Home
| Databases
| WorldLII
| Search
| Feedback
New Zealand Legal Complaints Review Officer |
Last Updated: 1 April 2019
|
LCRO 238/2017
|
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
|
VQ
Applicant
|
AND
|
CAR LIMITED
Respondent
|
DECISION
The names and identifying details of the parties in this decision have been changed.
Introduction
[1] Mr VQ has applied for a review of a decision by the [Area] Standards Committee [X] (the Committee) which, following inquiry into a complaint made by CAR Limited (CAR), entered a finding of unsatisfactory conduct against Mr VQ.
[2] Consequential on that finding, the Committee made orders directing that Mr VQ reduce the fee charged to CAR.
Background
[3] CAR wished to secure an easement over a property owned by Mr VQ’s client.
[4] As part of an agreement reached to secure the easement, CAR agreed to meet Mr VQ’s costs.
[5] A draft agreement and easement instrument were prepared by CAR and forwarded to Mr VQ’s client.
[6] What then ensued, were lengthy negotiations between the parties concerning the terms of the agreement and easement provisions.
[7] On 13 July 2016, Mr VQ forwarded an invoice to CAR, that invoice totalling
$5,000 plus GST.
[8] CAR considered the fee charged to be excessive. It made request of Mr VQ to provide an itemised account of his fee and sought clarification of the fee charged on a time and attendance basis.
[9] Mr VQ provided the following response to that request:
If you are not prepared to accept my bill as rendered then please confirm you dispute it and I will send you another bill which will be based on a charge out rate of $400 per hour and I will charge you for a further four hours work to include the unbilled time spent at [HG]’s office and the time spent on the execution of the instrument.
[10] CAR’s response to that request, was to seek further information from Mr VQ and to advise him that it considered that the agreement prepared was “standard”, and that costs commonly incurred for an agreement of this nature would not be expected to exceed $1,500. It noted that it considered a fee in the vicinity of $3,000 would be considered reasonable.
[11] Mr VQ then advised CAR that:
- (a) he was cancelling his previous invoice;
- (b) he was submitting a fresh invoice that more accurately reflected the time he had spent on the file;
- (c) his new invoice was submitted in the sum of $10,581.00 plus GST; and
- (d) this invoice included a charge of $400 for “responding to your baseless accusations of overcharging when you clearly did not read the file (3 hours but say 1 hour)”.
[12] No GST invoice was issued.
[13] CAR then lodged its complaint with the New Zealand Law Society Complaints Service (the Complaints Service).
The complaint and the Standards Committee decision
[14] CAR lodged its complaint with the Complaints Service on 15 August 2016. Its complaint essentially traversed the background to its dealings with Mr VQ as described at paragraphs [3]–[12] above.
[15] Prior to filing its complaint, CAR’s representative had discussed CAR’s concerns with a member of the Complaints Service staff.
[16] The complaint filed by CAR does not specifically state that it is pursuing a complaint against Mr VQ, it is framed more in the nature of an inquiry to the Law Society.
[17] But it is clear that CAR is expressing concern about the fees charged by Mr VQ.
[18] The Committee recommended that the parties consider resolving the matter through mediation, but on the basis that any attempt to mediate should proceed from the assumption that it was Mr VQ’s first invoice that was under consideration.
[19] Mr VQ advised that he was not agreeable to the matter being mediated.
[20] The Committee then resolved to appoint a costs assessor (Mr RJ) to review the fees charged by Mr VQ. The assessor was requested to assess both fees, being the invoice dated 20 July 2016, and the “new” invoice dated 12 August 2016.
[21] The Committee identified the issue to be considered, as whether Mr VQ had charged fees that were unfair and unreasonable in breach of r 9 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (the Rules).
[22] In framing its inquiry in that fashion, the Committee was focusing, as it was required to do, on r 9 which provides that a lawyer must not charge a client more than a fee that is fair and reasonable for the services provided, having regard to the interests of both client and lawyer and having regard also to the factors set out in r 9.1.
[23] Invited to provide response to the complaint, Mr VQ in correspondence to the Complaints Service of 31 August 2016, submitted that:
- (a) prior to seeking consent to the easement, CAR had installed a tunnel under his client’s land without seeking permission from his client;
[24] CAR provided response to Mr VQ in correspondence to the Complaints Service of 14 September 2016.
1 I take this to mean that Mr VQ was on notice that he needed to take particular care in ensuring that the documentation provided by CAR was in order.
[25] It submitted in reply that:
- (a) the historical events leading to the request by CAR were irrelevant to the complaint;
- (b) that said, CAR provided its account of its understanding of the background;
- (c) CAR was receptive to making changes to its standard contracts to accommodate its customers’ concerns; and
- (d) Mr VQ’s correspondence which gave indication of his intention to issue a new invoice, did not comply with the tax invoice/credit note/debit note requirements under the Goods and Services Tax Act 1985 (the GST Act).
[26] Following the issuing of a notice of hearing to the parties which identified the scope of the Committee inquiry, Mr VQ provided further submissions in which he:
- (a) advised that he did not agree that the fact that he practised from his home should be relevant to the question of determining an appropriate fee;
- (b) complained at the delay in dealing with the complaint; and
- (c) indicated that he considered that the Committee had prejudiced his defence by “threatening to recommend to any future Tribunal that my second invoice be disregarded”.
[27] In a brief response addressing issues raised in the notice of hearing, CAR submitted that:
- (a) the invoices submitted by Mr VQ were unfair and unreasonable; and
- (b) CAR would accept the cost assessor’s recommendation of an appropriate fee being $4,801.25.
[28] The Committee delivered its decision on 31 October 2017. It determined that there had been unsatisfactory conduct on Mr VQ’s part. The Committee ordered that Mr VQ was to reduce his fee.
[29] In reaching that decision the Committee’s approach to its inquiry, was to address the complaint by reference to all of the reasonable fee factors set out at r 9.1 of the Rules.
[30] Having undertaken that examination, the Committee indicated that:
- (a) it was concerned that Mr VQ effectively doubled his fee in response to CAR’s request for an itemised account;
- (b) it agreed with Mr RJ’s view that Mr VQ’s correspondence of 12 August did not constitute a new invoice as it did not comply with the requirements of the GST Act;
- (c) no new tax invoice had been issued by Mr VQ, nor had he cancelled the invoice initially issued;
- (d) it was therefore unnecessary to consider the second invoice issued;
- (e) Mr VQ’s file did not contain a digital time recording printout;
- (f) the amount of time spent on the file by Mr VQ had been over assessed;
- (g) Mr VQ had the requisite skill and knowledge to handle the transaction;
- (h) results achieved were satisfactory;
- (i) the transaction engaged a reasonable degree of risk;
- (j) the matter was not overly complex;
- (k) documentation dealt with was reasonably routine;
- (l) Mr RJ’s assessment of an appropriate hourly rate, was higher than that charged by Mr VQ in his initial invoice; and
- (m) Mr VQ had overcharged in the vicinity of 20 per cent.
Application for review
[31] Mr VQ filed an application for review on 12 December 2017. The outcome sought is payment of his invoice and an explanation as to why it has taken so long for the Law Society to deliver what it (the Society) considered to be “justice”.
[32] He submitted that:
[33] CAR was invited to comment on Mr VQ’s review application. It confirmed that it was comfortable with the decision delivered by the Committee and had nothing further to add.
Review on the papers
[34] This review has been undertaken 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.
[35] After having considered the matter, I decided to seek further comment from Mr VQ on two issues. The hearing was largely determined on the papers, but with the additional benefit of having heard from Mr VQ.
Nature and scope of review
[36] 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,
2 Deliu v Hong [2012] NZHC 158, [2012] NZAR 209 at [39]–[41].
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.
[37] 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.
[38] 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.
Analysis
[39] Having worked through the file and completed a draft decision, I arrived at the view that it would be helpful to seek clarification from Mr VQ on two matters.
[40] I wished to establish:
- (a) whether Mr VQ continued to be resistant to the possibility of the parties mediating an agreement; and
- (b) Mr VQ’s thoughts, having had time to reflect on the matter, on the appropriateness of the correspondence forwarded to CAR in which demand was made for a fee over double that initially rendered.
[41] A telephone conference was convened with Mr VQ.
[42] I did not consider it necessary to seek to have CAR join that conference as:
- (a) its consistent position throughout had been that it would accept the Committee fee determination;
3 Deliu v Connell [2016] NZHC 361, [2016] NZAR 475 at [2].
(b) subject to any change of view that I may reach after hearing from Mr VQ, I had satisfied myself that the approach adopted by the Committee in determining the fee was appropriate;
(c) only two issues were to be put to Mr VQ, neither of which required response from CAR;
(d) the conference was, as is the custom with Review hearings, recorded; and
(e) in the event that matters arose that did require a response from CAR, they would be provided with a copy of the transcript of the hearing and given opportunity to respond.
[43] At the commencement of the hearing, Mr VQ had advised that the matter had been settled and that his account had been paid by CAR on 20 June 2018.
[44] This information had not been conveyed to the Review Office.
[45] Questioned as to the amount that had been paid, Mr VQ recalled that it was the sum of his first invoice rendered ($5,750), but on further reflection, advised that the amount paid was $4,801.25, being the amount that the Committee had concluded was a fair and reasonable fee.
[46] This brought into sharp focus then the purpose of my first inquiry, which was to establish whether Mr VQ would have been amenable to considering the possibility of reaching agreement on an appropriate fee. Clearly the parties had by the time of the review moved on, and Mr VQ confirmed that it was now his position that he considered the matter to have been settled. He no longer had an appetite for pursuing his review application.
[47] A Standards Committee may, as was the case here, direct that the parties explore the possibility of resolving their dispute by negotiation, conciliation or mediation.4
[48] A LCRO, may exercise any of the powers accorded to a Standards Committee.5
4 Lawyers and Conveyancers Act 2006, s 143(1)(a).
5 Lawyers and Conveyancers Act 2006, s 202.
[49] Having reviewed the file, I had reached conclusion that this was a case that ideally lent itself to opportunity being provided to the parties to attempt to settle the matter themselves.
[50] Mr VQ was of course offered the opportunity to attend mediation but declined it. CAR were willing to mediate.
[51] Having considered the circumstances in which Mr VQ was offered the opportunity to mediate, I am satisfied that those circumstances were such that Mr VQ quite reasonably formed a view that the mediation would not proceed on the basis of a level playing field.
[52] In his review application, Mr VQ complained that the Committee had predetermined his case before suggesting mediation.
[53] In correspondence to the Complaints Service of 31 October 2016, he expressed concern that the Committee had proposed that the parties attend mediation, but on the understanding that the mediation would proceed from the basis that the issue under discussion was Mr VQ’s initial invoice of $5,000.
[54] At this point in the inquiry, it was Mr VQ’s contention that the services he had rendered were worth considerably more than reflected in the initial invoice provided. It was his view that the Committee was breaching principles of natural justice, by seemingly determining in part, a significant part of the complaint (limiting his claim to
$5000) before the matter had been properly considered by the Committee.
[55] Standards Committees, and this Office on review, are required to observe principles of natural justice when determining complaints and considering review applications.
[56] Section 142(1) of the Act provides that a Standards Committee must exercise and perform its duties, powers, and functions in a way that is consistent with the rules of natural justice.
[57] Similarly, s 206(3) of the Act directs that the Legal Complaints Review Officer must perform his or her functions and duties and exercise his or her powers in a way that is consistent with the rules of natural justice
[58] Whilst I do not propose to traverse all of the factors which can be said to fall under the umbrella of natural justice principles, it is generally acknowledged that at the heart of natural justice (as relevant to the determining of conduct complaints) is:
[59] In Dorbu v Lawyers and Conveyancers Disciplinary Tribunal, the Court observed that:6
Natural justice involves “a duty lying on everyone who decides anything to act in good faith and fairly listen to both sides”. It requires that parties be given adequate notice and opportunity to be heard and to respond to allegations made against them. The requirements of natural justice and the standards of fairness are flexible, depending on the nature of the power being exercised and the effect of the decision on personal interests.
(citations omitted)
[60] A careful perusal of the Committee’s file confirms that Mr VQ was:
- (a) provided with a copy of CAR’s complaint;
- (b) provided with explanation as to how the complaints process operated;
- (c) invited to provide response to the complaint;
- (d) provided with a copy of CAR’s response to his submissions;
- (e) invited to consider mediation using the services of a voluntary mediator at no cost to the parties;
- (f) provided with a copy of the costs assessor’s report and invited to respond to the report; and
- (g) provided with a notice of hearing that identified the issues to be considered by the Committee.
[61] Little issue can be taken with much of that process.
6 Dorbu v Lawyers and Conveyancers Disciplinary Tribunal HC Auckland, CIV-2009-404-7381, 11 May 2011 at [48].
[62] However, the Committee’s decision to recommend mediation, but on the basis that the mediation proceed from a consideration of the first invoice, does, in my view, indicate a measure of pre-determination of the issues. Irrespective of the view the Committee may have formed concerning the merits of Mr VQ’s second invoice, its indication prior to completing its inquiry that mediation should proceed on the basis that the second invoice was effectively to be discounted, was disregarding Mr VQ’s argument that the services he had rendered were worth considerably more than he had charged for.
[63] At the time the Committee was suggesting mediation, the Committee’s inquiry was in its early stages. It was in receipt of submissions from CAR that raised issue as to whether the second invoice issued complied with the GST Act, but there had been no inquiry conducted by the Committee into that issue, nor had it commissioned, let alone received, a report from its costs assessor.
[64] It is with reluctance that I criticise the approach adopted as it is clear from the correspondence forwarded to the parties, in which recommendation was made to consider mediation, that the Committee was earnest in its endeavours to assist the parties by providing opportunity for the parties to resolve the dispute on their own terms.
[65] But in signalling that the mediation should be based on Mr VQ’s initial invoice, the Committee was, as Mr VQ correctly observes, dismissing his claim that a fair and reasonable fee was represented by the second invoice provided. The Committee had determined part of its inquiry, before it had conducted a hearing, and before it was in possession of the submissions filed in response to the notice of hearing issued. It had given clear indication that it considered there was little merit in Mr VQ’s second invoice.
[66] This, in my view, constituted a breach of natural justice and provides reasonable explanation for Mr VQ’s decision to elect not to engage in the mediation process. In reaching this view, I do not remain oblivious to the fact, as discussed later in this decision, that Mr VQ himself did not proffer the second invoice in good faith. But at the time the Committee made its offer to mediate, it had to proceed on the basis that Mr VQ required the reasonableness of the fee to be assessed, by a consideration of the value of the work he maintained had been recorded in the second invoice.
[67] But in allowing opportunity in the course of this review for Mr VQ to advise as to whether he had had a change of heart on the mediation question, and that question being overtaken in practical terms by the agreement that has been reached, I consider it appropriate, and consistent with the initial view adopted by the Committee, that the
parties’ decision to settle the matter is confirmed. The outcome presents, in my view, as both pragmatic and sensible.
[68] I do not consider it is necessary for the unsatisfactory conduct finding to remain in place.
[69] My reasons for that are:
- (a) I consider that the careful examination of the fees by the Committee, together with the comprehensive report from the cost assessor, provided accurate assessment of a reasonable fee for the work done.
- (b) That said, I nevertheless formed a view that Mr VQ could have reasonably charged, considering his level of experience, a higher hourly fee then he had charged.
- (c) CAR’s consistent and conciliatory approach was to emphasise that it was primarily interested in getting a clear breakdown from Mr VQ as to how his account was made up.
- (d) CAR’s correspondence from which the Complaint was distilled was, as has been noted, framed more in the nature of a request for clarification than it was motivated by desire to pursue a conduct complaint.
- (e) CAR’s payment of the account without further reference to the LCRO gives indication that, from its perspective, the matter was settled.
- (f) Whilst the Committee concluded that Mr VQ’s account fell outside the range of tolerance such as to bring it within the range where a conduct finding was required, this was in my view a borderline case. CAR’s initial assessment of the fee charged for work of this nature seemed remarkably low. I accept as did the cost assessor, that problems with the documentation provided by CAR, contributed to extra work having to be done.
- (g) The cost assessor’s assessment of an appropriate charge out rate, was in fact more than that charged by Mr VQ.
- (h) I think it possible that Mr VQ’s confidence in his ability to recollect with precision all of the work that had been done on the file may have been misplaced. If his time had been, as is now conventionally the case in the
vast majority of law firms, recorded with an appropriate timekeeping system, some of these difficulties may have been avoided.
[70] In summary then, I consider that the imposition of an unsatisfactory conduct finding is unnecessary.
[71] I turn now, briefly, to the issues engaged by Mr VQ’s decision to issue a second invoice.
[72] Mr VQ’s response to receiving a request from CAR to provide clarification of his account was to take what can only be described as the unusual step of purporting to cancel his first account and reissuing a second account in a sum more than double the first.
[73] The Committee in what I consider to be a measured response to Mr VQ’s decision to issue the second invoice, noted that “it was concerned about Mr VQ’s conduct in effectively doubling his fee because CAR had requested an itemised account”.7
[74] Mr RJ did not consider it necessary to consider Mr VQ’s second invoice, as he had concluded that Mr VQ’s correspondence (in which the details of the second invoice were contained) did not in fact constitute an invoice.
[75] Suggestion that the second invoice had no legal validity was first raised by CAR’s counsel, in correspondence to the Law Society of 15 August 2016, where it was suggested that Mr VQ’s second invoice failed to meet the requirements of the GST Act.
[76] The Committee agreed with both CAR’s counsel and Mr RJ, that the second invoice issued did not constitute a properly issued invoice, it relying on s 24(3) of the GST Act which provides that an invoice must:
- (3) Except as the Commissioner may otherwise allow, and subject to this section, a tax invoice shall contain the following particulars:
- (a) the words “tax invoice” in a prominent place:
- (b) the name and registration number of the supplier:
- (c) the name and address of the recipient:
- (d) the date upon which the tax invoice is issued:
- (e) a description of the goods and services supplied:
- (f) the quantity or volume of the goods and services supplied:
7 Standards Committee determination, 31 October 2017 at [28].
(g) either—
- (i) the total amount of the tax charged, the consideration, excluding tax, and the consideration, inclusive of tax for the supply; or
- (ii) where the amount of tax charged is the tax fraction of the consideration, the consideration for the supply and a statement that it includes a charge in respect of the tax.
[77] The second invoice, as Mr VQ describes it, clearly does not comply with the requirements of s 24(3) to the extent that it does not:
- (a) contain the words “tax invoice”; and
- (b) provide the name and registration of the supplier.
[78] Both in content and tone, Mr VQ’s second invoice presents as the impetuous, if not petulant, response of a practitioner frustrated at the fact that his account was being challenged in circumstances where he considered he had done a good job in the face of CAR’s failure to provide adequate documentation, and in circumstances where he considered that the fee he had rendered for the job was fair and reasonable.
[79] However, I do not agree with the Committee and its cost assessor’s decision to disregard the second invoice, thus removing it from the scope of the disciplinary inquiry. Whilst the Committee and its cost assessor may have been correct in its view that the invoice rendered did not comply with the GST Act, the decision to disregard the invoice on grounds of non-compliance presented, in my view, as an unduly restrictive and overly technical approach. Mr VQ’s correspondence made it clear that he was withdrawing his first invoice and issuing a second. He identifies the work he said had been completed, his charge out rate, and the total charged for the services provided. There was enough there for the Committee to conclude that Mr VQ’s intention to issue a second invoice was compellingly clear, and for it to conclude that if Mr VQ was advancing the invoice as a serious indicator of the work that had been done, then it was appropriate to consider the invoice.
[80] The Committee’s decision (and I acknowledge the speculative nature of my comment) may have been influenced by a perception that the second invoice issued had not been issued in good faith.
[81] Argument that the invoice did not constitute a properly rendered invoice may have provided safe haven for Mr VQ, in that it diverted attention from an examination of any potential conduct issues that may have been engaged by Mr VQ’s decision to respond to a request for clarification of his account, by issuing a second account.
[82] It is difficult to perceive Mr VQ’s actions in issuing a second invoice as anything other than deliberately provocative with purpose to encourage CAR to settle his initial account.
[83] CAR did no more than the recipient of any account is entitled to do, question the account. And that inquiry was not pursued by CAR in an aggressive or confrontational manner.
[84] During the telephone conference, Mr VQ noted that when he provided the second invoice, he did not expect it would be “taken seriously”.
[85] Considering the tone and content of his correspondence, that was not surprising.
[86] If Mr VQ did not expect the second invoice to be taken seriously, then it was irresponsible for him to have sent it.
[87] It reflects no credit on Mr VQ to have responded in such a flippant manner.
[88] But the Committee elected to discard any consideration of the second invoice and I propose to do the same but for different reasons.
[89] There is little to be served, at this stage, in rekindling inquiry into the propriety or otherwise of Mr VQ’s decision to issue his second invoice. This complaint has taken a considerable amount of time to be resolved. There is need for finality. The focus of the complaint inquiry was on the reasonableness of the fee, and that matter has, in my view, been adequately and appropriately settled by the agreement reached between CAR and Mr VQ.
Decision
[90] Pursuant to s 211(1)(a) of the Lawyers and Conveyancers Act 2006 the determination of the Standards Committee (unsatisfactory conduct finding and orders made consequential on that finding ) is reversed.
Anonymised publication
[91] Pursuant to s 206(4) of the Lawyers and Conveyancers Act 2006, this decision is to be made available to the public with the names and identifying details of the parties removed.
DATED this 28TH day of March 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:
Mr VQ as the Applicant
CAR Limited Attention: Ms WB as the Respondent [Area] Standards Committee [X]
New Zealand Law Society
NZLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.nzlii.org/nz/cases/NZLCRO/2019/31.html