WR v VB [2019] NZLCRO 20 (4 March 2019)

Last Updated: 23 March 2019

	LCRO 255/2016
CONCERNING	an application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006
AND
CONCERNING	a determination of [Area] Standards Committee [X]
BETWEEN	WR Applicant
AND	VB Respondent

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

DECISION

Introduction

[1] Mr WR has applied for a review of the determination by [Area] Standards Committee 1 (the Committee) to take no further action with regard to his complaints about Mr VB.

Background

[2] Mr WR instructed Mr VB in 2011 to defend him against indecent assault charges laid by the police. Later in November 2011 Mr WR instructed Mr VB to act for him with regard to employment related matters. Mr VB drafted a personal grievance claim which proceeded to mediation and then to the Employment Relations Authority.

[3] The Authority found that Mr WR had been unjustifiably dismissed by his employer ([Company A]) and made awards in favour of Mr WR. [Company A] appealed to the Employment Court which upheld the Authority decision and made

further orders, which [Company A] then appealed to the Court of Appeal. The Court of Appeal upheld the judgment of the Employment Court.

[4] Invoices rendered by Mr VB during the time he acted for Mr WR were:

31 March 2011	$	5,370.00	–	prosecution
9 December 2015	$	6,300.00	–	services from 5 November 2014 to 13 November 2015 – appeal proceedings
9 December 2015	$	1,050.00	–	cross appeal re WINZ
30 June 2016	$	2,520.00	–	services from 14 November 2015 to 30 June 2016 re appeals
11 July 2016	$	5,069.09	–	employment and personal grievance claim for period from 21 November 2011 to 3 November 2014.1

[5] Mr WR had made his complaints known to Mr VB prior to lodging his complaints with the Lawyers Complaints Service and Mr VB had responded in some detail to Mr WR. Mr VB’s responses to the complaints are to be found in the correspondence from Mr VB to Mr WR provided with the complaint.

Mr WR’s complaints

[6] Mr WR included a two and a half page letter with his complaint. The letter complained about the conduct of Mr VB and the barrister instructed by him (Ms MH). The complaints about Mr VB were distilled by the Committee as relating to Mr VB’s fees and a complaint relating to the retention of funds by Mr VB pursuant to an undertaking provided by him (see [11] below).

The Standards Committee determination

[7] The Committee identified the issues to be addressed:2

The Standards Committee must consider whether the fees charged by Mr VB are fair and reasonable for the work undertaken and whether Mr VB is obliged to hold the funds said to be due to the OA and the IRD.

Fees

[8] Mr WR complained that Mr VB’s fees (which totalled $20,309.09 excluding GST and disbursements) were unfair “as they exceed the amount of $8843.50 claimed in Mr WR’s employment court proceedings”.3

1 There is no explanation why this bill was rendered on 11 July 2016 for the period stated.

2 Standards Committee determination, 6 October 2016 at [2].

[9] The Committee excluded from consideration the invoices rendered by Mr VB relating to the Employment Court proceedings as these had been approved by the Court, and restricted itself to a review only of “those fees (exclusive of GST) relating to the matter before and after completion of the Employment Court proceedings, being:”4

a.	31 March 2011	$	5,370.00
b.	11 July 2016	$	5,096.09
c.	30 June 2016	$	2,520.00

[10] Having considered these invoices the Committee determined the complaint about fees by saying:5

Having considered the work undertaken for Mr WR for the police prosecution in 2011 and those employment matters between 2011 and 2016 unrelated to the appeals, the time recorded, the skill and experience of Mr VB in his role as solicitor for Mr WR on criminal and employment matters and then as instructing solicitor for Ms White in the Employment Authority and Employment Court, the importance of the matter to Mr WR, the generous offers to waive and discount fees by Mr VB, the Standards Committee, whose members include those experienced in such matters, is of the view that the fees are fair and reasonable.

Retention of funds

[11] The Committee noted Mr VB was obliged to provide an undertaking to enable the Court to release funds paid in by [Company A]. Mr VB undertook the following:6

1. Upon the sum of $[–] currently held in the Ministry of Justice Trust Account being paid into my Trust Account no [xxxx], I hereby personally undertake as follows:
   
   • (a) To retain in my Trust Account 35% of the taxable portion of the gross lost wages that may become due to the Inland Revenue Department; and
     
   • (b) To retain in my Trust Account the sum of $10,000 that may become due to the Official Assignee.
     

[12] The Committee commented that:7

no payment at all would have been released by [Company A] had Mr VB not provided the undertaking. Having given the undertak[ing], Mr VB is bound to hold the funds until the amounts due (if any) have been ascertained.

3 At [3].

4 At [7].

5 At [9].

6 Mr VB undertaking 29 June 2016.

7 Standards Committee determination, above n 2, at [14].

[13] The Committee determined to take no further action in respect of this complaint and:8

encourage[d] Mr WR to liaise with Mr VB so that the necessary letters can be sent to the OA and the IRD to obtain approval for the release of his court awarded money.

The application for review

[14] Mr WR has raised the following issues to be addressed on review:9

• (i) Mr VB held and “unnecessarily delayed” payment of funds to IRD and the Official Assignee (OA).
  
• (ii) Mr VB failed to advise him about fees owing for attendances prior to the claim for costs against [Company A].
  
• (iii) Mr VB did not provide any letter of engagement.
  
• (iv) Mr VB’s fees were “unfair, unreasonable and exceed the services...rendered”.
  
• (v) payments made by Mr WR to Mr VB on account of costs “ha[ve] not been considered in the final account”.
  

Review

[15] This review has proven to be somewhat difficult in that Mr WR’s complaint and his application for review, has taken the form of a discursive letter in which issues relating to both Mr VB and Ms MH are intermingled. In addition, Mr WR’s language skills are somewhat restricted (a fact acknowledged by him) which makes the letter of complaint and the review more difficult to comprehend.

[16] Mr VB did not respond directly to the Lawyers Complaints Service following receipt of the complaint or to this Office following receipt of the application for review. It has therefore been necessary to consider in detail all of the copies of correspondence, invoices, statements and other documents to ascertain how they relate to the complaint and review.

Fees — jurisdiction

[17] The Committee did not consider it could interfere with Mr VB’s invoices for the Employment Court proceedings, as these had been considered and approved by the

8 At [15].

9 Application for review, 15 November 2016 – “Statements of facts and contentions”.

Court. It restricted itself therefore to a consideration of the invoices referred to in [9] above.

[18] Whilst a decision by the Court as to a lawyer’s bills of costs is helpful, it is not to be regarded as excluding the jurisdiction of the Complaints Service to consider the quantum of the bill(s). In Henderson Reeves v Busch, the law firm Henderson Reeves applied to bankrupt Ms Busch for non-payment of its legal bills.10 The application for bankruptcy was filed in September 2011.

[19] Prior to that, the law firm had commenced recovery proceedings in the District Court, and the bankruptcy proceedings were put on hold until the District Court proceedings were completed. The District Court gave judgment on the bills of costs to Henderson Reeves.

[20] Ms Busch appealed that judgment. She also (in October 2012) made a complaint to the Lawyers Complaints Service about the bills of costs.

[21] The Committee declined to take any further action on the grounds there was an adequate remedy otherwise available to Ms Busch.11 Ms Busch applied to this Office for Review, but at the time the proceedings issued by Henderson Reeves were before the Court, the Review had not been completed.

[22] The issue addressed by the Court was whether or not s 161 operated to stay the proceedings whilst the complaint was still in train. The Court held that it was not prevented from determining liability, but quantum still remained to be finalised by the Review.

[23] The principle derived from that judgment which applies to this Review, is simply that, even though a lawyer’s bill of costs has been before a Court, and included in an order for costs, the jurisdiction of the Complaints process is not excluded thereby.

[24] Consequently, on review, all of Mr VB’s bills of costs will be considered.

Fees — quantum

[25] All Mr VB’s fees have been based strictly on the time expended by him, charged at the rate of $350 per hour. That is a reasonable hourly rate for a practitioner

10 Henderson Reeves Connell Rishworth Lawyers Ltd v Busch [2013] NZHC 2521.

11 Lawyers and Conveyancers Act 2006, s 138(1)(f).

of Mr VB’s experience. The Committee noted the factors to be considered when assessing the fairness of a fee of which the time expended is only one.12

[26] An important factor in reaching a decision on this issue, is that Mr VB endeavoured to assist Mr WR by making significant concessions with regard to his fees:

• He offered to waive his initial fee relating to the prosecution following approval of the employment related accounts
  
• The 11 July 2016 fee had been reduced from $15,900
  
• The 30 June 2016 invoice had been discounted by 20 per cent
  

[27] The Committee did not address the two invoices dated 9 December 2015 presumably on the grounds that these were the invoices considered by the Employment Court which found them to be reasonable.13 However, they too, were calculated on the basis of the time expended only.

[28] The Committee did not call for Mr VB’s files or request a formal costs assessment by an independent costs assessor. However, it is assumed members of the Committee included lawyers who practice in an area of law similar to, if not the same as, the areas of law under consideration here. The Committee would have also included lay members.

[29] Mr VB’s invoices are sufficiently detailed to have enabled the Committee to form a view of the work required to be undertaken for Mr WR and the likely time involved in undertaking that work.

[30] The Committee considered Mr VB’s fees to be fair and reasonable and the expertise of the Standards Committee members should not be discounted. This is the situation which arose in AO v ZH where the Review Officer said:14

The Committee comprises lawyers and lay people who would have considered countless complaints about fees and their expertise and opinion is not to be discounted.

[31] That decision is also helpful in that the complainant in that case (as here) had not offered any evidence or opinion as to what he considered to be a fair and

12 Standards Committee determination, above n 2, at [8].

13 At [7].

14 AO v ZH LCRO 301/2011 (12 March 2014) at [15].

reasonable fee. The failure to provide any useful opinion was commented on by the Review Officer who said:15

Complaints about fees are often made in an attempt to stall recovery by the lawyer which is what s 161(1) of the Lawyers and Conveyancers Act 2006 provides. It would be completely unfair to lawyers if there was no requirement for a complainant to provide some support for his or her complaint. I acknowledge that it is often difficult for a complainant to provide objective comment on what a fair and reasonable fee should be, and consequently it is not possible to be definitive as to what a complainant should produce to support a complaint about fee. Each case will have to be judged on its particular facts.

[32] I have earlier noted that Mr VB restricted the basis for his billing to the time expended only, whereas r 9 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 provides various other factors that could have been taken into account when determining whether or not the fees rendered were fair and reasonable.

[33] In all of the circumstances there is no reason to disagree with the opinion of the Committee members.

Funds held for the OA/IRD

[34] In his application for review Mr WR asserted that “the overcharge by the respondent and unnecessary delay the payments owes to OA and IRD was not considered”. It is assumed that the reference to “overcharge” is not a reference to Mr VB’s fees but to Mr WR’s allegations that the amounts retained and/or paid were more than required.

[35] The Committee addressed the undertaking and payments made by Mr VB in [11]–[15] of its determination. The undertaking enabled the funds held in court to be released and payments due to the OA and IRD to be provided for. It is noted that the undertaking was to “retain” the specific amounts for payment of sums that “may become due” to the OA and IRD.

[36] Mr WR has provided a copy of a letter from Mr VB to him dated 9 December 2016 in which Mr VB confirms that the OA “makes no claim to the funds held on [Mr WR’s] behalf”. Mr VB had retained (as undertaken) the sum of $10,000 for this purpose. He was obliged to fulfil his undertaking to the OA but now that the OA has advised there is no claim against the money held by Mr VB it is assumed Mr VB has

15 At [9].

accounted to Mr WR for this money. For the purposes of this review the determination of the Committee to take no further action in respect of this issue is confirmed.

[37] With regard to the funds due to the IRD, the content of the letters to Mr WR 18 July 2016 and 6 April 2017 are noted. In these letters Mr VB explains what Mr WR was required to do to quantify the amount due to IRD, by completing tax returns that would have enabled the payment to be made to the IRD and Mr VB to account to Mr WR for any balance. That matter has presumably also been completed by now and for the purposes of this review the determination to take no further action is confirmed.

Other matters

[38] Mr WR complained that payments made by him to Mr VB on account of costs had not been fully accounted for. He has not provided any detail of alleged payments made by him which have not been accounted for, but with his complaint he included a number of statements provided by Mr VB. In particular the statement dated 13 July 2017 is headed “paid retainers/costs”. This statement clearly records all amounts receipted by Mr VB and if Mr WR considers payments made are not accounted for, details would be required. Nothing has been provided by Mr WR and without any information no further action can be taken with regard to this complaint. The determination of the Committee to take no further action in respect of this matter is confirmed.

[39] In the application for review Mr WR also asserts that Mr VB did not provide any Letter of Engagement. This is not a matter which was referred to in Mr WR’s complaint and consequently not addressed by the Committee. No new matters can be addressed on review and this issue is not therefore considered in this decision.

Decision

[40] Pursuant to s 211(1)(a) of the Lawyers and Conveyancers Act 2006, the determination of the Committee to take no further action in respect of Mr WR’s complaints, is confirmed.

DATED this 4th day of March 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:

Mr WR as the Applicant Mr VB as the Respondent

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