MR v GB [2019] NZLCRO 41 (4 April 2019)

Last Updated: 3 May 2019

	LCRO 35/2018
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	MR Applicant
AND	GB Respondent

DECISION

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

Introduction

[1] Mr MR has applied for a review of the finding of unsatisfactory conduct against him by [Area] Standards Committee [X] (the Committee). The Committee censured Mr MR, imposed a fine of $5,000 and ordered him to pay costs in the sum of $1,500.

Background

[2] Mr MR acted for Mr RJ. In 2012, Mr MR prepared a will for Mr RJ in which he appointed a friend (Ms VW) and Mr MR executors and trustees. The will was detailed and included bequests to Mr RJ’s eight god-children, and pecuniary legacies to some 40(+) beneficiaries. Mr GB was the residuary beneficiary.

[3] Mr RJ died in August 2015. At the time of his death Mr RJ was living on his own in [city1].

[4] Mr RJ owned real and personal property in [country] and New Zealand. Probate was applied for in New Zealand and resealed in [country].

[5] Mr MR and Ms VW travelled to [country] where they made funeral arrangements for Mr RJ’s body in accordance with the detailed directions in the will.1

[6] Mr MR and Ms VW were involved in attendances relating to the administration of Mr RJ’s estate (the Estate) which necessitated ascertaining the assets and liabilities, realising assets in the [country] and New Zealand, paying debts, locating the beneficiaries, and all of the other attendances required when administering an estate.

Mr GB’s complaints

[7] Mr GB consulted Mr EU (a partner in the law firm [lawfirm 2]) to assist him with regard to matters arising out of the Estate.

[8] Mr EU sought information about the administration of the Estate and advised Mr MR that Mr GB was concerned at the delays in receiving this information.

[9] On 19 August 2016, Mr GB received an interim distribution statement from Mr MR.

[10] Mr EU wrote to Mr MR on 2 September 2016 regarding issues arising out of the statement:

• he questioned the airfares charged to the Estate by the executors; and
  
• he referred to legal fees charged by Mr MR to the Estate and to his (Mr EU’s) earlier requests for invoices and timesheets.
  

[11] The requested information was not received, and Mr EU lodged Mr GB’s complaints with the Lawyers Complaints Service (the Complaints Service) on 19 October 2016. Included with the complaint was Mr EU’s letter to Mr MR of 2 September 2016. The details of the complaint were:2

Costs – (administration cost of [RJ] Estate)

My partner passed away on 28 August 2015 in [country] and [MR] was his lawyer. The Estate involved a property in [country]. [MR] travelled to [country] and organised the funeral/memorial services. He stayed at my partner’s apartment while in [country]. In addition he charged the estate $2400 for 23 days. [MR] is not able to explain as to what he did in [country] for 23 days firstly. Secondly, I

1 Mr MR travelled in business class which was the basis of some issues raised by Mr GB.

2 As completed in part 3 of the complaint form.

was not informed about these costs. Furthermore, I received the accounts a week before [RJ]’s anniversary.

My lawyer, [EU] from [Lawfirm 2] is struggling to get the explanation from [MR].

[12] The outcome sought by Mr GB was:

• an explanation
  
• an apology
  
• if possible a refund.
  

[13] In his covering letter with the complaint Mr EU submitted that Mr GB was the party chargeable with Mr MR’s costs as he was the residuary beneficiary of the estate. With regard to costs he referred specifically to:

• the business class travel to [country].
  
• airfares which had apparently been deducted twice.
  
• fees, which Mr EU considered to be excessive.
  
• attendances in [country] unsupported by time records.
  
• the time records provided for other invoices did not identify what work was being carried out.
  

[14] Mr EU and Mr GB requested answers to their queries.

[15] Mr MR responded to the complaints by letter dated 28 November 2016.3 With his letter he provided letters of support from Mr RJ’s sister (Mrs [PL]) and her husband. Mrs PL is a partner in the [city2] firm of [lawfirm 3] and her husband is a consultant to the firm. Mr MR also provided a letter of support from Ms VW who “utterly refut[ed] the allegations in the complaints”.

Further complaints

[16] The Committee continued its enquiry through the beginning of 2017. On 29 May 2017, Mr EU sent the Complaints Service a copy of an email which he had sent to Mr MR. Mr EU said:

... the email ... is self-explanatory but ... Mr [GB] wishes [it] to be included in his complaint against Mr [MR]. Mr [GB] has come under improper pressure to

3 The letter of complaint had been sent to Mr MR by the Lawyers Complaints Service under cover of a letter dated 4 November 2016.

withdraw the complaint to NZLS and he is concerned that Mr [MR] has played some part in this.

[17] Mr EU referred to an authority from Mr GB that he had sent to Mr MR, in which Mr GB had confirmed that any payments to him should be paid to Mr EU’s firm. Mr EU then referred to the fact that Mr GB had been approached by “an acquaintance of” Mr MR who had requested that Mr GB sign two documents, in one of which Mr GB withdrew his complaints, and the second which authorised Mr MR to correspond with, and make payments to, Mr GB directly.

[18] Mr EU said:

The documents appear to us to have been prepared by a lawyer. They were certainly prepared by someone who has knowledge of the complaint as they have the officer dealing with its name on it and his personal email address.

[19] The acquaintance who had approached Mr GB was Dr JK. These approaches, and Mr MR’s apparent involvement with them, formed the basis of Mr GB’s further complaints.

[20] All matters were addressed by the Committee in a single determination dated 25 January 2018.

The Standards Committee determination

[21] The issues addressed by the Committee were:4

1. Are the fees charged by Mr [MR] between December 2015 and July 2016 (totalling $83,159.30) fair and reasonable for the services provided and the work undertaken? and
   
2. Did Mr [MR], directly or indirectly, engage in unsatisfactory conduct during the course of the complaint?
   

Fees

[22] The Committee commissioned a report from a costs assessor who made the following concluding comments:5

1. it was necessary and appropriate for Mr [MR] to travel to [country] in order to administer the Estate, including the sale of Mr [RJ]’s flat in [city1];
   
2. given the length of the travel time to [city1] it was appropriate for Mr [MR] to travel business class;
   

4 Standards Committee determination, 25 January 2018 at [23].

5 At [26].

100. while Mr [MR] might have provided a more detailed account of the work undertaken in [city1], on balance the time and labour expended by Mr [MR] for that period was fair and reasonable as were the rates charged;
     

4. Mr [MR]’s hourly rate for the work undertaken in New Zealand was fair and reasonable considering his level of experience in wills and estates;
   
5. a satisfactory result was achieved as a consequence of Mr [MR]’s attendances in [city1], namely the sale of Mr [RJ]’s flat in [city1]; and
   
6. in their entirety the fees rendered by Mr [MR] were fair and reasonable.
   

[23] The Committee accepted the views of the costs assessor and determined to take no further action in respect of Mr GB’s complaints about Mr MR’s fees.

Mr MR’s conduct during the course of the complaint

[24] The Committee was “satisfied that Dr JK’s suggestion that he ask Mr GB to withdraw his complaint was not prompted by Mr MR”.6 However, the Committee determined that Mr MR’s “subsequent correspondence with Dr JK, in conjunction with his drafting of the document [notice of withdrawal], amounts to unsatisfactory conduct pursuant to s 12(b) of the Act”.7

[25] The two notices which Dr JK had put to Mr GB to sign read:

After careful consideration and after seeking independent advice, I wish to withdraw my complaint about the conduct and professional charges of [lawfirm1], Solicitors [town] and Mr [MR] who is an executor of the estate. I now appreciate the work and responsibility, which has been required in the administration of the estate, and accept that the charges are reasonable and that I have been advised of progress at all material times.

I hereby request and direct that henceforth all correspondence and dealings in relation to the above estate be sent to me direct and not through my solicitor Mr [EU]. I further request that any payments due to me be made to my bank account details of which are attached.

[26] The Committee took note of the email communications between Mr MR and Dr JK which it set out in the determination. It came to the view that “Mr MR had improperly involved himself in an attempt to have the complaint about himself withdrawn”. It considered it was “unprofessional and unacceptable for Mr MR to”:8

1. Correspond with Dr [JK] in relation to Mr [GB]’s complaint about him, especially in circumstances where that correspondence contemplated Dr [JK] asking Mr [GB] to withdraw the complaint.
   

6 At [30].

7 At [31].

8 At [33].

2. Instigate the drafting of a document purporting to instruct that all future correspondence in relation to the Estate be directed to Mr [GB] personally and not through his solicitor.
   

100. Draft a document purporting to withdraw Mr [GB]’s complaint about himself.
     

4. Offer to immediately pay $20,000.00 to Mr [GB] the inference being that it would ‘help’ expedite the withdrawal of the complaint.
   

[27] The Committee referred to r 10.2 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (the Rules) which provides:

10.2 A lawyer acting in a matter must not communicate directly with a person whom the lawyer knows is represented by another lawyer in that matter except as authorised in this rule.

[28] Having taken note of the rule, the Committee said:9

On the material before it, the Committee considers that Mr [MR]’s correspondence with Dr [JK], in the knowledge that it would be passed on to Mr [GB], amounts to indirect communication with Mr [GB], a potential consequence of which was the circumvention of the protections afforded to Mr [GB] via his representation by Mr [EU].

[29] The Committee determined that Mr MR’s conduct constituted unsatisfactory conduct pursuant to s 12(b) of the Lawyers and Conveyancers Act 2006 (the Act).

Application for review

[30] Mr MR applied for a review of the Committee’s determination. He accepts the dismissal by the Committee of what he refers to as “the initial complaint” (the complaint about fees). It is the finding in respect of what Mr MR refers to as “the supplementary complaint” that he wishes to have reviewed. He says:

12. Mr [MR] did not seek or suggest withdrawal of the complaint, and had no personal contact with Mr [GB] during these events. He drafted the requested form of withdrawal solely on the initiative of Dr [JK]. It went beyond the simple withdrawal document Dr [JK] requested and was what any lawyer would have prepared in the circumstances. It expressly contemplated independent advice. The withdrawal document was in no way linked with the payment which had been requested. The two matters were entirely separate.
    
13. Mr [MR] was entitled to recognise a person of Dr [JK]’s status as the personal representative of Mr [GB] and to respond to him directly when contacted. Mr [MR] took separate and prompt steps to have the monies paid out to Mr [GB] as beneficiary.
    
14. If (as it now appears happened) Dr [JK] tried to obtain withdrawal of the complaint by connecting it to the interim distribution from the estate through its executors, this was his own action, not that of Mr [MR] or his co- executor, and contrary to Mr [MR]’s position. Mr [MR] does not know what
    

9 At [37].

occurred but even if Dr [JK] did attempt to link the withdrawal of the complaint to the payment, Mr [GB] was unwilling to withdraw his complaint.

15. The supplementary complaint only arose as a result of the delay in the Standards Committee reaching a decision. The original complaint was made on 14 October 2016 and by the time of Dr [JK]’s intervention on 26 May 2017, over seven months later, there had been no outcome with the Committee, yet all actions requested by the complainant had been taken. This is not a criticism of the Standards Committee but explains why Mr [MR] welcomed Dr [JK]’s initiative to recommend a withdrawal of the complaint.
    

Review

Delegation/hearing

[31] A review hearing took place on 12 March 2019. The hearing was conducted by Mr Vaughan acting as a delegate duly appointed pursuant to cl 6, sch 3 of the Act.

[32] Mr GB attended the hearing in Auckland. Mr MR, accompanied by Mr XE QC, attended the hearing by way of audio visual link from Wellington.

[33] This decision is made after a full consideration of all matters by me after receipt of Mr Vaughan’s report.

The extent of the review

[34] Mr MR provided submissions on the day prior to the review hearing in which he stated that he was:

seeking a review of the decision of the Standards Committee in relation only to its finding against me on an allegation that I wrongly tried to influence the withdrawal of Mr [GB]’s complaint.

[35] At Mr Vaughan’s direction, the Case Manager responded:

Dear Mr [MR],

Thank you for your submissions received today.

You make the initial submission that your Application for Review is related only to the adverse finding against you.

The Review Officer has requested that you be made aware that all issues involved in the complaint and the Standards Committee determination are part of the Review and that the Review is not limited to the matters raised by the Applicant (Refer s 203 LCA.)

[36] Mr XE responded the following morning, prior to the hearing, noting that “there were two complaints and two determinations. Only the second one has ever been referred to the LCRO”.

[37] The issue was briefly addressed at the hearing where Mr XE advised that he/they had not come to the hearing prepared to address any issue other than the issue referred to by Mr MR in his submissions.

[38] It needs to be emphasised that when an application is made to the Legal Complaints Review Officer for a review of an investigation and determination by a Standards Committee, the extent of the review cannot be limited by any party. However, in the present circumstances, it can be said that, having considered all matters involved in Mr GB’s complaint, the determination of the Committee of issues other than those specifically discussed are confirmed. This confirmation applies particularly to Mr GB’s complaints about Mr MR’s fees and timeliness in providing information. The reasons for this are addressed in the next section of this decision. It is also relevant to note that Mr GB himself accepted that the issues raised by Mr MR would be the only matters addressed on review.

Mr MR’s professional duties

[39] An important fact that has not been referred to by the Committee is the fact that Mr MR was not providing regulated services to Mr GB. Mr MR’s clients were the trustees of the estate (himself and Mrs VW) and it was to them he owed professional duties. This is relevant with regard to Mr GB’s complaints about Mr MR’s lack of timeliness. Any complaints in that regard would need to be addressed in the context of Mr MR’s position as trustee/executor, and is not a matter to be addressed by the lawyers’ disciplinary processes.

[40] The Committee did not specifically address Mr GB’s complaints in this regard and Mr GB has not referred to them in the course of this review, but the implied determination to take no further action in relation to these complaints is confirmed. It is important that Mr GB recognised that Mr MR did not owe lawyer/client duties to him.

[41] In his letter to Mr MR, Mr EU took the view that as Mr GB was the residuary beneficiary of the Estate he had standing to challenge Mr MR’s fees as the ‘party chargeable’ with Mr MR’s fees. This submission was not addressed by the Committee, but in any event, Mr GB has standing pursuant to s 160(1) of the Act to complain about Mr MR’s fees.

[42] Other matters referred to by Mr GB at the hearing and in his written communication on the following day are either not addressed for the reasons discussed above or for the reason they constitute new complaints, which cannot be addressed on review.10

Review

Fees

[43] As a beneficiary of Mr RJ’s estate, Mr GB has standing pursuant to s 160(1) of the Act, to complain about Mr MR’s fees. His standing does not rely on him being held to be the ‘party chargeable’ with the fees as suggested by Mr EU.

[44] The Committee commissioned a costs assessor to review and report on Mr MR’s fees. The assessor’s conclusions are recorded above at [24] and the Committee accepted the view of the assessor that Mr MR’s fees (and disbursements) were fair and reasonable.

[45] There is no reason not to accept the assessor’s report on review, and in this regard, it is noted that Mr GB himself seems to be accepting of this conclusion.

[46] The determination of the Committee to take no further action with regard to this complaint, is confirmed.

The withdrawal notice

[47] There is no dispute that Mr MR prepared the withdrawal of the complaint for Dr JK to put before Mr GB to sign. Whilst it is acknowledged and accepted that Mr MR did not promote the idea of Dr JK seeking to have Mr GB withdraw the complaint, it is clear that Mr MR embraced the suggestion by Dr JK that he would see if he could persuade Mr GB to do so. Mr MR then took the next step of becoming more involved by agreeing to draft the withdrawal.

[48] Mr MR submits that the Notice of Withdrawal prepared by him is “what any lawyer would have prepared in the circumstances. It expressly contemplated independent advice”.

10 Mr GB’s complaint about breach of privacy falls into this category.

[49] All that is required to withdraw a complaint is for the Complaints Service to be notified accordingly. The notice prepared by Mr MR went significantly further by including a statement by Mr GB that he:

now appreciate[d] the work and responsibility which has been required in the administration of the estate and accept[s] that the charges are reasonable and that I have been advised of progress at all material times.

[50] These additional comments were unnecessary to effect a withdrawal of the complaint. Inherent in the additional wording is an acknowledgment by Mr GB that he was “out of line” in the first instance in making the complaint.

[51] Mr MR has reinforced the reference in the withdrawal to Mr GB taking independent advice. When Dr JK suggested he would see if he could persuade Mr GB to withdraw his complaint, all that was required was to tell Dr JK that, if Mr GB agreed to withdraw the complaint, he could instruct Mr EU accordingly. The requirement for independent advice would thereby be satisfied. Even though the withdrawal prepared by Mr MR contained reference to Mr GB taking independent advice, it is doubtful that he would have recognised the import of what was stated.

[52] Mr GB had consulted Mr EU with regard to all matters relating to the Estate and the complaint about Mr MR. If he wanted to withdraw the complaint it would be expected that he would take advice from Mr EU in that regard as well. However, as Mr MR was also suggesting to Dr JK that he endeavour to persuade Mr GB to allow Mr MR to communicate directly with him, Mr MR would not have wanted Mr GB to be consulting Mr EU with regard to the proposed withdrawal.

[53] It was unprofessional for Mr MR to be involved to the extent he was in the attempts to effect the withdrawal of the complaint. The finding of unsatisfactory conduct by the Committee pursuant to s 12(b) of the Act is confirmed.

The second notice

[54] The second notice put to Mr GB for signature was a direction that Mr MR could communicate directly with him. The Committee determined that it was unprofessional and unacceptable for Mr MR to “instigate the drafting of [the] document”.11

[55] In an email to Dr JK, Mr MR said:

At the present time, my instructions are that all payments to [GB] and all correspondence should go through his solicitor [EU]. As I see it, this will only incur extra expense for [GB]. It will be far better if I could deal with him direct. You might also like to get [GB] to sign an authority to me directing that future

11 Standards Committee determination, above n 4 at [33].

correspondence should not be to [EU] but [GB] direct and that payment should also be made to [GB] direct. He should give me his bank account number.

[56] Mr MR was encouraging Dr JK to attempt to dissuade Mr GB from continuing to consult Mr EU. Mr EU had sent many communications to Mr MR in which he made it clear that all correspondence was to be directed to him and any payments were also to be made through his firm. Mr MR’s suggestions to Dr JK were made only seven days after Mr EU had provided Mr MR with an authority signed by Mr GB to this effect.12

[57] Rules 10, 10.1 and 10.2.2 of the Conduct and Client Care Rules provide:

10. A lawyer must promote and maintain proper standards of professionalism in the lawyer’s dealings.
    

• 10.1 A lawyer must treat other lawyers with respect and courtesy.
  

10.2.2 A lawyer may communicate directly with a person if the lawyer reasonably believes that that person is no longer represented by another lawyer. In that event, the other lawyer must be notified in advance of the lawyer’s intention to communicate directly with that person.

[58] Mr EU had been corresponding and communicating with Mr MR for some eight months. For Mr MR to propose that he should communicate directly with Mr EU’s client, and to suggest that a third party obtain an authority from Mr GB for him to do so, was not conduct that lawyers of good standing would find acceptable. It could also be described as a breach of professionalism and discourteous to Mr EU.

Conclusion

[59] It was open to the Committee to have made separate findings of unsatisfactory conduct in respect of each notice put before Mr GB for signature as they involved separate issues. However, it did not and it is not proposed to take a different course on review. It follows however, that the finding of unsatisfactory conduct by the Committee is confirmed on review. The finding is modified to include that it is made pursuant to s 12(c) of the Act for breaches of the Rules referred to.

Penalty

[60] The Committee censured Mr MR, imposed a fine of $5,000, and ordered him to pay costs of $3,000. At the review hearing Mr Vaughan asked Mr MR and Mr XE for submissions on the penalties. They were, not unnaturally, reluctant to consider that the adverse finding would be confirmed and therefore expressed some diffidence in making independent submissions as to penalty. However, Mr MR referred to another

12 Authority 18 May 2017.

Committee’s determination involving a different practitioner in which a fine of $12,000 had been imposed. In that case, the practitioner had indulged in unacceptable conduct involving women and alcohol at a party. Mr MR thought that the comparison of the fine imposed on him to the Standards Committee decision he refers to, results in the fine imposed on him being somewhat high.

[61] There is no comparison between the two matters. Mr MR’s conduct involves breaches of professionalism which included pressure being brought to bear on Mr GB to withdraw his complaint about him. He drafted the Notice of Withdrawal and included an acknowledgment by Mr GB that the work carried out by Mr MR had been done to a high standard and that the fees charged by Mr MR were reasonable. He encouraged Dr JK to endeavour to persuade Mr GB to allow Mr MR to communicate with him directly.

[62] The legal profession must leave a person’s right to complain about a lawyer’s conduct, as provided in the Act, undisturbed. The disciplinary procedures operated by the Law Society must be allowed to process and determine a complaint about a lawyer without undue influence being brought to bear on the complainant by the lawyer complained about. Allowing the process to run its course can only enhance the overall trust and confidence in the process. Any interference with the process is unprofessional and unacceptable.

[63] I do not consider the fine to be excessive in these circumstances. If anything, I would have been inclined to increase the level of the fine.

[64] However, more emphasis needs to be placed on the censure of Mr MR by the Committee. Mr MR and Mr XE made mention on a number of occasions of Mr MR’s 50 years’ practice as a lawyer. It would be thought that a censure by fellow practitioners might be somewhat more disturbing to Mr MR after such a lengthy period of time with an otherwise unblemished record.

[65] The author of the text Ethics, Professional Responsibility and the Lawyer

notes:13

Subsequent authority ... suggests that a censure should be recognised as a significant penalty in its own right and not trivialised.

[66] The author refers to the judgment of the High Court in Bhanabhai v Auckland District Law Society where the court says:14

13 Duncan Webb, Kathryn Dalziel and Kerry Cook Ethics, Professional Responsibility and the Lawyer (3rd ed, LexisNexis, Wellington, 2016) at 130.

14 Bhanabhai v Auckland District Law Society [2009] NZHC 415; [2009] NZAR 282 (HC).

[68] A censure can be seen as an effective penalty. Mr Bhanabhai is now a sole practitioner. Those members of the profession who read the published censure will become aware (or be reminded) that he has breached an undertaking in a manner that amounts to professional misconduct. In the context of a person who practises alone, the likely consequence of other practitioners not accepting his undertaking is severe.

[67] The authors of the text also refer to a censure as being protective of the reputation of the profession in that it is seen to be the precursor to publication of a practitioner’s name.

[68] Publication is not proposed in this instance, but the seriousness of a censure is reinforced by these comments. On review, the censure by the Committee is reinforced and endorsed. Mr MR will need to reflect on this and objectively consider his conduct.

Decision

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

Costs

[70] The Costs Orders Guidelines issued by this Office provide:

3. Where a finding of unsatisfactory conduct is made or upheld against a practitioner costs orders will usually be made against the practitioner in favour of the Society. Those orders will usually relate both to the costs of the inquiry before the Standards Committee (dealt with at para 15 below) and the costs of the conduct of the review in accordance with s 210(3).

[71] This was a review in person and of average complexity. Accordingly, pursuant to s 210(3) of the Act, Mr MR is ordered to pay the sum of $1,600 to this Office by way of costs by 1 May 2019. Information relating to payment of these costs is included with this decision.

[72] Pursuant to s 215 of the Act, the fine and costs orders may, if necessary, be enforced in the District Court.

DATED this 4TH day of April 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 MR as the Applicant Mr GB as the Respondent

Mr XE QC as the Representative for the Applicant Mr ZU as a Related Person

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