UQ v VF [2019] NZLCRO 79 (26 May 2019)

Last Updated: 11 July 2019

LCRO 135/2018

CONCERNING an application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006

_AND

CONCERNING a determination of the [Area] Standards Committee [X]

BETWEEN UQ

_Applicant

AND VF

_Respondent

_DECISION

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

_changed.

Introduction

[1] Mr UQ has applied for a review of a decision by the [Area] Standards Committee [X] (the Committee) to take no further action on his complaint about the conduct of Mr VF in relation to his role in the administration of a gifting programme of the GAP Trust (the Trust).

[2] During the period engaged by the complaint, Mr UQ and his wife, together with KRT Trustee Services Limited (KRT) an incorporated adjunct of Mr VF’s incorporated law practice, LM Limited (LML), were the trustees of the Trust. The UQs had been trustees since the Trust’s inception 16 years before.

[3] The complaint centred upon what Mr UQ described as “a discrepancy between the balance in the gifting documents and the balance recorded in the financial statements”. What he meant by this will become clearer in due course.

[4] Mr UQ’s complaint was addressed to Mr VF personally. It has been and will continue to be treated accordingly.

Background

[5] This background does not set out to capture each and every event or point arising over the period in question. Its purpose, particularly as regards events from April 2017 onwards, is simply to set out in a general way what has led to the complaint with an emphasis on what this Office finds relevant to the disposition of this review.

[6] The Trust was settled through the legal practice of a Mr BA in September

2001. He retired as a trustee on 1 August 2008 and was replaced by KRT. Mr MH of KRT supervised gifting and other legal services for the Trust until his retirement as a director on 31 August 2010.

[7] In 2011, Parliament abolished gift duty for dispositions of property made on or after 1 October 2011.1 Before that, gifts in any one year of or exceeding $27,000 attracted gift duty.

[8] Consequently, and from 1 October 2011, the filing of gift statements with the Inland Revenue Department ceased to be necessary. However, the need to properly record gifts, especially including those in relation to trusts, to ensure legal certainty remained.2

[9] From July 2010 until June 2016, time devoted by LML/KRT to the provision of legal/trusteeship services to the Trust was either recorded by Mr MH of LML (a director of KRT until his 31 March 2016 retirement, after which he remained for a time as a consultant) or by Ms LN, a legal executive.

[10] On 1 July 2016, Ms LN resigned and was replaced on 11 July 2016 by Ms KM. The current directors of LML and KRT are Mr VF (since September 2011) and WC (since December 2014).

[11] In late April 2017 — after the Trust’s annual balance date of 31 March 2017 —

Ms KM prepared gift statements and associated resolutions for the Trust. On 1 May

2017, she emailed the UQs inviting them to come in to complete them.

[12] The UQs, who as noted above, have been trustees of the Trust throughout, attended on Ms KM on 31 May 2017 and signed without apparent query the gifting

1 Taxation (Tax Administration and Remedial Matters) Act 2011, s 245.

2 Inland Revenue Department “Gift duty abolition” <www.ird.govt.nz>.

documentation she had prepared. This appears to have been the first time that she met the UQs.

[13] Almost 6 weeks later on 11 July 2017, Mr UQ emailed Ms KM to say that the gifting figure in the documentation had been wrong and the records needed to be regularised.

[14] She responded on 12 July 2017 to say that she had taken the figure from the previous year’s gift documentation, rather than the 2017 accounts which had yet to arrive.

[15] She acknowledged the desirability of conformity but remarked that, because of the timing of the receipt of annual accounts, with most trusts the gifting dates did not sit neatly with those accounts. She offered the assurance of a tidy up when the current, that is the 2017–2018, accounts were completed.

[16] She added:3

As discussed, you may wish to make a larger gift next year, or you can choose to extinguish the debt in full. We will check with you next year to confirm your wishes in that regard.

[17] That prompted a quite lengthy response from Mr UQ which arrived later that day. The tenor of it was unmistakeable — Mr UQ was not happy with the service received. He particularly pointed to reasons why increased gifting did not suit his and his wife’s circumstances.

[18] What was presumably important to the UQs was the avoidance, so far as might be possible, of any actions that might negatively impact on assets testing for rest home care subsidy purposes.4

[19] Ms KM must have referred the whole matter to Mr VF as he promptly stepped in with an email to the UQs on 14 July 2017. That appears to mark his first personal involvement with the Trust’s affairs.

[20] It was now clear that from the UQ’s point of view the meeting with Ms KM on

31 May 2017 had not gone as well as, on all sides no doubt, would have been wished. When Mr VF emailed the UQs on 14 July 2017, he conveyed, in what presents as a gesture genuinely intended to mitigate matters, Ms KM’s regrets for so-called oversights and unhelpful advice.

3 In so writing she perhaps had the 2011 gift duty changes in mind.

4 See for example the Social Security (Long-Term Residential Care) Regulations 2005, which prescribe allowable gifting and gifting periods for the purposes of financial means assessments.

[21] In that email he set out to identify the gifting position as it had come to be and advised his willingness to forward the result to [Accountants], the Trust’s accountants, so that the Trust’s accounts could in due course be adjusted to reconcile them with the relevant gifting documents.

[22] On 19 July 2017, he followed up by emailing what present as carefully detailed queries to [Accountants], the email being copied to the UQs.

[23] [Accountants] responded on 25 and 31 July 2017. Its basic observation and conclusion as to future action (such advice being copied by it to Mr UQ) was that:5

In [Accountants’] experience the usual problem in reconciling the records arises from the original indebtedness not being adjusted for new settlor advances or missed gifting. Either way, the appropriate course of action is to adjust the gifting in the current year.

[24] That conclusion was in line with what Ms KM (see [14] above) had earlier proposed to the UQs.

[25] On 25 July 2017, before [Accountants] had finally reported to Mr VF and Mr UQ, Mr UQ responded to Mr VF’s 14 July 2017 email. He said he and his wife were going overseas (according to Mr UQ they were away for three weeks) and he expressed the hope that the matters he considered still to be outstanding would have been fully resolved by the time they returned.

[26] He emailed Mr VF again on 4 October 2017. He expressed concern that the latter had not been in touch since 14 July 2017. He spoke of a 13 September 2017 email he had sent inquiring as to progress (to which he said there had been no reply) and he sought a plan for ongoing action. (He did not mention that he had been a direct recipient of the 31 July [Accountants] advice.)

[27] Having apparently received no response, Mr UQ followed up again on

24 October 2017. He sent an email to LML’s Practice Manager seeking an investigation. He recorded his expectation of an early resolution of outstanding matters, but nevertheless enquired about the lawyers’ complaints procedure in case there was a need to formalise the process.

[28] The Practice Manager obviously referred this enquiry to Mr VF because the next day, 25 October 2017, he responded to the UQs at some length. Of his communication with [Accountants] about historical aspects of gifting (which he had copied to the UQs when he approached the accountants) he said that KRT, being

5 It seems from the materials as a whole that by “current year” (an expression used elsewhere)

was meant the 2017-2018 accounting year.

satisfied with the responsive information received from [Accountants], had since signed and returned the accounts to them. His letter went on to cover a range of other matters.

[29] Following a preliminary acknowledgement on 25 October — one that exhibited continuing dissatisfaction — Mr UQ emailed Mr VF at length on 19 November 2017. To him, the “timing differences” explanation was simplistic and far from satisfactory. In his view a range of problems remained which he largely laid at the feet of LML. He was now seeking an exceptionally detailed response on a number of fronts.

[30] Mr VF did not reply to that email from Mr UQ.

The complaint and the Standards Committee decision

[31] What became a joint complaint by the UQs was lodged with the New Zealand Law Society Complaints Service (Complaints Service) on 25 February 2018. They complained that Mr VF had failed to:

(a) act with competence and in a timely fashion;6

(b) provide information about the work to be done, who would do it and how;7

(c) provide clear information and advice;8

(d) treat them fairly, respectfully and without discrimination;9

(e) keep them informed as to progress and of work completion;10 and

(f) advise how to make a complaint and to deal with a complaint promptly and fairly.11

[32] The UQs (through Mr UQ) particularly said:

The initial issue raised ... was regarding a discrepancy between the balance then the gifting documents and the balance recorded in the financial statements. These figures have been significantly different for several years. Had (LML) investigated this, identified the cause and proposed an appropriate timeframe, there would be no cause for complaint.

6 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, r 3.

7 Rules 3.4–3.6.

8 Preface to the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules.

9 Rule 3.1.

10 Rule 3.2.

11 Rule 3.4(d).

The failure of VF to competently address this and to communicate with us his clients, has caused me significant inconvenience, as well as time and effort. We were paying for the services of a professional trustee to provide us with independent advice - we have been badly let down.

[33] The complaint then continued in elaborative detail.

Standards Committee decision

[34] The Committee delivered its decision on 27 June 2018 and determined, pursuant to s 138(2) of the Lawyers and Conveyancers Act 2006 (the Act), that no further action on the complaint was necessary or appropriate.

[35] In delivering that decision it noted that the UQs raised a number of issues about the service received including whether Mr VF or LML:12

(a) were incompetent or unprofessional;

(b) failed to satisfactorily address errors made and the complaints lodged by the UQs; and

(c) failed to treat them with respect.

[36] It identified as the key issue whether it was appropriate to take disciplinary action against Mr VF regarding the matters raised by the UQs.

[37] It recorded that:

(a) Mr VF had acknowledged staff oversights in the administration of the

Trust;

(b) the question then was whether it was appropriate to take any disciplinary action against Mr VF himself;

(c) lawyers were not required to be perfect and it was neither practical or appropriate to make a finding of unsatisfactory conduct on account of every error made by a lawyer; 13

12 As indicated earlier, my focus is on Mr VF personally because the complaint was identified as being against him alone. A lawyer in his position will usually have supervisory responsibilities for staff (such as would appear to have been so with Ms KM) but there is neither complaint nor evidence of a failure in supervision being material to any errors or oversights on her part.

13 Referring to ZN v CH LCRO 168/2014 (19 December 2014) at [27] — “a breach of a rule, if

established, does not automatically attract a disciplinary sanction”.

(d) it had come to the view that this was not a case where disciplinary action was appropriate — the oversights were not of a sufficiently serious nature to warrant a finding of unsatisfactory conduct; and

(e) Mr VF had attempted to allay the UQ’s concerns and had offered apologies and, while the UQs remained unsatisfied, its view was that Mr VF had acted appropriately in the circumstances.

[38] The Committee concluded by noting that it did not consider it necessary to address each and every one of the UQ’s allegations but that it had reviewed all of the material provided before concluding that disciplinary action was not appropriate.14

[39] It is, however, important to note that, despite Mr UQ’s obvious concerns over Mr VF’s response delays after 14 July 2017 and, in the end, failure to respond at all to the 19 November 2017 email, the Committee does not appear to have specifically focused on those matters. I shall do so below.

Application for review

[40] Mr UQ alone filed an application for review on 23 July 2018. It is important to detail the outcome sought because it is an unusual one to find in the disciplinary context.

[41] As broadly described by Mr UQ, the outcome sought is that “we want to be in a position where [the Trust] can withstand an audit” and saying that he was not confident that as matters stood that was the case. What kind of audit is not explicitly identified.

[42] Some idea of the nature of his concerns can perhaps be gathered from the remedies Mr UQ seeks:

(a) “a full reconciliation of the financial information maintained by LM and an explanation of how these differences arose ... any charges from our accountants [Accountants] to be paid by LM Lawyers”;

(b) “a clear explanation of the process required to rectify this discrepancy ...

_{documented as a file note (or similar) prepared and signed by LM”;}

14 I too have reached my independent decision after examining and considering the totality of the materials before me. See also [52]– [54] below.

(c) “clear advice regarding progressive gifting as requested in my email of

19 November 2017 ... the advice provided ... has been contradictory and confusing”;

(d) “a meaningful censure of LM lawyers e.g. publication of the findings of

this complaints process”;

(e) “an apology: specifically identifying and acknowledging the areas of

deficiency”; and

(f) “this complaints process prevents us claiming money because of [sic] the amount involved it is below the threshold. However, I do feel aggrieved that we paid significant fees each year for a very basic service

... [that has been] ... sub-standard. An additional cost to us will be the time spent by our accountants ... this cost would not have been incurred if LM had acted competently”.

[43] His obvious expectation is that Mr VF should be required to accomplish each and all of the outcomes that he sets out which, in their essence, I have repeated at [42] just above. Some of those remedies are akin to requests for mandatory injunctive relief, delivery of which could not effectively be supervised. The remedial powers available to a Standards Committee (and thus this Office) are wide, but it would be unprincipled and wrong to make any orders that could not be effectively policed.

[44] Mr UQ then particularly submits that:

(a) the problem perceived by him was longstanding; (b) Mr VF had unilaterally abandoned remedial work;

(c) for some months he had been inattentive to the matter;

(d) Mr VF had failed to detail (as requested by Mr UQ) what work LML (presumably meaning KRT) would do as a professional trustee;15

(e) there was more than just a “timing issue”;

(f) he had not found the email responses to his concerns from Ms KM and

_{Mr VF helpful; and}

15 He had sought a comprehensive explanation of a professional trustee’s duties.

(g) the LML practice manager had initially ignored a request for the information about its complaints procedure.16

[45] In making those submissions he draws attention to matters that in his consideration were either overlooked or accorded insufficient weight by the Committee when it decided that no further action was necessary or appropriate.

Mr VF’s response

[46] Mr VF chose to continue to rely on his (received by the Complaints Service on

23 March 2018) response to the original complaint.

[47] So far as remains relevant, he also noted that:

(a) the responsible trustees had been the UQs and KRT;

(b) information about movements in the Trust’s current account were for the most part exclusively in the knowledge of the UQs until they imparted same to the Trust’s accountants;

(c) prior to 31 May 2017, it had been open to Mr UQ to impart any information about current account movements to KRT before the gifting documents were finalised;

(d) he considered that Ms KM’s 12 July 2017 response and his own of

25 October 2017 had been sufficient in the circumstances;

(e) his perception that one of Mr UQ’s responses (referred to at [28] above) had simply been vexing, adding nothing that offered a better focus on what still troubled Mr UQ; and

(f) he had considered Mr UQ’s further 19 November 2017 email to be “over the top” and evidencing “escalating irascibility”, which called for time for reflection before any reply was made, and that end of year workload pressures had then intervened.

[48] His overall position was that the complaints made were disproportionate to the central (the timing) issue, and excessive, and that the outcomes sought were unnecessary because:

_{(a) the UQs knew why the discrepancies had occurred; and}

16 This was not framed as a complaint against Mr VF personally.

(b) their resolution was simple to achieve as had been pointed out to them more than once.

[49] As to further or better advice about gifting — which Mr UQ had called for —

Mr VF had observed that no lawyer could predict future government policy.

Mr UQ’s rejoinder

[50] The Complaints Service had received a rejoinder from Mr UQ on 23 April

2018.

[51] The rejoinder:

(a) rehearsed his already voiced complaints of inattention and delay;

(b) reasserted that the discrepancies could not be passed off as timing differences;

(c) said that such had not been a topic to which he had given thought when he and his wife signed the 2017 gifting documentation;

(d) asserted that Mr VF had prematurely abandoned the investigation he had instigated with [Accountants];

(e) belatedly sought to question the $300 plus GST administration fee charged in the year in question;17

(f) accepted that he and his wife had trusteeship responsibilities too;

(g) asserted that because there was more to it than a timing difference and the Trust could be open to “future challenge”;18 and

(h) rehearsed his 19 November 2107 request for a “considered recommendation” as to progressive gifting.

Content of this decision on review

[52] In what follows I will by no means refer to every aspect of the materials that have been before me from the parties, although I have carefully considered all material.

17 Its amount is substantially below the regulatory threshold for challenge.

18 What was meant by that expression was not explained.

Review on the papers

[53] 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.

[54] 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

[55] The nature and scope of a review have been discussed by the High Court, which said of the process of review under the Act:19

... 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.

[56] More recently, the High Court has described a review by this Office in the following way:20

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.

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

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

[57] 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

Exercise of a discretion

[58] This is a case where it seems that while the Committee found that, on occasion, there were oversights on this file, no such incident was of a sufficiently serious nature to merit a disciplinary finding against Mr VF.

[59] The making of a finding of unsatisfactory conduct, when justified, is necessary before any disciplinary consequences can follow.

[60] A decision not to make a finding of unsatisfactory conduct, even when technically open on the facts, can properly be driven by the conclusion, reached with the exercise of reasonable judgment that, in all the circumstances, disciplinary action is unnecessary, because pursuit of the public interest in the maintenance of standards of professional conduct does not require that.

[61] As is provided for in s 138(2) of the Act, the Committee decided not to take any further action on the complaint because to it this was a case where in all the given circumstances further action was unnecessary or inappropriate.

[62] Section 138(2) of the Act, in contrast to s 138(1) which lists a range of specific criteria that may justify calling halt to the investigation of a complaint, gives a Standards Committee a wide discretion.

[63] The general law is that when a decision-maker exercises an available discretion, the consequential decision cannot be set aside in the absence of (1) error of law or principle; (2) the taking account of irrelevant considerations; (3) a failure to take account of a relevant consideration; or (4) the case being that the decision is plainly

_wrong.21

21 Kacem v Bashir [2010] NZSC 112, [2011] 2 NZLR 1 at [32].

[64] It is also the general law that if a decision has been reached in the exercise of a discretion, the mere fact that the reviewing entity would have favoured a different conclusion is no justification to set that decision aside.22

This Office’s jurisdiction

[65] As noted above, the High Court has recognised that this Office has an obligation to take a fresh look on review and, having done so, to provide an independent opinion on the available materials — see [59] above — but it has also, as I noted at [58], said that:23

... 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.

[66] Given what I set out above:

(a) I apprehend that the words “good reason” as used by the High Court are intended substantially to serve as a short-hand reference to the general law principles set out in those paragraphs;

(b) notwithstanding the obligation on this Office to take a fresh and independent look at every case on review, the general law is not to be ignored; and

(c) I am fortified in that view by the injunction to exercise “particular caution”

before interfering.

Evaluation

Preliminary

[67] With all those matters in mind, I now turn to my independent and fresh evaluation of the merits of this case.

_{[68] In doing so I first note the following:}

22 Oceanic Palms Ltd v Danforth Nominees Ltd CA179/05 15 December 2005 at [20].

23 Deliu v Hong, above n 19 at [41].

(a) one of my clear impressions is that the UQ’s meeting with Ms KM got off on, or at least ended up on, the wrong foot;24

(b) however, especially when viewed in the light of the later advice of [Accountants], Ms KM’s email to the UQs of 12 July 2017 was a not unreasonable response to Mr UQ’s queries up to that point;

(c) Mr UQ’s 11 July 2017 email intimation had been that he had received the 2017 accounts from [Accountants], which showed no gifting, so the reliance that Ms KM had placed on the 2016 accounts for a gifting figure had been misplaced;

(d) he had sought that the balance debt remaining be updated from those accounts and had noted that he would be sending the accounts to KRT for signature;

(e) her reply had been to suggest a correction in 2018 and to note, as an option for consideration rather than a matter of firm advice, deferral of any further gifting until the 2018 accounts came to hand;

(f) she had then noted the options of more substantial gifting or even a complete forgiving of the Trust’s indebtedness, but as that — options — not as firm advice; and

(g) there is no evidence to support any implicit in the UQ’s case suggestion that Mr VF, whom I take to have been Ms KM’s supervisor, had failed in that role.

[69] Ms KM’s 12 July 2017 response was met with a rejoinder later that day in

which Mr UQ:

(a) posited that the extent of the discrepancy suggested a long existing problem;

24 The UQs complained that when they saw Ms KM to sign the gifting documentation (a first- time meeting for all three), there had been a moment at the outset of the meeting when she was or seemed confused as to the purpose of their visit. Mr VF later explained why that had been so. This was not a matter anywhere near approaching a conduct issue but may have contributed to the setting in motion of the growing dissatisfaction of the UQs.

(b) acknowledged that there had been discussions about the possible pattern of future gifting but asserted that at the meeting adherence to

$27,000 a year had been already agreed;

(c) was variously critical of the service provided, that criticism extending to asserted historical shortcomings; and

(d) wanted to know how matters would be remedied and whether there would be charges for that. He ended by saying:

We gave you the opportunity to respond, and in my view you did not address the concerns raised. Therefore I am asking that you escalate the matter.

Mr VF — reversion to [Accountants]

[70] As I noted earlier Mr VF, having at that point become immediately involved, reverted to [Accountants] for advice and comment, a logical step to take since as much any other there was an accounting issue to be resolved.

[71] As already recorded, their 31 July 2017 conclusion (copied to Mr UQ just as had been Mr VF’s email approach to them) was that:

In [Accountants’] experience the usual problem in reconciling the records arises from the original indebtedness not being adjusted for new settlor advances or missed gifting. Either way, the appropriate course of action is to adjust the gifting in the current year.

[72] As has been seen, the [Accountants] conclusion pointed in the same direction as Ms KM had earlier proposed to the UQs.

Audit risk

[73] Despite the variously expressed concerns of Mr UQ about “audit” risk and so on, from no quarter of the case (his included) does there emerge any actually and specifically identified risk.

Mr VF’s 25 October 2017 report

[74] When Mr VF reported to the UQs as trustees on 25 October 2017 he:

(a) confirmed the signing off and return to [Accountants] of the 2017 accounts;

(b) acknowledged again the UQ’s disapproval of LML’s service and said that

it had not met its own standards;

(c) rehearsed the risk of discrepancies arising from the fact that accounts were financial year end related documents whereas gifting might occur at any time;

(d) noted that such could be avoided by deferring any new gifting until accounts were available and adjusting the figures to reflect the accounts;

(e) rehearsed that the 31 July 2017 advice of [Accountants] was to make the appropriate adjustment in the current (that being the 2017–18) year’s accounts; and

(f) recorded that:

as we advised at the time of our last meeting, and continue to advise, there is no guarantee that progressive gifting of $13,500 each per year will ensure your eligibility for a rest home subsidy ... we have no control over government policy, which can change at any time. Current policy is clear: it is expected that people will provide for themselves in their old age and not seek government assistance when they have access to funds held by a trust. It is likely that the scrutiny of family trusts will increase as public funding to assist the elderly becomes scarce ... the choice is, of course, yours but we do note that we have not advised you to continue with progressive gifting.

[75] Mr VF obviously considered that at this point he had discharged his retainership obligations. Then apologising for an earlier oversight as regards sending a gifting reminder, and noting that when future services were provided there would be a charge for those, he added:

You may wish to consider whether you want KRT Trustee Services to continue as your independent trustee. [Accountants] may provide a trustee service and you may find this a more appropriate arrangement.

[76] This letter was framed courteously and with the obvious intention that it should prove helpful.

[77] Mr UQ’s substantive response of 19 November 2017 had been preceded by a

message to Mr VF immediately following receipt of the 25 October 2017 letter.

[78] This message contended that Mr VF’s advice had not adequately addressed his preceding queries. Mr VF responded on 27 October 2017 to say that from his perspective the queries have been answered and a solution proposed. But he nevertheless expressed a preparedness to entertain identification of any omissions.

Mr UQ’s 19 November 2017 email

[79] Mr UQ’s 19 November 2017 email ultimately followed. Before that, and on

6 November 2017, the Practice Manager informed Mr UQ (in response to a request from him) of LML’s complaints process.

[80] The 19 November 2017 email was comprehensive and detailed, but it suffices to record that it:

(a) conveys the clear impression that Mr UQ’s dissatisfaction with the

services provided to that point has become deep-seated;

(b) identifies, in particular, that Mr UQ wants and expects far more detailed advice than has to that point been provided on the rest home care subsidy issue;

(c) seeks a detailed investigation into the quality of historical advice from

LML on the discrepancy issue;25

(d) seeks a detailed investigation into the matter of the current day discrepancy;26

(e) on both counts a “reconciliation” of actual or perceived anomalies is wanted, presumably as a thought to be necessary once and for all slate cleaning; and

(f) seeks specific advice as regards future gifting.

[81] What the email does not clearly express or identify as regards (c), (d) and (e) is any specific justification or need for what is sought. (As regards (b) and (f) see [98]-[99] below.)

[82] Towards the very end Mr UQ says:

Finally, you suggest that we should walk away from this unresolved mess and find someone else to be the professional trustee.

[83] This does not present as a reasonable response to what, plainly enough, Mr VF was clearly trying to convey, namely that it appeared that the UQs had lost trust and confidence in LML/KRT in which case a parting of the ways might be sensible.

25 A task likely better suited to a lawyer independent of LML.

26 Despite the [Accountants] explanation by then already given and concurred in by Mr VF.

[84] The 19 November 2017 email sought a reply within five working days but intimating that if more time would be needed Mr VF should so advise. In any event, for the reasons recorded at [47](f) above, Mr VF did not respond to the message at all.

Mr UQ’s view of the heart of the matter

[85] I have noted previously — see [44] above — that on review Mr UQ particularly submits that:

(a) the problem perceived by him was longstanding; (b) Mr VF had unilaterally abandoned remedial work;

(c) for some months he had been inattentive to the matter;

(d) Mr VF had failed to detail what work LML (presumably meaning KRT)

would do as a professional trustee;

(e) there was more than just a “timing issue”;

(f) he had not found the email responses of Ms KM and Mr VF to his concerns helpful; and

(g) The LML practice manager had initially ignored a request for the

information about its complaints’ procedure.

[86] I take this catalogue to reflect the matters or areas that, in Mr UQ’s submission, must have been underestimated, or even overlooked, by the Committee in reaching its decision.

My findings

[87] I preface my findings by rehearsing that it appears to be the case that Mr VF

had not had any direct (or even supervisory) involvement with the Trust until 2017.

[88] While his 19 July 2107 message to [Accountants] (copied, as noted before, to the UQs) presents as indicative of a careful effort usefully to delve into matters historical, the short point is that Mr VF personally cannot be called to account for any shortcomings in service that did not occur on his watch.

[89] I next note that there is no evidence from a suitably qualified professional to

suggest that anything more by way of remediation as regards the “discrepancy” or

“timing” issue was required, or even desirable, than that successively advocated by

Ms KM, [Accountants] and Mr VF himself.

[90] That solution spoke of the essential mechanics of correction, and the repeated and recorded communications of the advice on that point assured the existence of an explanatory paper (or an electronic equivalent) trail.

[91] Furthermore, there is no evidence from a suitably qualified professional to suggest that, absent some additional or different form of intervention, the Trust was at some kind of “audit” or “future” challenge risk. Indeed, no evidence is offered of what any such perils might be.

[92] As to inattention and thus delay, Mr VF did let himself down inasmuch as, first, the letter he wrote on 25 October 2017 should have been sent rather earlier — at least shortly after Mr UQ’s reported 13 September 2017 reminder — and secondly the

19 November 2017 message ought to have been promptly acknowledged; even if only to say that he (Mr VF) needed time to consider it or that there was nothing he saw that could usefully be added to his prior advice.

[93] For Mr UQ to expect Mr VF to provide a highly specific catalogue of a professional trustees’ duties (another request that he had made) was to overlook that what may in the future be required of any trustee cannot, as to all the possibilities, be the subject of a failsafe forecast.

[94] Speaking generally every trustee (“professional” or otherwise) has duties to exercise their powers in the best interests of the beneficiaries of the trust; to act fairly towards the beneficiaries; and to take advice when that is necessary or sensible.

[95] A “professional” trustee should be a suitably skilled person or entity, which has no present or possible future interest in the trust property and with no inclination to do other than to act in a detached way in the service of the interests of the beneficiaries.

[96] These are surely self-evident truths of which one such as Mr UQ should, after

16 or so years of experience working with professional trustees, have been aware. It is therefore difficult to see what more of a general nature he could have been told.

[97] As to clear gifting advice Mr UQ appears to have been looking for some form of omnibus advice, rather than such as could be related to a specific factual situation.

[98] Otherwise he would surely have set about arranging to see Mr VF so as to go into factual detail — or at least would have spelt out in writing precisely what that factual detail was.

[99] As to the LML complaints process issue, by 6 November 2017 — under a fortnight after Mr VF’s letter — he knew from the Practice Manager what that comprised and there is no evidence that Mr VF was to blame for any delay.

[100] There is no evidence at all of Mr VF acting in any sort of discriminatory or unfair way towards the UQs. Nor of any lack of respect. As I remarked earlier, his

25 October 2017 letter displayed no such signs.

[101] Mr UQ takes umbrage at the suggestion by Mr VF that the UQs might wish to look elsewhere for a professional trustee for the future. I see that suggestion as reflecting no more than that matters had reached a point where it was open to Mr VF to conclude that the UQs had lost confidence in him.

[102] I do not find that Mr VF acted incompetently or otherwise transgressed the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 save in his failure in the latter stages of his involvement to act in a timely fashion.

[103] The overarching impression with which I am left is that a point was reached where Mr VF likely came to the view that, whatever he did or said, Mr UQ would remain dissatisfied and demonstrate that by further escalating demands.

[104] It might even be said that the nature of the remedies now sought by Mr UQ

offers support for that such apprehension.

[105] Lawyers, no more than is the reasonable expectation of any other professional, are not required to be punctilious without fail.

[106] Mr VF should not have let go of matters as he did at the end, but in all the circumstances I do not find that failure serious enough to warrant a finding of unsatisfactory conduct.

[107] I thus see no grounds which could persuade me to depart from the

Committee’s decision.

Decision

Pursuant to s 211(1)(a) of the Lawyers and Conveyancers Act 2006, the decision of the

Standards Committee is confirmed.

DATED this 26TH day of May 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 UQ as the Applicant

Mr VF as the Respondent

Ms WC as a related person

[Area] Standards Committee 2

New Zealand Law Society