AH v NR [2019] NZLCRO 59 (7 April 2019)

Last Updated: 15 June 2019

	LCRO 134/2018
CONCERNING	an application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006 (the Act)
AND
CONCERNING	a determination of the [City] Standards Committee [X]
BETWEEN	AH Applicant
AND	NR Respondent

DECISION

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

Introduction

[1] Mr AH, at the relevant time the principal of AH Legal (the firm), has applied for a review of a decision by the Auckland Standards Committee 3 (the Committee). The Committee determined that by failing to honour an undertaking Mr AH had contravened r 10.3 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules (the rules) which constituted unsatisfactory conduct pursuant to ss 12(c) and 12(b) of the Lawyers and Conveyancers Act 2006 (the Act).

[2] In August 2017, Mr AH’s client sold a cafe business which occupied leased premises. Mr RA, a lawyer employed by the firm, carried out most of the required legal work. Mr NR acted for the purchaser.

[3] The agreement for sale and purchase of the business (the business sale agreement) was subject to conditions including the need to obtain the lessor’s consent

to the assignment of the premises lease.1 Because there was a head lease, the head lessor’s consent was also required.

[4] Another condition relating to “weekly sales” was satisfied on 4 October 2017. The agreed settlement date was 9 October 2017. On 6 October 2017 Mr NR forwarded the deed of assignment, signed by his client purchaser (and shareholder as guarantor), to Mr RA.

[5] Having arranged signature by his client vendor, Mr RA forwarded the deed of assignment to the lessor’s lawyer on 9 October 2017.

[6] That day Mr AH provided his undertaking to Mr NR by facsimile that:

Immediately following receipt of confirmation of deposit of settlement funds to our trust account, we undertake:

1. To provide you after the settlement date, with the original or certified copies of:
   
   • - Deed of Lease dated 15 November 2015
     

- Deed of Assignment of Lease for this transaction Thank you
[7] The deed of assignment, incorporating the signed consents of the lessor, and head lessor, was not available for Mr RA to effect settlement on 9 October 2017, or the following day, 10 October 2017.

[8] Settlement was deferred until 10 October 2017. Later that day the lessor’s lawyer sent to Mr RA, and Mr NR by email a PDF version of the deed of assignment which Mr AH says contained the lessor’s and head lessor’s signatures.

[9] The balance of the purchase price which Mr NR had paid to the firm was held in the firm’s trust account until the deed of assignment containing the lessor’s, and head lessor’s consents was ultimately received by Mr RA and forwarded to Mr NR on 24 November 2017.

Complaint

[10] Mr NR lodged a complaint with the New Zealand Law Society Complaints Service (NZLS) on 7 November 2017.

1 Prepared on the Auckland District Law Society Incorporated (ADLSi) Agreement for Sale and Purchase of a Business, Fourth Edition 2008 (3).

[11] The essence of his complaint was that at the time Mr AH provided his undertaking on 9 October 2017, Mr AH “was not in a position to satisfy the undertaking”. For that reason, he claimed Mr AH “breached” the fundamental integrity of an undertaking”, namely, the recipient “being able to rely on [the undertaking] in completing settlement of a transaction”.

(1) Control of subject matter

[12] He claimed having received Mr AH’s undertaking, “it later transpired” that Mr AH did not “hold a fully signed Deed of Assignment”. He stated Mr AH “was therefore unable to satisfy his undertaking”.

(2) Failure to honour undertaking

[13] Mr NR said that the following day, 10 October 2017, he sent an email to Mr AH

(a) pointing out that the Deed of Assignment “had not been signed by all parties” when Mr AH provided his undertaking, and (b) requesting an explanation about that from Mr AH.

[14] He said Mr AH did not respond to either that request, or to his follow-up emails on 16, and 24 October 2017. He said Mr AH told him on the telephone on 24 October 2017 that [Mr AH] was “not required to answer”.

Response

[15] I refer to Mr AH’s response in my later analysis.

Standards Committee decision

[16] The Committee delivered its decision on 8 June 2018 and determined, pursuant to s 152(2)(b) of the Act, that in contravention of r 10.3, Mr AH had failed to honour his undertaking which constituted unsatisfactory conduct pursuant to sections 12(c) and 12(b) of the Act.2 The Committee ordered Mr AH to pay a fine and costs.

2 “unsatisfactory conduct “; s12(c) “conduct consisting of a contravention of this Act, or of any regulations or practice rules made under this Act that apply to the [lawyer], or of any other Act relating to the provision of regulated services (not being a contravention that amounts to misconduct under section 7); ...”; s12(b) - “conduct ... that occurs at a time when [the lawyer[ is providing regulated services and is conduct that would be regarded by lawyers of good standing as being unacceptable, including - (i) conduct unbecoming a [lawyer]; or (ii) unprofessional conduct; or...”.

[17] The issues identified by the Committee for consideration were first, whether Mr AH, when he provided his undertaking, was able to “control whether the parties [would] all subsequently execute the deed”. If not, whether he was able to honour his undertaking?

[18] Secondly, whether or not Mr AH had honoured his undertaking?

(1) Control of subject matter

[19] The Committee stated that the time “to assess [Mr] AH’s conduct was when he provided the undertaking”.

[20] Contrary to Mr AH’s “belief” that he did have control over his ability to honour his undertaking, the Committee determined that at the time he provided the undertaking, Mr AH did “not in fact hold an original fully executed deed [of assignment] [or] a certified copy”.

[21] In reaching the conclusion that at the time he provided his undertaking Mr AH did not have control over whether the lessors would sign the original deed of assignment the Committee stated that because “[a]nything could theoretically have happened to prevent the deed” being signed by the lessors who “could simply have changed their minds”, (a) [the Committee] did not accept it was “likely (even very likely)” they would sign the deed of assignment, and (b) the fact that the lessors did “subsequently” sign the deed of assignment did not mean Mr AH “had been in control all along”.

(2) Honouring the undertaking

[22] Although acknowledging Mr AH’s “effort to obtain” signature of the deed of assignment by the lessors following settlement, which he “was ultimately able to provide” to Mr NR, the Committee stated Mr AH “was not in a position to honour the undertaking” at the time he provided it to Mr NR.

[23] The Committee referred to the “internal conflict” in the wording of the undertaking, namely, (a) Mr AH would perform his undertaking “immediately following receipt” by Mr AH “of confirmation of deposit of settlement funds to [the firm’s] trust account, yet (b) his promise to “provide” the “original or certified copies” of the deed of assignment to Mr NR was “after the settlement”.

[24] In determining that Mr AH, in contravention of r 10.3, breached his undertaking, the Committee observed that any ambiguity in an undertaking provided by a lawyer will “generally ...be interpreted in favour of the recipient”.3

[25] In the Committee’s view, the “clear intention” of the undertaking, and “the expectation of the parties would have been” that Mr AH would have provided Mr NR with the originals or certified copies of the deed of assignment upon receipt by Mr AH of confirmation of payment of the settlement funds, and not six weeks later.

Application for review

[26] In his application for review, filed in this Office on 20 July 2018, Mr AH seeks a reversal of the Committee’s determination.4

(1) Control of subject matter

[27] He disagrees with the Committee’s decision. He submits he had “control” over his ability to honour his undertaking. He says the Committee ought to have taken into account the “full circumstances” that gave rise to him providing his undertaking.

[28] He says the lessors’ “consent to the assignment of lease had already been granted”. He submits that the lessors’ consents “constitute a contractual obligation” which he could rely on, and that their signatures of their respective consents on the deed of assignment would follow.

[29] He says the lessors had also signed their respective consents on the copies of the deed of assignment which the lessor’s lawyer forwarded to him and Mr NR by email as a PDF file on 10 October 2017.

[30] He contends “almost all settlement[s]” take place in reliance on undertakings from the vendor’s lawyer “to provide the Deed of Assignment of lease to the purchaser after... settlement” which “normally takes more than a month”.

(2) Honouring the undertaking

[31] Mr AH also disagrees with the Committee’s finding that he did not honour his undertaking.

3 Auckland Standards Committee 3 of New Zealand Law Society v W [2011] NZHC 659; [2011] 3 NZLR 117 (HC) at [42].

4 Mr AH's application for review was made by Mr RA.

[32] He repeats that a copy of the deed of assignment with the lessors’ signatures of their respective consents was sent by the lessor’s lawyer to Mr NR by email as a PDF file “before the new settlement date”. He says if a “counterpart” provision had been included in the deed of assignment then the PDF copy would have been sufficient for settlement purposes.

[33] Mr AH contends he honoured his undertaking by later providing the original deed following signature by both lessors. He says until that time he held the sale proceeds in the firm’s trust account thereby “safeguarding” Mr NR’s client’s interests.

Response

[34] In his response filed in this office on 8 August 2018 Mr NR submits that Mr AH “has failed to reflect on his conduct”, and “does not comprehend the basic principles of an undertaking”.

(1) Control of subject matter

[35] Mr NR says although the lessors had agreed to consent to the assignment of lease, the copy of the deed of assignment sent to him 9 October 2017 did not have their signatures on their respective consents.

[36] He contends that signature of the deed of assignment by the lessors was “outside Mr AH’s...control”. He says Mr AH “was not in a position to honour” his undertaking because “the Deed of Assignment had not been signed by all parties”.

[37] He repeats Mr AH did not reply to his 10, 16 and 24 October 2017 emails in which he requested an explanation from Mr AH, who told him on the telephone on 24 October 2017 that [Mr AH] “did not have to answer” Mr NR.

(2) Honouring the undertaking

[38] Mr NR says at the time Mr AH provided his undertaking [Mr AH] “was not in possession of either an original Deed of Assignment ... or an email PDF version...which had been signed by all parties”.

Review on the papers

[39] The parties have agreed to the review being dealt with on the papers. This review has been undertaken on the papers pursuant to s 206(2) of 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.

[40] I record that having carefully read the complaint, the response to the complaint, the Committee’s decision and the submissions filed in support of and in opposition to the application for review, there are no additional issues or questions in my mind that necessitate any further submission from either party. On the basis of the information available I have concluded that the review can be adequately determined in the absence of the parties.

Nature and scope of review

[41] The nature and scope of a review have been discussed by the High Court, which said of the process of review under the Act:5

... 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.

[42] More recently, the High Court has described a review by this Office in the following way:6

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.

[43] 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

5 Deliu v Hong [2012] NZHC 158, [2012] NZAR 209 at [39]–[41].

6 Deliu v Connell [2016] NZHC 361, [2016] NZAR 475 at [2].

to consider all of the available material afresh, including the Committee’s decision, and provide an independent opinion based on those materials.

Issues

[44] The issues I have identified for consideration on this review are:

• (1) Control of subject matter
  
• (a) Had the lessors consented to the assignment of lease before 9 October 2017, the settlement date?
  
• (b) Who had signed the deed of assignment before Mr AH provided his undertaking to Mr NR on 9 October 2017?
  
• (c) If the lessors had not signed a copy, or copies, of the deed of assignment before Mr AH provided his undertaking, in what sense, if any, did he have control over signature of that document by the lessors?
  
• (2) Honouring the undertaking
  

(a) Did Mr AH honour his undertaking?

Analysis

(1) Undertakings

(a) Role in the practice of law

[45] Lawyers’ undertakings have an important role in the practice of law. They are held out by the legal profession “as having an elevated and special status”. They are recognised by and enforced by the Courts.7 For these reasons, “it is necessary for the profession to scrupulously honour them”.8

(b) Professional rules

7 Lawyers and Conveyancers Act 2006, s 268 — the Courts have an inherent jurisdiction in respect of the conduct of lawyers who are officers of the court. The third purpose of the Act is “to recognise the status of the legal profession” (section 3(1) (c)).

8 Auckland Standards Committee 3 of New Zealand Law Society v W [2011] NZHC 659; [2011] 3 NZLR 117 (HC) at [67].

[46] In acknowledgement of the importance of the care a lawyer must take when giving, and equally receiving an undertaking to another lawyer r 10.3 provides that:

Undertakings

10.3 A lawyer must honour all undertakings, whether written or oral, that he or she gives to any person in the course of practice.

10.3.1 This rule applies whether the undertaking is given by the lawyer personally or by any other member of the lawyer’s practice. This rule applies unless the lawyer giving the undertaking makes it clear that the undertaking is given on behalf of a client and that the lawyer is not personally responsible for its performance.

(c) Enforceability

[47] To be enforceable against a lawyer who provides an undertaking, the language used in the undertaking must be “clear”.9 The undertaking must be given by the lawyer personally in the lawyers’ capacity as a lawyer,10 and must state, whether expressly or impliedly, a date on, or by when it will be fulfilled or honoured.11

[48] To that end:

• (a) Care is required before providing an undertaking.12 So too a lawyer proposing to rely on an undertaking is required to ensure that the undertaking is capable of performance by the lawyer giving it.13
  
• (b) The subject matter of the undertaking must be within the lawyer’s control.14
  
• (c) An undertaking will be construed according to its “substance and intention” and not in a “technical legal manner”.15
  

9 Duncan Webb, Kathryn Dalziel and Kerry Cook Ethics, Professional Responsibility and the Lawyer (3rd ed, LexisNexis, Wellington, 2016) at [15.9.1]; see also previous New Zealand Law Society Rules of Professional Conduct for Barristers and Solicitors, 7th Edition (Consolidated) 2008 (RPC), r 6.07, commentary (6) — “precise and unambiguous in its terms”.

10 Webb, Dalziel and Cook at [15.9.1]; GE Dal Pont Lawyers’ Professional Responsibility (6th ed, Thomson Reuters, Sydney, 2017) at [22.05].

11 Webb, Dalziel and Cook at [15.9.1]; see also previous RPC r 6.07, commentary (4): “given expressly and not merely by implication” citing as an example “a vendor’s practitioner’s undertaking that rates will be paid on settlement should be express rather than implied from a settlement statement”.

12 Auckland Standards Committee v Stirling [2010] NZLCDT 4.

13 Dal Pont, above n 10 at [22.70].

14 At [22.65].

15 Auckland Standards Committee 3 of New Zealand Law Society v W above n 8 at [41].

(d) Any “ambiguity” will generally be construed in favour of the recipient.16

(e) Strict adherence is required.

[49] The context in which the undertaking has been given must be considered objectively.17 The Court of Appeal has stated that “[t]he subjective views of the practitioner giving the undertaking are irrelevant. So too, are the views of the practitioner or party receiving the undertaking”.18

(2) Control of subject matter — issues (a), (b), (c)

(a) Parties’ respective positions

• (i) Mr NR
  

[50] Mr NR claims that at the time Mr AH provided [Mr AH’s] undertaking on 9 October 2017, [Mr AH] did not have in his possession the deed of assignment of lease either as an original, or PDF copy which contained signature by the lessor and head lessor of their respective consents to the assignment of lease.

[51] For that reason, he says Mr AH did not have control over [Mr AH’s] ability to honour, or fulfil, [Mr AH’s] undertaking.

(ii) Mr AH

[52] Mr AH submits he did have control over his ability to honour his undertaking. He says the lessor, and head lessor had, by 9 October 2017 (a) agreed to consent to the assignment of lease which his client vendor could enforce, and (b) signed their respective consents on the copies of the deed of assignment which the lessor’s lawyer forwarded to him and Mr NR as a PDF file on 10 October 2017.

(b) Discussion

[53] The central question is whether at the time Mr AH provided his undertaking he was able to honour, or fulfil it by handing over to Mr NR the deed of assignment signed

(a) by the vendor, and purchaser, as assignor and assignee respectively, and (b) by the

16 At [42] and [60].

17 At [63].

18 At [45].

lessor, and the head lessor as to their respective consents contained in the deed of assignment.

(i) Chronology

[54] Mr NR, as the purchaser’s lawyer, forwarded to Mr RA on 6 October 2017 the proposed deed of assignment, already signed by the purchaser, and its shareholder as guarantor. Mr NR asked Mr RA to arrange for signature by the vendor, and by the lessor, and head lessor.19

[55] Three days later on 9 October 2017 at 11.35 am, the lessor’s lawyer informed Mr RA that he had received the deed of assignment from Mr RA and had “emailed copies” to the lessor, and head lessor “for signing”.

[56] In a subsequent exchange of emails, Mr RA informed the lessor’s lawyer at

12.11 pm that settlement of the sale of the business was due that day. Mr RA requested the insertion of a “counterpart clause” but asked that “all parties sign on one copy of the deed, even if separate originals end up being circulated in due course”.

[57] By 3.33 pm, the lessor’s lawyer informed Mr RA that the head lessor consented to the assignment, but “cannot sign the deed [of assignment] in its current form”. He added that although “taking steps to ensure” signature by the head lessor, “a signed deed [of assignment] will not be available this afternoon”. At 4.48 pm Mr RA forwarded to Mr NR the “deed of assignment of lease signed by our [respective] clients”.

[58] Mr AH provided his undertaking to Mr NR on 9 October 2017 by facsimile. Although the time of the facsimile has not been provided to the Committee or to this Office, there is no disagreement that Mr AH sent it that day.

[59] At 9 am on 10 October 2007 Mr NR informed Mr AH that it was “apparent” that the deed of assignment “had not been signed by all parties at the time” Mr AH provided his undertaking. Mr NR requested an explanation from Mr AH.

[60] In response to Mr RA’s subsequent request to the lessor’s lawyer that day for “the signed Deed of Assignment via email”, the lessor’s lawyer stated that he did “not yet have a signed copy” of the deed of assignment, “although” he understood “it had been signed” by the lessor. The lessor’s lawyer requested Mr RA’s “undertaking to pay” the lessor’s lawyer’s “fee and those of the head [lessor]”.

19 Except for Mr AH's undertaking which was communicated by fax on 9 October 2017, all other communications were by email.

[61] Shortly afterwards that day, at 12.59 pm, the lessor’s lawyer sent by email “the Deed of Assignment” to both Mr RA and Mr NR “on the basis” that the lessor’s lawyer’s fees “are paid from the settlement proceeds”. He asked Mr RA to retain sufficient funds “to meet the fees of the head [lessor]”. He stated that the original deed of assignment had been posted to his client lessor, but there was “very little hope of having the original deeds in time for settlement tomorrow”. For that reason, he had sent “emailed copies” to the head lessor’s lawyer, and the lessor “at the same time”.

(ii) Consideration

[62] It is evident from these communications that irrespective of the actual time on 9 October 2017 that Mr AH sent his undertaking to Mr NR, by the end of that day only Mr NR’s client purchaser (and shareholder), and Mr AH’s client vendor (and shareholders) had signed the deed of assignment.

[63] That is consistent (a) with Mr NR’s statement that the copy of the deed of assignment he received from Mr RA that day “did not have” the lessor’s and head lessor’s signatures, and (b) with the communications between Mr RA and the lessor’s lawyer on 9 and 10 October referred to above.

[64] Mr AH asserts that on 9 October 2017 he was in possession of a copy of the deed of assignment “signed by all parties” which he or Mr RA had received, presumably from the lessor’s lawyer by email. However, he has not produced any evidence in support of that position. The copy of the deed of assignment which Mr NR says he received from Mr RA on 9 October 2017, and which he produced to the Committee, does not evidence signatures of the lessor and head lessor on their respective consents.

[65] Mr AH says that having received a PDF copy of the deed of assignment from the lessor’s lawyer on 10 October Mr NR relied on that document and Mr AH’s undertaking to hold the sale proceeds in the firm’s trust account until the original deed of assignment became available.

[66] However, by then Mr AH had already provided his undertaking — the day before on 9 October.

[67] The conclusion I have reached from my analysis of the information provided for this review is that on 9 October 2017, when Mr AH provided his undertaking to Mr NR, the lessor and the head lessor had not signed their respective consents on the deed of assignment.

(3) Honouring the undertaking — issue (d)

(a) Parties’ respective positions

• (i) Mr NR
  

[68] Mr NR claims that Mr AH did not honour his undertaking. He says Mr AH “was not in a position” to do so because the deed of assignment “had not been signed by all parties”.

(ii) Mr AH

[69] Mr AH submits that his undertaking required him to provide Mr NR with the original or certified copies of the deed of assignment “after the settlement date”, not “on” the settlement date.

[70] He submits he honoured his undertaking by obtaining the lessor’s and head lessor’s signed consents on the original deed of assignment which he forwarded to Mr NR on 24 November 2017.

[71] He says pending availability of the deed of assignment signed by the lessor and head lessor, he held the sale proceeds in his firm’s trust account thereby “safeguarding” Mr NR’s client’s interests.

(b) Discussion

[72] Mr AH undertook to Mr NR that “immediately” after he had received “confirmation” of payment of the “settlement funds” to the firm’s trust account, he would provide Mr NR “after the settlement date, with the original or certified copies” of both the deed of lease, and the assignment of lease.20

[73] The context for Mr AH’s undertaking was provided in the business sale agreement, which stated that possession of the business would “be given and taken on the “possession date” which the parties agreed was 9 October 2017. The “[s]ettlement date” was defined as “the possession date or such other date as the parties are to perform their obligations under subclause 3.3”.21

[74] Those obligations included the purchaser being required to pay “[t]he balance of the purchase price, interest and other moneys, if any”. The vendor was required to

20 See undertaking at [6] above.

21 Clause 1.1(14).

“concurrently deliver to the purchaser: (a) ...the lease and a duly executed deed of assignment of the lease in the form described in subclause 9.6, together with the landlord’s written consent to the assignment”. Clause 9.6 required that the deed of assignment be “in the current form published” by ADLSi.

[75] Taking these requirements into account, the words “after the settlement date” in Mr AH’s undertaking can only sensibly be interpreted as meaning following payment by the purchaser of the balance of the purchase price. Not on an undetermined later date if and when the lessor and head lessor signed their respective consents on the deed of assignment.

[76] I have already found that on 9 October 2017, when Mr AH provided his undertaking to Mr NR, the lessor and head lessor had not signed their respective consents on the deed of assignment, and for that reason, Mr AH did not have control over signature by both lessors of their respective consents on the deed of assignment.

[77] From my analysis of the information produced for this review, the conclusion I have reached is that upon receipt of the settlement monies from Mr NR, Mr AH, as he undertook he would, did not provide to Mr NR the original or certified copies of the deed of assignment which contained the lessor’s, and head lessor’s consent.

[78] Although, following signature by the lessors, Mr RA ultimately forwarded the original deed of assignment to Mr NR on 24 November 2017, by not providing those documents to Mr NR upon receipt of the balance of the sale proceeds of the business from Mr NR, Mr AH did not honour his undertaking to do so.

(4) Conclusion

[79] In contravention of r 10.3, which constitutes unsatisfactory conduct under s 12(c), and s 12(b) of the Act, Mr AH:

• (a) provided an undertaking to Mr NR in circumstances when he did not have control over whether [Mr AH] would be able to honour the undertaking. In particular, Mr AH was not in possession of the original deed of assignment of lease containing the signed consents of the lessor, and head lessor; and
  
• (b) did not honour that undertaking by providing the original deed of assignment of lease including the consents of the lessor, and head lessor to Mr NR upon receipt from Mr NR of the balance of the sale proceeds of the business.

[80] Finally, I make the observation that from the time Mr RA received the deed of assignment from Mr NR, settlement was due in three days within which time the consents of the lessor and head lessor had to be obtained. As I have noted, Mr RA did suggest to Mr NR on 9 October that the documents be signed by “counterpart” which would allow signature by the parties to a document on separate copies of the same document, but that was not taken up.22

[81] The result was that faced with not being in possession of the lessor’s and head lessor’s consents to the deed of assignment on the settlement day, an undertaking of the type provided by Mr AH was not an option open to him. In the context of property transactions, the Property Law Section, of the New Zealand Law Society, Property Transactions and E-dealing Practice Guidelines warn lawyers against providing undertakings if “not in a position to ensure they are carried out”.23

[82] In my view, the sensible course for Mr AH would have been to seek to defer settlement until the consents had been obtained and the form of the deed of assignment approved. Alternatively, once the lessors had both agreed to give consent, and approved the form of deed of assignment, possibly arrange an interim settlement.

Decision

[83] For the above reasons, pursuant to s 211(1)(a) of the Lawyers and Conveyancers Act 2006 the decision of the Committee that Mr AH contravened r 10.3, which constitutes unsatisfactory conduct under s 12(c), and also constitutes unsatisfactory conduct under s 12(b) is confirmed.

Orders

[84] In giving consideration as to whether it is appropriate to order a penalty, I refer to the guidance provided by the Disciplinary Tribunal which has stated that the “predominant purposes [of orders] are to advance the public interest (which include ‘protection of the public’), to maintain professional standards, to impose sanctions on a

22 The original deed of assignment uplifted by Mr RA from the head lessor’s lawyer on 24 November 2017, and forwarded to Mr NR that day, contained a signature by “counterpart” provision.

23 New Zealand Law Society “Property Transactions and E-dealing Practice Guidelines” (April 2015) <www.lawsociety.org.nz> at [5.6].

practitioner for breach of his/her duties and to provide scope for rehabilitation in appropriate cases”.24

[85] The starting points for penalty are the seriousness of the conduct and culpability of the lawyer concerned. Mitigating and aggravating features, as applicable, are also taken into account. Acknowledgement by the lawyer of error, and acceptance of responsibility are matters to be considered in mitigation.

[86] A fine is one of the orders a Standards Committee, or this Office on review, can make. The maximum fine available is $15,000.25 Concerning an appropriate fine, this Office has stated that in cases where unsatisfactory conduct is found as a result of a breach of applicable rules (whether the Rules of Conduct and Client Care, regulations or the Act) and a fine is appropriate, a fine of $1,000 would be a proper starting place in the absence of other factors.26

[87] In ordering that Mr AH pay a fine of $5,000, the Committee took into account that Mr AH had “spent a reasonably significant amount of time and effort” to obtain the consents of the lessor and head lessor to the deed of assignment, but weighed that against a previous finding of unsatisfactory conduct against Mr AH for breach of undertaking, and “a lack of insight” into his conduct.

[88] I observe from Mr AH’s submissions on this review that even though he was unable to provide the deed of assignment to Mr NR, which led to settlement being postponed, Mr AH does not appear to appreciate that at the time a lawyer provides an undertaking, the lawyer must have the ability to honour it without relying on outside influence, or third parties.

[89] For these reasons, I do not propose to interfere with the fine of $5,000 ordered by the Committee. Pursuant to s 211(1)(a) of the Lawyers and Conveyancers Act 2006 the decision of the Standards Committee is:

• (a) Confirmed as to the Committee’s order that Mr AH pay to the New Zealand Law Society the sum of $5,000 by way of a fine to be paid within 30 days of the date of this decision. (s 156(1)(i))
  

24 Daniels v Standards Committee (2) of the Canterbury-Westland Branch of the New Zealand Law Society [2013] NZHC 349, [2013] NZAR 416. See also s 3 of the Act — the consumer protection purposes.

25 Lawyers and Conveyancers Act 2006, s 156(1)(i).

26 Workington v Sheffield LCRO 55/2009 (26 August 2009) at [68].

(b) Confirmed as to the Committee’s order that Mr AH pay to the New Zealand Law Society the sum of $1,000 by way of costs within 30 days of the date of this decision. (s 156(1)(n))

Costs

[90] Where an adverse finding is made, costs will be awarded in accordance with the Costs Orders Guidelines of this Office. It follows that Mr AH is ordered to pay costs in the sum of $900 to the New Zealand Law Society within 30 days of the date of this decision, pursuant to s 210(1) of the Act. Pursuant to s 215 of the Lawyers and Conveyancers Act 2006, I confirm that the order for costs made by me may be enforced in the civil jurisdiction of the District Court.

Anonymised publication

[91] Pursuant to s 206(4) of the Act, I direct that this decision be published so as to be accessible to the wider profession in a form anonymising the parties and absent of anything as might lead to their identification.

DATED this 7th day of April 2019

B A Galloway

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 AH, as the Applicant Mr NR, as the Respondent

Auckland Standards Committee 3 New Zealand Law Society