligence does not necessarily amount to negligence

– particularly if there has been no loss as a result of a practitioner’s lack of

competence.

[48] However, the relationship between the tort of negligence and unsatisfactory conduct as defined in s 12(a) of the Act is close. In the introduction to the chapter on negligence in The Law of Torts the authors state:4

Negligence is a relatively straightforward and well-understood concept in lay terms. It is defined in the Concise Oxford Dictionary simply as a lack of proper care and attention or carelessness. This broad notion of carelessness is undoubtedly an integral part of negligence as a foundation for legal liability, but other elements are also involved. If one or more of those elements is lacking, then an action will fail, even though the defendant may have been careless, even grossly so, in a popular sense.

[49] Ms TJ, quite fairly and reasonably, made demand that her questions and concerns be responded to in what she describes as “layperson” terms and I am apprehensive that argument explaining the distinction between the legal concept of negligence, and that of professional competency, can readily descend into explanation of the seemingly indescribable presented in the form of the unreadable.

[50] I will endeavour to describe the distinction in this way.

[51] To the extent that Ms TJ is making complaint that the conduct of her lawyers resulted in financial loss (she maintains that she received no benefit from the service provided and incurred substantial costs), she is alleging that her lawyers were not just incompetent in aspects of her representation, but negligent.

[52] When she alleges for example that she had suffered financial loss as a consequence of the lawyers failing to properly identify the extent of the relationship property assets, a proper examination of that complaint necessarily requires, if the awarding of compensation is to be considered:

_{(a) Evidence of failure on the part of the lawyers to identify assets.}

4 Stephen Todd (ed) The Law of Torts in New Zealand (6th ed, Thomson Reuters, Wellington,

2013) at [5.1].

(b) Evidence that the lawyers could have, and should have, been able to identify the assets.

(c) Evidence of the value of the assets.

(d) Evidence of the extent of the loss suffered.

(e) Evidence of a causal link between the failure of the lawyers, and the loss suffered by Ms TJ.

[53] It would be abundantly clear, that an enquiry of the nature identified above is one which necessarily would require the calling of expert evidence (for example valuation reports) and the opportunity to be provided to the parties to cross-examine witnesses and in general, subject the evidence to the type of scrutiny which would conventionally accompany a hearing in the civil court.

[54] That type of enquiry is not, and cannot, be conducted through the vehicle of a disciplinary investigation.

[55] The focus for this review must be on those aspects of Ms TJ’s complaints which properly engage a consideration as to whether the lawyers acted competently.

Should the lawyers have assisted Ms TJ in making an application for legal aid?

[56] Ms TJ says that she made repeated requests of her lawyers to file an application for legal aid, but they refused to do so.

[57] The lawyers contend that they explained to Ms TJ that they did not consider that she would qualify for legal aid.

[58] I am unable to resolve this conflict of recollections on the evidence available.

[59] I would note however that during the course of what was a retainer of approximately two years, Ms TJ was regularly invoiced.

[60] I can see no indication of Ms TJ having raised objection to the accounts when received, and questioned at hearing as to why she had not raised concerns with her lawyers if her understanding was that she would be receiving legal aid, Ms TJ said that she was disconcerted when she had received the accounts, but had expectation that the position with legal aid would be clarified at some point.

[61] There is evidence of the lawyers writing to Ms TJ updating her on progress and reminding her that they were becoming concerned about her escalating fees.

There is no indication that the lawyers were proceeding on the basis of an understanding that an application would be made for legal aid, nor any evidence of Ms TJ having persistently raised the issue with her lawyers.

[62] That said, in correspondence of 3 August 2012, Ms TJ made inquiry as to whether she was “entitled to legal aid like Mr Dotcom?”. In referencing the well-known and long running case of Mr Dotcom, I assume that Ms TJ was expressing concern that she seemingly did not qualify for a legal aid grant in contrast to Mr Dotcom who was widely reported to be a man of substantial financial means.

[63] The lawyers note that they had numerous telephone discussions and face to face meetings with Ms TJ as the matter progressed. They say that any inquiry made by Ms TJ as to her possible entitlement for a legal aid grant, would have been addressed with her when raised. They also note that some weeks prior to Ms TJ making her request of 3 August 2012, two Court orders had been secured which provided Ms TJ with spousal and child support in a combined sum which would have disqualified her from eligibility for a grant of legal aid.

[64] I am not persuaded that the lawyers neglected to follow instructions from

Ms TJ to make an application for legal aid.

Did the lawyers fail to take sufficient steps to identify the assets owned by, or under the control of, Mr TJ?

[65] Ms TJ believes that her husband failed to disclose significant assets. At the time the settlement was negotiated, it was her understanding that Mr TJ had failed to disclose his interest in:

(a) Four farm properties.

(b) A French bank account.

[66] She is adamant that her lawyers failed to take sufficient steps to ascertain the extent of her husband’s assets. She measures this failure against the representation she says the lawyers made to her to the effect that they had a particular skill and experience in relationship property disputes where parties owned significant assets outside the New Zealand jurisdiction.

[67] As evidence of their failings, Ms TJ notes that the lawyers had neglected to pick up that a document exhibited by Mr TJ which purported to be a certificate of title, recorded the value of the property described in the wrong currency.

[68] This apparent error did not, in my view, constitute a mistake of such significance that it puts into question the issue as to whether the lawyers took sufficient steps to adequately identify the relationship property assets.

[69] Questioned as to what evidence she had to support allegation that the lawyers had failed to adequately investigate the extent of Mr TJ’s assets, she advised that she had personal knowledge of the French bank account, and that her son had visited farm properties owned by Mr TJ.

[70] I am not persuaded that the lawyers failed to take sufficient steps to establish the full extent of the relationship property.

[71] Ms TJ’s argument that there were substantial assets that were not taken into account, fails to identify those assets with the degree of precision necessary which would provide reasonable basis for further enquiry.

[72] She provides no evidence to support argument that there were assets in existence that would have been identified if the lawyers had made proper inquiry. Indication that her son had visited properties that she now believes were owned by her husband falls well short of evidence that would have assisted the lawyers in tracking the properties.

[73] I accept that Ms TJ believes that her husband had concealed assets, but in the absence of any evidence which could assist the lawyers with attempts to trace assets which were not being disclosed, it is difficult to see what steps the lawyers could have taken, without real possibility of significant costs being incurred with no guarantee of outcome for Ms TJ.

[74] Nor does it appear to be the case that the question as to whether there were other assets for distribution was a live issue at the settlement conference.

[75] I note that the settlement agreement contains the standard provision recording that each party has made a full and proper disclosure of all property.

[76] If Ms TJ was able to secure compelling evidence to support her belief that her husband had failed to make full disclosure, she would have remedies available to her in the court. But mere indication of her belief that her husband has concealed assets overseas, does not provide a sufficient foundation for argument that the lawyers failed to take adequate steps to ascertain the extent of the assets.

Did the lawyers fail to ensure that the agreement entered into adequately protected

Ms TJ in the event of Mr TJ defaulting on its obligations?

[77] Ms TJ expressed concern that the lawyers had failed to adequately protect her position, by neglecting to ensure that the settlement agreement contained adequate provisions for enforcement in the event that Mr TJ defaulted on his obligations under the agreement.

[78] The agreement was entered into in September 2013. The review hearing proceeded on 8 August 2018.

[79] Ms TJ was questioned as to whether there had been problems with Mr TJ

honouring his commitments.

[80] Her response was less than forthcoming.

[81] Whilst she suggested that there had been some breaches, she was unable to identify precisely the nature of those breaches, or when they had occurred.

[82] When questioned as to whether an examination of her bank accounts would give indication that Mr TJ had largely met his obligations, Ms TJ conceded that it would.

[83] The breaches complained of appeared minor. There was no evidence produced by Ms TJ to support argument that there had been a sustained failure on Mr TJ’s part to honour agreements reached.

[84] Argument that the lawyers had failed to ensure that the settlement agreement contained provisions for enforcement in the event of default, presents as irrelevant in the circumstances.

Unpalatable as it may seem, enforcing the provisions of a relationship property agreement in circumstances where one of the parties is residing overseas can present significant difficulties. That is not to say that provisions could not have been included in the agreement to allow Ms TJ to attach the New Zealand assets (particularly the division on purchase or sale of the home) but the absence of those provisions does not, in my view, constitute a matter which requires a disciplinary response.

Did the lawyers fail to take steps to freeze assets?

[85] Ms TJ argues that the lawyers should have taken steps to freeze assets held in New Zealand when instructions were first taken.

[86] The asset of major significance was the matrimonial home.

[87] The home was registered in the name of both parties.

[88] She argues that bank accounts had been depleted by Mr TJ and that she had been left destitute. At the risk of repetition, it must again be emphasised that arguments such as this, cannot be re-litigated as part of review of a conduct complaint. I simply note that the settlement agreement entered into after completion of a lengthy mediation, makes no reference to jointly owned funds having been dissipated prior to settlement being reached.

[89] There is no evidence that the lawyers failed to adequately protect the New

Zealand based assets.

Did the lawyers fail to keep Ms TJ informed on significant matters?

[90] I have reviewed the lawyers’ correspondence and pleadings files. [91] The files are comprehensive.

[92] There are 9 correspondence files. The files provide comprehensive record of the degree of engagement between Ms TJ and the lawyers during the course of the retainer.

[93] Three things are immediately apparent from a perusal of the files. Firstly, it is obvious that Ms TJ (as she was entitled to be) was heavily involved in the progressing of the file. Her instructions to her lawyers are thorough, as are her responses to information received from her husband, and her husband’s lawyer. Secondly, it is clear that this was a bitterly contested dispute. Every issue, be it relating to maintenance or property issues, was intensely examined. Thirdly, there is no indication that the lawyers failed to keep Ms TJ properly informed. To the contrary, there is abundant evidence from the files that the lawyers were conscientious in ensuring that Ms TJ’s many inquiries were promptly responded to. The file is replete with evidence of the lawyers carefully setting out and explaining the issues for Ms TJ. When, on occasions, Ms TJ became concerned about how her matters were progressing, the lawyers promptly made arrangements to meet with her to address her concerns.

[94] I am not persuaded that the lawyers failed, as was their obligation, to keep

Ms TJ appropriately informed.

Should the lawyers have taken steps to ensure that Ms TJ was provided with details which would enable her to make contact with Mr TJ?

[95] Ms TJ makes complaint that the lawyers failed to ensure that she was provided with contact details for Mr TJ.

[96] It presents as surprising that Mr TJ would not seek to maintain contact with Ms TJ, particularly bearing in mind the interests of the children, and the inevitable need at some point in time, for matters relating to the family home to be resolved with finality.

[97] She says that she currently has no information which would assist her in locating Mr TJ.

[98] I do not consider that a failure to include a provision in an agreement requiring

Mr TJ to maintain contact details is an issue that engages conduct issues.

[99] A matter such as this falls squarely in Mr TJ’s domain. I do not see how a requirement for Mr TJ to keep Ms TJ informed of his whereabouts (sensible as that is) could be enforced.

Should the lawyers have taken Ms TJ’s concerns about her safety more seriously?

[100] Ms TJ explained the circumstances which prompted concern that Mr TJ

presented a risk to her safety.

[101] Without wishing to minimise Ms TJ’s concerns, the events she identified would not, in my view, have provided the lawyers with basis to conclude that they could advance the protection remedies available to Ms TJ with any reasonable prospect of success.

Did the lawyers contribute to delay in resolving matters?

[102] Ms TJ made complaint that her lawyers had contributed to the delay in reaching a final settlement.

[103] This criticism was advanced in general rather than specific terms.

[104] She suggested that if her lawyers had the degree of skill, knowledge and experience that she says they were repeatedly telling her they possessed, matters would have been resolved more promptly.

[105] She does not however lay the blame for delay solely at the door of the practitioners. She considered Mr TJ to be significantly responsible for the delays that had occurred. She says that she informed her lawyers at commencement that Mr TJ would be evasive and difficult to deal with. She notes that Mr TJ was continually failing to disclose information and deliberately attempting to prolong matters.

[106] Unfortunately, achieving a resolution of relationship property matters can be a time-consuming process, particularly in circumstances where, as appears to be the case here, one of the parties refuses to engage cooperatively in the process.

[107] Whilst I accept that Ms TJ was concerned at the time taken to bring matters to conclusion, I am not persuaded that the delay was attributable to any specific failings on the part of her lawyers.

Did the lawyers fail to achieve any outcome of value to Ms TJ?

[108] It was Ms TJ’s contention that, despite incurring substantial fees, her lawyers had achieved little of value for her.

[109] It was the lawyers’ view that they had achieved “an excellent outcome in

exceptionally difficult circumstances”.5

[110] The gulf between Ms TJ’s view of “nothing achieved” and the lawyers’ conclusion of having an achieved an “excellent outcome” for their client, illustrates, if more was needed, the diametrically opposed views of the parties on virtually every aspect of the retainer.

[111] It is not the role of a Review Officer to assess the fairness or otherwise of a property settlement, but Ms TJ’s determined and robust submission advanced at hearing to the effect that the lawyers had achieved absolutely nothing for her, is difficult to understand.

[112] Following separation from her husband, Ms TJ says that she was financially destitute, and lacking any means of financial support.

[113] Applications were made to the court for spousal and child maintenance orders.

[114] Interim spousal orders were made on 11 June 2012, 19 February 2013, and

_{15 May 2013.}

5 Lawyers’ correspondence to Complaints Service (17 May 2015) at [21].

[115] The lawyers submit (and there is no evidence to counter their position) that the orders provided Ms TJ with financial support over the period 11 June 2012 to

15 November 2013 in the sum of $234,000.

[116] The agreement entered into on 19 September 2013, required Mr TJ to pay maintenance to Ms TJ in the sum of $6,000 per month, from 1 October 2013 to

1 January 2018.

[117] The lawyers submit that the spousal maintenance package totalled more than

$540,000, running over a period of almost 6 years. The package is described by the

lawyers as “very substantial given the funds available”.6

[118] In respect to the property division, the lawyers contend that settlement was reached on the basis of a 60:40 split in favour of Ms TJ. That is contested by her. She considers that the lawyers’ analysis fails to take sufficient account of the extent of her liabilities under the agreement.

[119] I accept that Ms TJ believes that the full extent of the parties’ assets had not been disclosed and challenges the lawyers’ view of the extent of the maintenance received, but argument that the lawyers achieved “nothing” is quite unsustainable.

Was Ms TJ pressured into signing an agreement she was unhappy with?

[120] Ms TJ says that she was unhappy that the lawyers had agreed to have the relationship property mediated rather than, as she understood was the intention, to have the issue determined by the court.

[121] She says that the decision to attempt mediation was taken without consultation. She was surprised when advised that a mediation had been organised. She says that she was unhappy to be required to sit in a room with Mr TJ. She didn’t feel able to cope with that degree of engagement with him. Further, she complains that the mediation went on for too long, that she felt pressured and overwhelmed by the process, and that as a consequence, the results achieved fell well short of her expectations.

[122] The lawyers have a differing recollection. They say that Ms TJ told them that she had felt empowered by the mediation process, and that she expressed satisfaction with the outcome. The lawyers note that Ms TJ visited their office after the matter had been concluded bearing gifts, this say the lawyers, intended to convey her appreciation to the lawyers for the work they had done. Ms TJ dismisses this apparent indication of

6 Lawyers’ correspondence to Complaints Service (17 May 2015) at [5.2.3].

appreciation by explanation that it was simply old-fashioned courtesy rather than a reflection of satisfaction with the service provided.

[123] It presents as unusual, if not incomprehensible, that a lawyer would in circumstances such as these, explore, without discussing first with their client, the possibility of attempting to resolve a relationship property dispute through mediation, rather than progressing with proceedings that had been filed in the court.

[124] It is clear from the practitioners file that:

(a) Mr DM and opposing counsel discussed the possibility of a private mediation.

(b) These discussions proceeded on the basis that the Court proceedings would remain on foot if the mediation was unsuccessful.

(c) Mr DM wrote to Ms TJ on 7 August 2013, expressing a view that he considered mediation would be a good option.

(d) In that correspondence he indicates that if a mediation was to proceed, he would arrange for Ms TJ to meet with the mediator prior to the mediation.

(e) Ms TJ had indicated a willingness to attend mediation, provided that there was agreement that all matters identified by her as requiring settlement were addressed.

[125] On 8 August 2013, Ms TJ responded to Mr DM and expressed concern that the possibility of a mediation proceeding had been discussed with opposing counsel, without reference first to herself.

[126] On 14 August 2013 Mr DM wrote further to Ms TJ. In that correspondence he addressed concern that matters were taking so long to resolve, and reiterated his view that he considered mediation to be a sensible option. Mr DM advised that it was his view that what he described as the “mix of assets and issues” pointed inevitably to a settlement shaped by Ms TJ’s circumstances. He considered the scene was set for a resolution to be reached by agreement.

[127] At the conclusion of his correspondence, Mr DM invites Ms TJ to reflect on the issues raised, and to confirm if she would attend mediation. He notes that “we will of course spend time with you prior to the mediation preparing you for that process and

will also try to make time for you to meet [the mediator] in advance of the mediation

day”.

[128] Arrangements were made for Ms TJ to meet with both Mr DM and Ms ZP on Monday 26 August 2013. Correspondence was also forwarded to Ms TJ on that day which traversed a number of issues, including providing explanation as to how the suggestion of attempting mediation had arisen. Mr DM emphasises that Ms TJ is not being “bullied” into mediation, rather he was endeavouring to clarify what he considered to be the advantages of attempting mediation, including a consideration of likely costs if the matter was to proceed to a hearing.

[129] A file note was made recording the matters discussed with Ms TJ at the meeting on 26 August 2013.

[130] Immediately following that meeting, email correspondence was forwarded to Ms TJ confirming the date the mediation would proceed, and advising a time for Ms TJ to meet with the mediator prior to the mediation.

[131] Whilst I accept that Ms TJ initially had reservations about attending mediation, I am not persuaded that she was pressured to do so.

[132] To the contrary, it is apparent that the lawyers were attentive to ensuring that the process was discussed with Ms TJ, and that she was familiar with how the mediation would be conducted.

[133] I have no doubt that the process was stressful for Ms TJ, as Court proceedings may also well have proven to be. But I do not think it probable that Ms TJ was pressured into accepting a settlement that she was unhappy with. The correspondence on the lawyers’ file gives clear indication that the lawyers were sensitive to the need to ensure that Ms TJ was as comfortable with the process as she could be. In view of the careful attention the lawyers had paid to preparing Ms TJ for the mediation (including making arrangements for her to meet with the mediator beforehand), it would present as unlikely that the lawyers would not be similarly alert to the need to ensure that Ms TJ was properly protected in the course of the mediation. The parties had the benefit of an experienced mediator, and it could reasonably be expected that the mediator would have immediately intervened if he felt that Ms TJ was being subjected to any undue pressure.

[134] The lawyers say that they were, following the mediation, complimented by the mediator on the manner in which the lawyer attending the mediation had assisted with ensuring the mediation progressed smoothly.

Were the fees charged fair and reasonable?

[135] I have carefully reviewed the file (together with the pleadings) and, having done so, concluded that it would be appropriate to return the matter to the Committee with a recommendation that a cost assessor be appointed to review the fees.

[136] I do so with a measure of reluctance as I am mindful that there has been some considerable delay in having this matter resolved. That reluctance is heightened by the view I have formed that the lawyers’ files provide abundant evidence of them having provided attentive and competent representation to Ms TJ.

[137] I am satisfied, as was the Committee, that Ms TJ was fully informed as to the fees that were accruing. When her fees were around the $100,000-mark, request was made to the Court to sanction release of funds to Ms TJ that would have enabled her to meet her legal costs. Correspondence on the file records that the lawyers were keeping Ms TJ abreast of the situation with her escalating fees, and advising her that whilst they had been prepared to proceed with a significant amount of work in circumstances where she had no immediate capacity to pay, that was not a situation they could tolerate indefinitely.

[138] I am not persuaded that Ms TJ was advised that all her costs would be met by her husband although there is indication that the lawyers had informed her of their expectation that there would likely be a measure of cost recovery if there was a positive outcome from her court proceedings. That was tempered with the indication given to her that it would be unlikely, even in the event that she was successful on all points, that the Court would consider making orders directing her husband to pay all of her fees.

[139] It remains the view of the lawyers that the settlement negotiated did provide significant compensation for costs.

[140] It is clear that a substantial amount of time and effort was spent in preparing the affidavit evidence in support of (and responding to) the maintenance and relationship property applications. I think it likely that Ms TJ’s perhaps overly conscientious approach to addressing and responding to every issue in detail, may have contributed to the lawyers having to spend more time on the file than they needed to.

[141] However, in examining the analysis the Committee has provided in respect to the fee issue, I consider that it falls short of what is required when considering a fee of such substance.

[142] There can be no argument that a fee charged of $169,904.45 (reduced by the lawyers to $155,000) presents as a sizeable fee.

[143] The pool of relationship property assets which fell to be divided, was in total value, relatively modest. The major asset was the matrimonial home valued for relationship property purposes, at $530,000. The property was encumbered with a mortgage of $66,089 at the time the parties reached a settlement.

[144] The retainer was on foot for approximately two years.

[145] In reaching its view that the fee charged was fair and reasonable, the

Committee concluded that:

(a) the time applied to Ms TJ’s matter was reasonable and justified in light of

the complexity of the matter; and

(b) the jurisdictional issues engaged were complex; and

(c) the resolution of issues had been prolonged by the uncooperative approach adopted by Mr TJ; and

(d) the results achieved were positive for Ms TJ; and

(e) the matters were of importance to Ms TJ; and

(f) Ms TJ was on notice as to the extent of the fees that were accruing.

[146] Overarching this analysis, was the Committee’s observation that it had considered the reasonableness of the fee charged by reference to the factors set out in r 9.1 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules

2008.

[147] The Committee acknowledged that the fees charged were significant.

[148] At the commencement of its inquiry, the Committee made request for the lawyers to provide their files.

[149] A file note from the Complaints Service dated 12 October 2015 records that on receipt the files were given to a member of the Committee to review, with intention that the Committee would discuss the outcome of the review at its next meeting.

[150] It is pertinent to note that Standards Committees are made up of practicing lawyers, familiar with the practice of law including the conduct of litigation in the courts,

as well as lawyers’ duties and obligations and the pressures under which lawyers often find themselves. Standards Committees must also include a lay member. This format allows for a range of views – legal and non-legal – to be considered. The process is flexible and robust.

[151] I think it probable that the Committee member tasked with the job of reviewing the files, would have been a practitioner experienced in the area of family law.

[152] It is the experience of this Office in considering the raft of fee complaints that come before it by way of review, that it is common practice for a Committee to appoint a cost assessor when considering the reasonableness or otherwise of a fee of this magnitude.

[153] A costs assessor’s report is generally sufficiently detailed to provide comfort to the lawyer’s client that their fee complaint has been the subject of attentive consideration.

[154] Not infrequently, though not always, a costs assessor will consider it helpful to meet with the parties, thus providing both with an opportunity to raise any particular points of concern.

[155] Armed with the assessor’s report, it then falls to the Committee to make a decision.

[156] In circumstances where a Committee member has been asked to review a practitioner’s fee and report back, if the Committee is significantly influenced by the recommendations of the Committee member tasked with conducting a detailed review of the file, it would be helpful in my view, for the decision to record:

(a) that a member of the Committee equipped with specific expertise in the relevant area of work undertaken had reviewed the files.

(b) Details of the reasoning that led to the conclusions arrived at, by reference to specific examples, rather than by relying solely on reference to general principles.

[157] I am mindful that membership of a Standards Committee inevitably carries with it a workload that can significantly encroach on a Committee member’s time.

[158] There are practical reasons why Committee decisions need to be succinct.

[159] But to ensure that the consumer protection objectives of the Lawyers and Conveyancers Act 2006 are met, it is important that parties receiving a decision from a Committee are fully aware as to the reasoning followed by the Committee in arriving at its decision.

[160] This is not to suggest that the Committee’s decision in this instance fails to provide explanation for the conclusions reached, but rather to emphasise that when the fee under consideration is substantial, more is required than simple reference to the factors considered to be relevant.

[161] The Committee properly noted that it had, in the course of considering the fee issue, referenced the factors set out in r 9.1 of the Rules.

[162] Rule 9.1 provides a helpful summary of the factors that may be relevant in assessing the reasonableness of a fee, but care must be taken to ensure that reference to the factors considered does not occur in isolation, and that there is, when required, necessary amplification as to the relevance of the rules relied on.

[163] It has been noted that determining a reasonable fee is “an exercise in assessment, an exercise in balanced judgment, not an arithmetical calculation”.7

[164] There may be circumstances where it is sufficient to simply reference the fee factors relied on, but in others it will be necessary to provide more comprehensive explanation in order to ensure that the complainant fully understands the reasoning that has gone into the decision-making process.

[165] Reference to a rule 9.1 factor may have little meaning for a complainant in the absence of explanation as to why the factor was considered significant.

[166] The simple citing of a rule 9.1 factor does not necessarily imbue the factor with any particular significance or relevance for the fee enquiry.

[167] The Committee noted that the positive results achieved at settlement, and importance of the matter to Ms TJ were matters of significance in considering the reasonableness of the fee.

[168] I do not diminish the importance of either of those factors to Ms TJ, but it is difficult to see how “importance” here, in the absence of explanation, assumes particular relevance as a factor in the consideration of the overall fees charged. It would be obvious that the matters were of importance to Ms TJ. She had separated

7 Property and Reversionary Investment Corp Ltd v Secretary of State for the Environment

[1975] 2 All ER 436 (QB).

from her husband. She had limited financial means. She was understandably anxious to achieve a relationship property settlement that provided her with opportunity to move forward. For most clients to approach a lawyer for advice, be it the case that the matter is simple or complex, routine or unusual, the matters are generally of real importance to the client.

[169] If importance is to assume a significance over and above what could be the reasonably expected appreciation of the relevance of the matter to the client, explanation needs to be provided as to how that heightened level of importance materially impacted on the fees charged. If, for example, the importance of the matter to the client had direct impact on the extent of Ms TJ’s engagement with the lawyers (as may have been the case here) it would be helpful, and necessary for the decision to explain that.

[170] The Committee noted that the jurisdictional issues were complex. This was a relevant factor for the Committee to identify, but it would have been helpful (particularly for Ms TJ) if some explanation had been provided as to how the jurisdictional complexities contributed to the escalation of the fee.

[171] I note from the lawyers’ files that applications were made for substituted service, and it is readily apparent that Mr TJ’s lack of cooperation with the process and difficulties in being able to communicate with him overseas, meant that more time had to be spent on the file. But other than the typical problems which commonly arise when one of the parties adopts an uncooperative attitude to resolving matters following a marital separation, there is no explanation provided as to how the jurisdictional issues impacted on the fee. Other than the applications made for substituted service, I am unable to identify any application put to the court to deal with a specific jurisdictional issue.

[172] The Committee also noted that the time that had been applied to Ms TJ’s matters was reasonable and justified in light of the scale and complexity of the matter. Again, more explanation is required. I do not discount the difficulties that were clearly encountered as a consequence of Mr TJ’s apparent lack of cooperation, and the practical difficulties occasioned by the fact that he was residing overseas and was difficult to communicate with, but the decision would have been assisted by clarification as to how issues of complexity materially impacted on the fees charged.

[173] Ms TJ’s complaint that the fees charged of $150,000 were excessive, was addressed by the Committee in one brief paragraph of its decision.8 It did so, by reference to time, scale and complexity, jurisdictional difficulties, and positive outcome. These factors, the Committee noted, were to be viewed through the prism of the uncooperative approach adopted throughout by Mr TJ.

[174] The decision would, in my view, have provided more assurance to Ms TJ, if there had been greater amplification of the reasons given.

[175] Whilst, as I have noted, I accept that members of a Standards Committee may be ably equipped to review a significant fee, there are demonstrable benefits when reviewing a fee of this substance, if a Committee appoints a costs assessor. Those advantages include the likelihood that the analysis of the fee will be more comprehensive, and the opportunity that process allows for the complainant to be more directly involved in the fee enquiry.

[176] I have indicated my intention to return the fee complaint to the Committee.

[177] For avoidance of doubt, I emphasise that further inquiry into the reasonableness of the fee charged is to focus solely on that issue, and not to be diverted by inquiry as to whether:

(a) the lawyers were required to make an application for legal aid, and

(b) the lawyers provided assurances to Ms TJ that her husband would be required to cover her legal costs.

Anonymised publication

[181] 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.

Decision

(a) Pursuant to s 209(1)(a) and (b)(i)–(ii) of the Lawyers and Conveyancers

Act 2006, the Standards Committee is directed to reconsider the question as to whether the fees charged were fair and reasonable.

8 At [17], preceded by reference in [16] to r 9.1 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008.

(b) In undertaking that reconsideration, the Standards Committee is to appoint a cost assessor to undertake a review of the fee.

(c) In all other respects the decision of the Standards Committee is confirmed

_{DATED this 26}th _{day of September 2019}

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:

Ms TJ as the Applicant

Mr DM and Ms ZP as the Respondents

Mr KN as the Related Person [Area] Standards Committee [X] New Zealand Law Society