TM - Application for review of a prosecutorial decision [2019] NZLCRO 49 (3 April 2019)

Last Updated: 29 May 2019

	LCRO 230/2018
CONCERNING	an application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006
AND
CONCERNING	a determination of the [Area] SC [X]
BETWEEN	TM Applicant
AND	APPLICATION FOR REVIEW OF A PROSECUTORIAL DECISION

DECISION

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

Introduction

[1] Mr TM has applied for a review of a decision by the [Area] SC [X] (the Committee). The Committee determined that Mr TM’s conduct should be considered by the New Zealand Lawyers and Conveyancers Disciplinary Tribunal (the Tribunal), pursuant to s 152(2)(a) of the Lawyers and Conveyancers Act 2006 (the Act).

[2] Mr TM, who acted for Ms CP (since deceased) as vendor and Mr BO as purchaser, has come to accept and acknowledge that his failure to consider or advise on a conflict of interest in acting for both parties regarding the sale transaction is likely the most serious of three issues that arise from the complaint made by Ms CP’s daughter, BD, which gives rise to the decision under review.

[3] Although Mr TM did not make specific admissions to the Committee, in his application for review he says, with respect to a deed that he drafted in 2012:

Having considered this with the benefit of hindsight, I accept that the agreement was one which required independent legal advice. In particular, it did not adequately protect Ms CP’s position and I did not provide her with advice to that effect at the time.

[4] Mr TM says in his application for review:

I wish to acknowledge that a conflict of interest did exist and that in acting for the complainant’s mother I could and should have done more to try and protect her interests in that transaction. I am by no means confident that Ms CP would have accepted written advice to obtain independent legal advice, or to have required security from the purchaser, should she have received that advice. She saw the transaction as mutually beneficial, and importantly that it would enable her to fund projects in[redacted] that she was passionate about. The parties to the transaction were friends and trusted each other. Given these factors and the nature of the transaction, I should have refused to act for one or both of the parties.

[5] Mr TM adds:

Mrs CP approached me about the arrangements she and Mr BO had discussed, wishing to proceed as they had discussed.

I did not favour either client in the conveyancing transaction and genuinely believed my role was to formalise an agreement that had been worked out between the two and was intended to benefit both parties.

[6] Mr TM says he did not benefit personally from the transaction, and only charged Ms CP a fee of $82.

[7] Mr TM submits that overall his:

conduct could and should not be classified as misconduct as that term has been legally defined.

I was not intentionally dishonest, nor was I “gross, wilful or reckless”. Any shortcomings were inadvertent and not representative of the manner in which I have practiced law for nearly 30 years.

[8] Mr TM invites this Office to reverse the Committee’s decision to lay charges against him to the Tribunal, replace that with a determination that there has been unsatisfactory conduct on his part, and make any orders or directions that the Committee could have made. Mr TM offers himself up to a restorative justice or similar process with the complainant and her husband, both of whom take issue with his conduct towards them after BD’s mother died as well as his conduct in acting for Mrs CP.

[9] With respect to recovery of debts from Mrs CP’s son NU, and Mr BO, Mr TM acknowledges that he accidentally put the wrong amount in a letter of demand to NU. He says he became confused with other debts owed to Mrs CP. He accepts that his error may have heightened hostilities between Mrs CP and NU.

[10] With respect to a significant debt owed to Mrs CP by Mr BO, Mr TM says:

I have explained previously that I was brought in to formalise an agreement that he and Mrs CP had made. While I acknowledged the conflict of interest with both clients, I was comfortable that the arrangement formalised what they had already agreed to and there would be no prejudice. However, I could not have taken steps against Mr BO [to recover] any debt he owed Mrs CP or specific performance of the agreement as I had previously acted for both clients in relation to the conveyancing agreement. I acknowledge that I should have given clear written advice to that effect, and referred Mrs CP to another lawyer. I regret not having done that.

[11] As to the other matters contained in BD’s complaint, Mr TM generally denies wrongdoing, but accepts shortcomings which he submits may not reach a standard where a professional disciplinary response is required.

Role of this Office on Review of Decisions to Prosecute

[12] The role of this Office on review has been discussed in a number of decisions including decisions from this Office in relation to reviews of Committee decisions to lay charges to the Tribunal regarding practitioner conduct.

[13] In Orlov v New Zealand Law Society the Court of Appeal determined that there was no threshold test to be met before matters could be referred to the Tribunal.1 The Court explained that:2

The protection to the practitioner once afforded by the threshold test [in the Law Practitioners Act] is thus now met by other means. The oversight of the LCRO should also assist in protecting the resources of the Tribunal and prevent it from being overwhelmed by petty or trivial cases.

[14] Previous decisions from this Office have emphasised the need for this Office to proceed with caution when considering whether or not to interfere with a determination by a Standards Committee to refer a matter to the Tribunal.3

[15] It has been noted that it will only be in exceptional cases that a decision to prosecute will be reversed on review.4

[16] Given the grounds set out in Mr TM’s review application, it is relevant to note that this Office is not required to consider all of the evidence relating to the complaint, although if there were no evidence, that could well give rise to concern on review.5

1 Orlov v New Zealand Law Society [2013] NZCA 230, [2013] 3 NZLR 562 at [53] and [54](d).

2 At [54](d).

3 AE – Decision to prosecute LCRO 93/2013 and 338/2013 (11 March 2014) at [31].

4 Poole v Yorkshire LCRO 133/2009 (11 November 2009), EG & EH v Auckland Standards Committee 1 LCRO 163/2011 and 164/2011 (11 November 2011) at [4]; JR v QL LCRO 108/2012 (7 September 2012) at [18].

5 OJ v PT LCRO 168/2011 (27 July 2012) at [6].

[17] Relevant principles that might apply to decisions being reversed by Review Officers were discussed in FF v Wellington Standards Committee 2 and include situations where a decision to prosecute was:6

• (a) Significantly influenced by irrelevant considerations.
  
• (b) Exercised for collateral purposes unrelated to the objectives of the statute in question (and therefore an abuse of process).
  
• (c) Exercised in a discriminatory manner.
  
• (d) Exercised capriciously, in bad faith, or with malice.
  

[18] In FF v Wellington Standards Committee 2 the LCRO observed:7

• [50] ... it was noted in the Rugby decision that “if the conduct was manifestly acceptable then this might be evidence of some improper motivation in the bringing of the prosecution”.
  
• [51] While I do not necessarily agree that this might constitute evidence of some improper motivation in the bringing of the prosecution, I do agree that the decision to prosecute should be set aside of the conduct was manifestly acceptable.
  

[19] This is an approach that has been described elsewhere as appearing to be:8

... consistent with the general stance adopted in common-law jurisdictions, where a very restrictive approach to the reviewability of a decision to prosecute has been emphasised since, the prosecutor’s function is merely to do the preliminary screening and to present the cases.

[20] These principles, while not necessarily exhaustive, provide guidance to this Office on the approach a Legal Complaints Review Officer (LCRO) can be expected to adopt when proceeding with a review of a decision to prosecute. It is an approach that is consistent with the cautionary approach commended by her Honour Winkelmann J in Deliu v Hong where she noted:9

In my view 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 judgement without good reason. (citations omitted)

6 FF v Wellington Standards Committee 2 LCRO 23/2011 (27 September 2011) at [49]–[51].

7 At [50]–[51].

8 PA v Standards Committee LCRO 267/2014 (30 June 2015) at [42].

9 Deliu v Hong [2012] NZHC 158, [2012] NZAR 209 at [41].

[21] The Court of Appeal in Orlov v New Zealand Law Society observed that the decision to lay charges:10

... does not determine the outcome of the complaint. It only determines which body should be seized of it. The decision is procedural in nature and occurs at a very preliminary stage of what is a comprehensive statutory process involving several checks and balances, in what the legislature saw as a more responsive regulatory regime.

[22] It is accepted that the Court of Appeal in Orlov was addressing an application for a judicial review of a Standards Committee determination, but it has been noted that “the observation that the decision is procedural in nature still holds good in respect of a review by this Office”.11

[23] The Committee’s power to refer a practitioner to the Tribunal derives from s 152(2) of the Act. The Committee may make a referral, if it considers that concerns have arisen in a professional context which, if proven, could lead to a finding of misconduct. The Committee need only be satisfied that the conduct in question, if proven, is capable of constituting misconduct. It does not fall to the Committee to determine whether the conduct in question is misconduct.

[24] The issue for consideration on review is whether there is any proper basis for interfering with the Committee’s decision. It is not part of the role of this Office on review to decide whether or not the evidence is sufficient to support a finding of misconduct. It is enough that there is some evidence to support a complaint that is of sufficient gravity to warrant referral to the Disciplinary Tribunal.

[25] The Court noted in Orlov that the Tribunal is the forum best suited to hear and investigate charges involving “complex issues of law or fact or to be likely to result in a significant precedent”.12 There is a need to protect the Tribunal’s resources where a case may be “petty or trivial”.13

[26] The Act defines two conduct standards: misconduct and unsatisfactory conduct. Conduct that does not fall within either of those definitions does not require a disciplinary response. Misconduct is the more serious of the two, and can ultimately lead to the Tribunal striking a practitioner off.

[27] The jurisdiction of this Office and Standards Committees extends only to unsatisfactory conduct. The jurisdiction of the Tribunal extends to both standards.

10 Orlov v New Zealand Law Society, above n 1, at [50].

11 BD and GA Application for review of prosecutorial decision LCRO 186/2013 (5 May 2014) at [52].

12 Orlov v New Zealand Law Society, above n 1 at [54](h).

13 At [54](d).

That places the Tribunal in a position to consider both standards in relation to the conduct that is the subject of charges framed and laid by the Committee when confronted with a complaint in which “the spectre of misconduct” is raised.14

[28] Significantly, when directing a complaint to the Tribunal for consideration, s 158 does not require a Standards Committee to provide reasons. Reason must be given “only when a standards committee makes a finding of unsatisfactory conduct or determines to take no further action”.15 However, this Office is obliged to provide reasons on review.

[29] I have taken all of these considerations into account on review and conclude for the following reasons that the decision of the Committee is confirmed.

Discussion

[30] The issue for consideration on review is whether there is any proper basis for interfering with the Committee’s decision. The short point is that Mr TM accepts his conduct was, at least, unsatisfactory. While Mr TM’s admissions are sufficient to support a finding of unsatisfactory conduct, it is necessary to consider whether they could also support a finding of misconduct, although this Office has no jurisdiction in that regard, nor does the Standards Committee.

[31] In considering that preliminary point, reference is made to a discussion by the learned authors of Ethics, Professional Responsibility and the Lawyer on the nature of unsatisfactory conduct and misconduct under the Act which includes the following:16

Conduct may be misconduct even though there was no intentional wrongdoing. In Complaints Committee 1 of the Auckland Districts Law Society v C, the Court observed:

While intentional wrongdoing by a practitioner may well be sufficient to constitute professional misconduct, it is not a necessary ingredient of such conduct. The authorities referred to above (and referred to in the Tribunal decision) demonstrate that a range of conduct may amount to professional misconduct, from actual dishonesty through to serious negligence of a type that evidences an indifference to and an abuse of the privileges which accompany registration as a legal practitioner.

(citations omitted)

14 LCRO 125/2015 (24 August 2017) (Unpublished decision).

15 At [30].

16 Duncan Webb, Kathryn Dalziel and Kerry Cook Ethics, Professional Responsibility and the Lawyer (3rd ed, LexisNexis, Wellington, 2016) at 107 and 110.

[32] The authors referred to Myers v Elman as a useful guide. In that case, the Court was exercising its inherent jurisdiction to discipline a lawyer in the course of a trial for misconduct. Lord Wright said:17

The matter complained of need not be criminal. It need not involve peculation [that is, embezzlement] or dishonesty. A mere mistake or error of judgement is not generally sufficient, but a gross neglect or inaccuracy in a matter which it is a solicitor’s duty to ascertain with accuracy is sufficient. ... It is impossible to enumerate the various contingencies which may call into operation the exercise of this jurisdiction. It need not involve personal obliquity.

[33] Under the heading “fiduciary breaches” the authors say:18

...obvious fiduciary breaches which would amount to misconduct are continuing to act in the face of a conflict of interest, including failing to ensure a client obtains adequate independent advice...

[34] And:19

there is no hierarchy of seriousness as between the paragraphs [of s 7] such that a) is more inherently serious than c), and nor do each of the paragraphs have to be considered relative to the others. Conduct is to be assessed in respect of the particular charge that has been brought... Behaviour which does not necessarily amount to professional misconduct may be in a separate category of offending in terms of s 106(3)(c). Reliance on epithets is not helpful in this context. No gloss should be placed on the statutory test.

[35] And:20

The discussion so far has proceeded on the basis that unsatisfactory conduct will generally be conduct which is less egregious than misconduct, though still falling foul of the standards set out in s 12 of the Act. This is, however, a generalisation. While the words of the Act support such an interpretation (for example, by the fact that wilful acts are misconduct but negligent acts may be merely unsatisfactory), it may be that there is some necessary overlap between the two concepts.

...the two concepts refer to distinct professional lapses. In general, unsatisfactory conduct will be the less serious wrong, but not always.

Further support for this can be found in s 241(b) of the Act, which provides that a charge may be laid before the disciplinary tribunal that a lawyer has been guilty of “unsatisfactory conduct that is not so gross, wilful, or reckless as to amount to misconduct”. Inherent in that statement appears to be the fact that there is some unsatisfactory conduct which might be so gross, wilful, or reckless as to also amount to misconduct.

A further observation is that it may be unhelpful to adhere too slavishly to existing authorities as to what amounts to misconduct. The starting place should obviously be s 7 of the Act. That section uses the term “disgraceful” and “dishonourable”, which are familiar from discussions in the cases of standards of misconduct under the Law of Practitioners Act 1982 and the common law...

17 Myers v Elman [1940] AC 282 (HL) at 319. 18 Webb, Dalziel and Cook, above n 16 at 113. 19 At 116.

20 At 120–121.

A final matter to consider is the conundrum faced by a Standards Committee which reaches the view that the conduct complained of is properly considered to be misconduct but the matter (while not trivial) is not deserving of the onerous stamp of prosecution before the New Zealand tribunal. There has always been a discretion as to whether or not to charge a practitioner with misconduct.

[36] The authors also note that:21

[Sections 152 and 211] use discretionary language in stating that the Committee “may” make certain determinations, including a determination to lay charges. This is consistent with a long-standing convention of prosecutorial discretion.

[37] All of that brings the discussion back to whether there is a proper basis for interfering with the Committee’s discretion on review.

[38] It is relevant that it could not reasonably be argued that the admissions made by Mr TM relate to a case that is petty or trivial. The essence of Mr TM’s admissions are that he:

• (a) drafted the deed negligently;
  
• (b) acted where Mrs CP’s interests were in conflict with Mr BO’s in breach of r 6.1;
  
• (c) failed to obtain the prior informed consent of all parties concerned in breach of r 6.1.1;
  
• (d) continued to act because it did not become apparent to him (for quite some time) that he could not discharge the obligations he owed to both of the clients for whom he was acting in breach of rule 6.1.2; and
  
• (e) did not obtain informed consent from Mrs CP after she had received independent advice in breach of rule 6.1.3.
  

[39] According to the authors’ discussion referred to above, continuing to act in circumstances of conflict of duties is capable of being the subject of a misconduct finding.

[40] While it is understandable that Mr TM may prefer to avoid the Disciplinary Tribunal process by making admissions to this Office on review, only the Tribunal can decide whether his conduct falls within the statutory definitions of misconduct and/or

21 At 121.

unsatisfactory conduct under the Act. It would be open to Mr TM to repeat and elaborate on the arguments he has made in his application for review to the Tribunal.

[41] The relevant principles discussed in FF v Wellington Standards Committee 2 apply to Mr TM’s situation in the following way. There is no evidence of the Committee having been significantly influenced by irrelevant considerations. There is no evidence of the Committee having exercised its prosecutorial function for collateral purpose unrelated to the objectives of the Act. There is no evidence of the Committee having exercised its prosecutorial discretion in a discriminatory manner against Mr TM. There is no evidence of caprice, bad faith or malice on the part of the Committee.

[42] It could not sensibly be argued on the basis of conduct Mr TM admits that the conduct alleged:

• (a) is petty or trivial;
  
• (b) is manifestly acceptable; or
  
• (c) does not raise “the spectre of misconduct”.
  

[43] There is nothing exceptional in the available evidence that indicates the decision to prosecute should be reversed on review.

[44] There is no proper basis on which to reverse of modify the Committee’s exercise of its prosecutorial discretion.

[45] The decision is therefore confirmed.

Costs on Review

[46] Section 210 of the Act provides this Office with discretion to order costs on review.

[47] The LCRO’s Costs Orders Guidelines presume that a lawyer who is unsuccessful on review, as Mr TM has been, will be ordered to pay costs on review.

[48] As that presumption is not displaced, Mr TM is ordered to pay costs of $900 for a straight forward review on the papers by 1 May 2019.

[49] Pursuant to s 215 of the Act, the costs order is enforceable, if necessary, in the District Court.

DATED this 3rd 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 TM as the Applicant

Ms DF as the Representative for the Applicant Ms CP as an Interested Party

[Area] Standards Committee [X] New Zealand Law Society Secretary for Justice