GB v JV [2019] NZLCRO 28 (20 March 2019)

Last Updated: 1 April 2019

	LCRO 218/2018
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	GB Applicant
AND	JV Respondent

DECISION

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

Introduction

[1] Mr GB has applied for a review of a determination by [Area] Standards Committee [X] (the Committee) which decided further action on his complaint about his lawyer, Ms JV, was unnecessary or inappropriate pursuant to s 138(2) of the Lawyers and Conveyancers Act 2006 (the Act).

Review Application

[2] Mr GB’s application for review is advanced on the grounds that the Committee erred in finding that:

• (a) Ms JV provided a letter of engagement the day after she declared the agreement unconditional;
  
• (b) it was more likely than not that Mr GB had agreed that the due diligence condition was satisfied; and

• (c) Mr GB’s instruction to declare the agreement unconditional could be inferred from the first sentence of his email by taking it out of its surrounding context.
  

[3] Mr GB says his email, properly interpreted, was not an instruction to declare the agreement unconditional, but was a request for advice on what the next step was in the sale and purchase process. He says the next step was for him to complete due diligence so he could satisfy that condition, and then the agreement could be declared unconditional.

[4] Mr GB contends that Ms JV probably did not put her mind to ensuring that Mr GB actually knew what due diligence meant. Although he accepts there was some urgency on his part in declaring the agreement unconditional, due diligence, and confirming satisfaction of the due diligence condition to the purchaser, should not have been done “willy nilly”.

[5] Mr GB says Ms JV has not provided any file notes to support the position she advances. He considers Ms JV should be found to have committed serious misconduct for failing to take full and informed instructions from him before confirming the agreement was unconditional. Mr GB says Ms JV’s failure to provide a letter of engagement before she accepted his instructions to start work constitutes unsatisfactory conduct or serious misconduct.

[6] Mr GB has not advanced the suggestion on review, which he raised in his complaint, that he may be entitled to damages.

Ms JV’s reply

[7] Ms JV maintains the position she adopted in the complaint process. Ms JV confirms, and it is not disputed, that she provided Mr GB with a letter of engagement the day after the agreement was declared unconditional. She says she understood from Mr GB at the time he instructed her that he believed that if he did not secure the purchase, the vendor would probably cancel the agreement. Ms JV says she understood that Mr GB had already read all the clauses, and she provided a copy of an email she had sent to Mr GB highlighting various clauses which included the due diligence condition. Mr GB told her he accepted those conditions and did not ask her to explain any of them.

[8] Ms JV says the email she received from Mr GB before she declared the agreement unconditional was only part of his instructions. She understood Mr GB wanted to know what the next step was. As it was clear to her that Mr GB’s objective

at the time was to secure the purchase, and he had raised no concerns about any of the conditions, the next step for her was to declare the agreement unconditional.

[9] Ms JV’s position is that she understood from her discussions with Mr GB that he was more concerned about securing the purchase than he was with satisfying conditions before he committed himself to the purchase. Consistent with the terms of the retainer, Ms JV says she declared the agreement unconditional. That triggered Mr GB’s obligation to pay the deposit to secure the purchase, and Mr GB attended to that.

Review on the papers

[10] This review has been undertaken on the papers pursuant to s 206(2) of the Act because it appears that it can be adequately determined on the basis of the information available. Having carefully read the complaint and associated materials, including the Committee’s decision and materials provided on review, no additional issues or questions arise that require further comment by either party.

Nature and scope of review

[11] 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.

[12] 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

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].

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

[13] The professional standards issue Mr GB raises is that Ms JV declared the agreement unconditional without providing advice that informed his instructions.

[14] Ms JV has produced no file notes to support her recollections but refers to a number of conversations she had with Mr GB at the time from which she understood the retainer was for her to secure Mr GB’s position by declaring the agreement unconditional. That was his overarching objective at the time, and that is what she did.

[15] Mr GB’s position is that most of those discussions did not, in fact, occur. Mr GB says Ms JV should be disbelieved simply because she has not produced any contemporaneous file notes to support her evidence.

[16] The production of contemporaneous file notes would have been helpful, but is not determinative of this review.

[17] Mr GB says the Committee’s decision is wrong. Mr GB disputes the meaning to be attributed to his email to Ms JV on 13 June 2016 in which Mr GB said:

I have read all the clauses that you indicated, and I accept those conditions. So just tell me what to do for the next step please, thanks very much

[18] It is fair to observe that Mr GB’s email is ambiguous. His question does not invite consideration of who is to take the next step: him or Ms JV. That ambiguity can only be satisfactorily resolved with reference to the surrounding context at the time.

[19] Mr GB says his email was not an indication that he was satisfied with all of the conditions, including the due diligence condition. He says he did not know what the due diligence clause meant. Unfortunately, that is not apparent from the email or any of the other contemporaneous evidence available on review.

[20] There is no evidence of Mr GB having given Ms JV any indication that he needed more specific advice on any of the conditions, including as to what due diligence meant in the context of the agreement Mr GB had signed. Mr GB said in his email only that he wanted to know what the next step was in the sale and purchase process and he accepted the conditions which were in the agreement. The latter is obvious from the fact he had already signed the agreement. The former, is where the ambiguity lies.

[21] If Mr GB did not understand the meaning of any of the clauses the optimal time for him to have asked questions was before he accepted the vendor’s conditions by signing the agreement. Having missed that opportunity, when he sought advice from Ms JV, Mr GB could have asked her for an explanation. There is no evidence that he did.

[22] It is clear from an email Ms JV sent to Mr GB before the agreement became unconditional that Ms JV highlighted a number of clauses, logically so she and Mr GB could discuss them before the agreement was declared unconditional. As due diligence is an inquiry carried out by the purchaser, only Mr GB could have known what due diligence would mean to him in the context of the agreement. The point is that Ms JV raised the potential issue but Mr GB gave Ms JV no clear reason to start that discussion.

[23] There is no evidence of Mr GB having wanted to discuss the conditions or asked for an explanation of any of them. With no such indication, it is difficult to see how Ms JV could have known that Mr GB did not understand the commitments he had already accepted, such as what he meant by due diligence in the context of the agreement the vendor had prepared and Mr GB had signed.

[24] Mr GB left himself with only a short time to obtain legal advice, and to satisfy the conditions or decide he was prepared to waive them, before he was obliged to declare the agreement unconditional or risk losing the deal. Mr GB must be taken to have accepted all the attendant uncertainty and risk by signing an agreement that allowed him so little time to seek advice and satisfy the conditions before the unconditional date.

[25] The urgency was not of Ms JV’s making. There is no indication on the materials that she was responsible for any delay. If she had not declared the agreement unconditional so promptly, Mr GB may have had cause to complain if he had lost the agreement because of delay on Ms JV’s part.

[26] Ms JV says she understood Mr GB’s instructions to her were to secure the purchase so he could pay the deposit. As Mr GB signed the agreement with so little time to prepare, it is accepted that his overarching objective at the time was to secure the section. Declaring the agreement unconditional triggered Mr GB’s obligation to pay the deposit. Ms JV declared the agreement unconditional. Mr GB paid the deposit. That secured the purchase. His objective at the time was achieved in accordance with what are understood to have been his instructions.

[27] None of that prevented Mr GB from making the same inquiries that he could have made through the process of due diligence before he became committed to the agreement.

[28] Beyond Mr GB’s assertion that he did not tell Ms JV to declare the agreement unconditional, there is nothing in the evidence available on review from which it can be inferred that Ms JV’s conduct was inconsistent with Mr GB’s instructions. There is no basis on which to hold Ms JV professionally responsible for the risks and uncertainties Mr GB accepted by signing the agreement without first taking legal advice or working out what due diligence might have meant in the circumstances.

[29] Mr GB has failed to provide any persuasive reason to modify or reverse the Committee’s decision. The Committee’s decision is therefore confirmed.

Decision

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

DATED this 20TH 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 GB as the Applicant Ms JV as the Respondent

Mr VQ as the Representative for the Applicant [Area] Standards Committee [X]

New Zealand Law Society