RR and [SS] Trust v QQ [2019] NZLCRO 123 (3 December 2019)

Last Updated: 20 December 2019

LCRO 2/2017

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 RR AND [SS] Trust

_Applicant

AND QQ WW EE GG TT YY UU OO PP ZZ

FF AND DD

_Respondent

_DECISION

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

Introduction

[1] Mr RR has applied for a review of a decision by the [Area] Standards Committee [X] which declined jurisdiction over his complaint concerning conduct on the part of QQ, WW, EE, GG, TT, YY, UU, OO, PP, ZZ, FF and DD (the lawyers), all of whom are or have been directors of [REW] Ltd (Law Firm), a solicitors’ nominee company (the nominee company).

[2] Throughout the time Mr RR/the trust was an investor, the nominee company was to be run according to the Lawyers and Conveyancers Act (Lawyers: Nominee Company) Rules 2008 (the Rules) made under the Lawyers and Conveyancers Act

2006 (the Act).

[3] The history of Mr RR’ complaint is set out in the Standards Committee’s

determination which is the subject of this application for review. It refers to: (a) Mr RR’ original complaint;

(b) A decision by this Office referring parts of Mr RR’ original complaint back to a Standards Committee for it to reconsider; and

(c) a comprehensive report by Mr JJ.

[4] In the Standards Committee’s determination under review, the Committee rejected jurisdiction on the basis that all the elements of Mr RR’ complaint had, by that stage, already been considered and determined.

[5] Mr RR disagrees, and with assistance from counsel, LL, has applied for a review of the decision.

Application for review

[6] The grounds of Mr RR’ application for review are that the nominee company’s compliance with the Rules between 2007 and May 2009 when the trust became an investor has not previously been considered or determined, and is therefore not, as the Committee concluded, res judicata.

[7] Mr RR says that conduct:

relates to a different time period, different actions, as well as different practitioners (although there is some cross over with [Redacted]).

Review on the papers

[8] The parties have agreed to the review being dealt with on the papers pursuant to s 206(2) of the Lawyers and Conveyancers Act 2006 (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, as I do.

Nature and scope of review

[9] The nature and scope of a review have been discussed by the High Court, which said of the process of review under the Act:1

... 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.

[10] More recently, the High Court has described a review by this Office in the following way:2

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.

Discussion

[11] If the Committee correctly declined jurisdiction, this Office would also lack jurisdiction under the Act to consider and determine this review for the same reason. No concluded view is expressed on review regarding the jurisdictional point. This review is determined on a different basis.

[12] Mr RR is correct when he says that the conduct of the nominee company that is the subject of the decision under review relates to a different time period, different actions, and different practitioners (except for [Redacted]). The Committee did not consider or make a determination about conduct said to have occurred between 2007 and May 2009 when the Trust became an investor. Mr RR acknowledges that he has

_{no direct, or personal, knowledge of events before the Trust became an investor.}

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

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

[13] Any other investor who had interests in the nominee company from 2007 onwards that may have been affected in a similar manner to that described by Mr RR will be familiar with their own losses (if any). Any such investor has the same statutory right to make a complaint under the Act as any other investor.

[14] However, as Mr RR/the Trust was not an investor in the nominee company between 2007 and mid-May 2009, he and the trustees do not have sufficient personal interest over that period to support a complaint about the nominee company.

[15] Complaints made under the Act are private. They are not in the nature of a class action. Overlaps are undesirable.

[16] The complaint that is the subject of the Standards Committee’s determination under review was made in 2016. Quite some years had passed since the subject matter of that complaint arose. Delay often presents practical difficulties in investigating complaints.

[17] However, if a complaint were to be made by another investor, at least some of the difficulties that can arise from delay could be surmounted by reference to the report that was prepared to assist in addressing the concerns Mr RR had raised. That report forms part of the nominee company’s record held by the New Zealand Law Society (NZLS).

[18] The interests of consumers and members of the public, in the form of affected investors who have not registered concern, is better protected than it would have been if there had been no complaint by Mr RR, and no report had been prepared in response to that complaint.

[19] Importantly, the substance of Mr RR’ complaint on behalf of the Trust has been addressed by the Committee and the LCRO. If other investors wish to advance complaints about their own involvement with the nominee company, the concerns of those consumers can be considered on their particular facts, within the framework of the legislation, regulations and rules that applied at the time. It is noted that the regulatory regime changed from 1 August 2008 when the Law Practitioners Act 1982 and rules made under that were revoked and replaced by the Act and the regulations and rules made under that.

[20] If the Committee’s decision to decline jurisdiction was not correct, the view formed independently on review is that further action on Mr RR’ complaint is not necessary or appropriate for the reasons discussed above. Those include the opinions that:

(a) the length of time that has elapsed between the date when the subject matter of the complaint arose and the date when the complaint was made is such that further investigation of the complaint is no longer desirable; and

(b) Mr RR and the trust do not have sufficient personal interest in the subject matter of the complaint insofar as it relates to the operation of the nominee company between 2007 and May 2009 when Mr RR and the trust were not investors; and

(c) It is not necessary or appropriate to take further action on Mr RR’ complaint when the interests of other investors whose interests may be affected are not involved in this statutory processes of complaint and review, but those investors have a right under the Act to make a complaint without involving Mr RR.

[21] On the assumption there is jurisdiction to do so, this review is determined pursuant to ss 211(1)(b) and 138(1)(a), (e) and 138(2) of the Act.

Incorporated Law Firms

[22] Although it makes no difference to the outcome of this review, I observe that the complaints were processed against the individual lawyers concerned, rather than treating the nominee company as an incorporated law firm for the purposes of the Act. The nominee company was providing services that are regulated by the Rules which are made under the Act. Without looking any further into the facts, it may be that the nominee company was caught by the definition of an incorporated law firm set out in s 6 of the Act. If that is correct, it may be that the complaint could have been processed against the nominee company with links to the individual lawyers involved in its operations from time to time.

Decision

[23] Pursuant to ss 211(1)(b), 138(1)(a), (e) and 138(2) of the Lawyers and Conveyancers Act 2006, further action on Mr RR’ complaint about the lawyers is not necessary or appropriate.

_{DATED this 3rd day of December 2019}

D Thresher

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:

RR and [SS] Trust as the Applicant

Ms QQ, Ms WW, Ms EE, Ms TT and GG, YY, UU, OO, PP, ZZ, FF and DD as the

Respondents

LL as Representative for the Applicant

Ms MM as Representative for the Respondents

[Area] Standards Committee [X] The New Zealand Law Society