EF v JY [2022] NZLCRO 42 (9 May 2022)

Last Updated: 31 May 2022

LEGAL COMPLAINTS REVIEW OFFICER ĀPIHA AROTAKE AMUAMU Ā-TURE

	[2022] NZLCRO 042 Ref: LCRO 12/2022
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	EF Applicant
AND	JY Respondent

DECISION

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

Introduction

[1] Mr EF has applied to review a penalty determination by the [Area] Standards Committee X (the Committee) dated 30 November 2021 in which the Committee, having earlier made a finding of unsatisfactory conduct against him in a determination dated 13 October 2021, ordered Mr EF to pay a fine of $1,000 together with costs of $500.

Background and complaint

[2] The background to the Committee’s penalty determination, has been set out by it in its liability determination.1

1 Standards Committee liability determination (13 October 2021) at [3]–[5].

[3] I respectfully adopt the Committee’s summary of the background, from the liability determination.

[4] In simple terms, Mr EF had agreed to act for Dr JY in connection with marriage dissolution proceedings that had been issued by her husband in the Family Court, and which she wished to defend.

[5] The retainer was relatively short, at the end of which Mr EF issued an invoice dated 20 July 2020 to Dr JY for legal fees in the sum of $1,500 (GST inclusive).

[6] Dr JY complained that Mr EF had agreed to act for her, without fee.2

[7] Mr EF’s response to that complaint was, essentially, that he had been duped into acting for Dr JY, and when that was revealed he considered it appropriate to charge her a fee, albeit a significantly reduced one.

Committee’s liability determination

[8] It is to be noted that the Committee narrowed the focus of its inquiry from the wide-ranging matters initially complained about by Dr JY, to whether Mr EF had charged her fees in circumstances where he had earlier agreed to act for her without fee.

[9] In particular, the Committee noted that the issue was “whether Mr EF’s invoicing of Dr JY [in the circumstances of the case] amounts to unsatisfactory conduct or misconduct”.3

[10] The particular circumstances of the case included that:

• (a) Mr EF’s terms of engagement dated 31 March 2020 included the requirement that Dr JY pay a retainer of $2,500.
  
• (b) In a subsequent email (22 June 2020) Mr EF referred to assisting Dr JY “as an acquaintance free of cost”.
  
• (c) In a later email (27 June 2020) Mr EF asked Dr JY to pay “$1,000 being highly discounted fees”.
  

2 Dr JY also complained about other aspects of Mr EF’s conduct during the retainer. The Committee decided to take no further action on those issues of complaint, focusing only on the fees issue. Dr JY has not applied to review those aspects of the Committee's determination. They are not issues for me to consider in this review application.

3 Standards Committee liability determination at [18].

(d) In an email to Mr EF (2 July 2020), Dr JY described how Mr EF had agreed to act as follows: “you moved forward for free on your willingness”.

[11] The Committee noted that Dr JY’s complaint was that Mr EF had assured her “of doing [her] case for free of cost”, but had then asked her to start paying fees.

[12] It was the Committee’s conclusion “that Mr EF agreed to provide legal services to Dr JY on a pro bono basis and did not ever alter or discuss alternating that arrangement with her”.4

[13] Moreover, the Committee was satisfied that Dr JY understood that the terms of the retainer were that she would not be charged a fee. It noted that this appeared to be Mr EF’s view as well, given the contents of his 22 June 2020 email to her in which he referred to “assisting her ... free of cost”.

[14] The Committee accepted that Mr EF’s terms of engagement initially referred to the payment of a retainer of $2,500, but was satisfied that this was never followed-up by Mr EF; nor did he issue regular invoices.

[15] Subsequent discussions between the two varied that arrangement leading Dr JY to reasonably conclude that she would not be charged a fee. Mr EF’s 22 June 2020 email made that clear.

[16] The Committee considered that if Mr EF subsequently concluded that he had somehow been duped to act for Dr JY, and that he should thus charge her a fee, then it was incumbent upon him to cease doing any further work until matters had been clarified and agreed.

[17] The Committee’s held that:5

Mr EF issued an invoice to Dr JY for an improper purpose, and in the context where there was a reasonable explanation that his legal services were being provided on a pro bono basis.

[18] It was the Committee’s conclusion that this was unsatisfactory conduct. On that account, it called for submissions as to the appropriate penalty.

Mr EF’s penalty submissions to the Committee

[19] In an email to the Complaints Service dated 1 November 2021, Mr EF said the following:

4 At [24].

5 At [29].

(a) First, he objected to the parties mutually exchanging penalty submissions, saying that this denied him an opportunity to comment on Dr JY’s submissions.

(b) Mr EF submitted that the circumstances of the case did not call for any penalty to be imposed, and that a Committee had a discretion in that regard. He submitted that “the finding of unsatisfactory conduct is sufficient sanction in the circumstances”.

(c) The particular circumstances referred to by Mr EF included “the peculiar circumstances that existed and the urgency during COVID times, family sickness, and the fact that the work was satisfactorily completed and there is no chance of recovery”.

(d) Mr EF said that “we have stopped all such type of assistances that we do in good faith but then recoils on the Practitioner”.

(e) Alternatively, Mr EF submitted that the Committee ought to order him to cancel his invoice, or reduce “to nil balance owing on it”.

[20] Dr JY did not make any submissions about penalty to the Committee.

Standards Committee’s penalty determination

[21] The Committee noted the following:

• (a) It was “concerned that Mr EF [did] not seem to appreciate that his issuing of the invoice was improper. Regardless of circumstances, it is inappropriate to issue any invoice to a client after having agreed to undertake any work on a pro bono basis”.6
  
• (b) It was not appropriate to simply cancel Mr EF’s invoice because it should not have been issued in the first place and was thus not payable.
  
• (c) Mr EF’s suggestion that this was an appropriate penalty “demonstrates a significant lack of insight into the crux of [the] complaint – and his own conduct.”7
  
• (d) The mitigating factors advanced by Mr EF were not accepted.
  

6 Standards Committee penalty determination (30 November 2021) at [7].

7 At [9].

(e) However, the Committee noted that it was “aware of the particular circumstances and challenges of the lawyer – client relationship in this case [and as a consequence] the conduct [did not require] the most serious penalty available”.8

(f) Nevertheless, the Committee considered that a penalty was required to demonstrate that issuing an invoice was unacceptable.

[22] It was the Committee’s view that the appropriate penalty was a fine of $1,000. As well, Mr EF was ordered to pay $500 towards the cost and expenses of and incidental to the Committee’s inquiry and hearing.

Application for review

[23] Mr EF filed his application for review on 19 January 2022. He said:

• (a) The Committee was biased against him. The complaint “was dealt with by a closed, tainted and prejudiced mind.”
  
• (b) The Committee pre-determined the issue by cherry-picking facts to suit its conclusions.
  
• (c) The letter of engagement made reference to fees, justifying the issuing of an invoice.
  
• (d) Contemporaneous correspondence shows that Dr JY was aware that she would have to pay legal fees.
  
• (e) The retainer was satisfactorily completed.
  
• (f) Dr JY had gang connections in New Zealand and had asked Mr EF to facilitate her ex-husband being assaulted by them.
  
• (g) Dr JY had duped him into agreeing to act for her, by pretending to be a respected member of the local [LOCAL COMMUNITY] community and asking him to act for Dr JY, on a pro bono basis.
  
• (h) As well, the Committee did not accord appropriate weight to the evidence, made errors of law and fact and considered irrelevant factors and failed to take into account relevant considerations.
  

8 At [10].

[24] By way of outcome, Mr EF asked for the Committee’s decision to be reversed, and for the matter to be properly considered afresh.

[25] In particular, and noted by Mr EF on his Application for Review form, the date of the Standards Committee decision relevant to his review application, was 30 November 2021.

[26] In short, Mr EF’s review application concerns the Committee’s penalty decision.

Discussion

[27] Mr EF has not applied to review the Committee’s liability determination, dated 13 October 2021. Therefore, the Committee’s findings of fact about Mr EF issuing his invoice, remain the last word on that topic.

[28] Indeed, in his penalty submissions to the Committee Mr EF said that “the finding of unsatisfactory conduct is sufficient sanction in the circumstances”.9

[29] This is explicit recognition by Mr EF that his conduct in issuing the invoice to Dr JY, was unsatisfactory.

[30] Despite this earlier concession, in his review of the Committee’s penalty determination, Mr EF substantively challenges its earlier liability findings.

[31] If he had concerns about the Committee’s liability findings, the proper course for Mr EF was to apply to review the liability determination. A challenge to the penalty determination is not, and cannot be, a back-door means of attacking the liability determination.

[32] Accordingly, except to the extent that Mr EF might raise mitigating issues concerning the facts, I do not propose to undertake any review of the Committee’s factual findings.

[33] Before leaving that topic, I address Mr EF’s various allegations that the Committee was biased; that it dealt with Dr JY’s complaint with a “closed, tainted and prejudiced mind”; that it was “predetermined ... to affix liability on [him]”; that it failed to give proper weight to evidence, made errors of law and fact, considered irrelevant factors and failed to take into account relevant considerations.

[34] This unsupported grab-bag of legal jargon, commonly associated with judicial review proceedings, reflects no credit on Mr EF. He simply makes the many allegations,

9 Email from Mr EF to the Complaints Service (1 November 2021).

without more. He does not provide a shred of evidence to support any one of the allegations he made about the Committee.

[35] It is disappointing that a lawyer would resort to that level of gratuitous and unsubstantiated criticism about a Committee’s liability reasoning, in a review application about penalty.

[36] Mr EF had his opportunity to review the Committee’s liability determination and apparently declined to advance that.10 It is entirely inappropriate to level allegations of this nature at the Committee, without any foundation whatsoever, in a challenge to the penalty subsequently imposed by the Committee.

[37] Having read the Committee’s complaint file which includes the parties’ submissions and the supporting documentation each provided, I find myself in complete agreement with the conclusions reached by the Committee in its liability determination.

[38] It is abundantly clear that Mr EF informed Dr JY that the legal work he was undertaking for her, would not attract legal fees.

[39] The fact that the initial letter of engagement made reference to a retainer was overtaken by the subsequent discussions between the two during which Mr EF agreed that he would act on a pro bono basis.

[40] As a lawyer, Mr EF would well understand that that represents a variation of the contract of retainer. Properly agreed variations then become binding terms.

[41] Whether or not Dr JY unwittingly duped Mr EF into taking that course (and the evidence about that is far from clear), is irrelevant.

[42] If that was indeed the case, and as the Committee observed, the proper approach for Mr EF on learning of that was to terminate the retainer, or negotiate fresh terms which included payment of a fee.

10 Review applications are required to be lodged, together with the necessary filing fee, no later than 30 working days after the date on which a Standards Committee’s decision or determination is given to or otherwise drawn to the applicant's attention (see generally s 198 of the Lawyers and Conveyancers Act 2006). This information is provided at the end of every decision or determination issued by a Standards Committee. There is no ability for a Review Officer to extend that time limit. The Committee's liability determination was dated 21 October 2021. 30 working days after that date falls on or about 3 December 2021. Mr EF did not lodge any review application in connection with the Committee's liability determination, within the required 30 working days. He lodged his penalty review application, on 19 January 2022 – some 50-plus working days after the liability determination was first given to him. As a matter of law, the penalty review application cannot also be treated as an application to review the liability determination.

[43] This review application therefore deals with a very narrow issue: was the fine imposed by the Committee ($1,000), excessive? Relatedly, were the costs that the Committee ordered Mr EF to pay, also excessive?

[44] The maximum fine that a Committee may impose upon a lawyer, is $15,000.11

[45] It is not necessary to refer to other Review Officer decisions on penalty, to draw a ready conclusion that a fine of $1,000 is at the very lowest end of the scale of fines that may be imposed.

[46] A fine of that magnitude reflects the decision-maker’s view that the lawyer’s conduct was not the most serious though nevertheless warranted the disciplinary mark of a finding of unsatisfactory conduct and monetary penalty.

[47] Because Mr EF has not challenged the Committee’s conclusion that his conduct was unsatisfactory, it must follow that he accepts that description of his conduct.

[48] The options open to me on review include the ability to increase a Committee’s fine, uphold or decrease it.

[49] I have given some thought as to whether the fine imposed by the Committee sufficiently marked the seriousness of Mr EF’s conduct.

[50] My initial conclusion was that the fine imposed was very modest indeed, and that a fine in the range of $2,000 – $2,500 would not have been out of the question.

[51] I consider that it is a serious matter to agree to act for a client without fee, and then in a fit of pique to issue an invoice. As the Committee correctly observed, to do so is improper.

[52] Nevertheless, I defer to the Committee’s decision not to impose a fine of that magnitude. It had the benefit of Committee discussions about the facts, and of drawing together the views of not only the lawyer-members of the Committee, but also the lay- members who represent the interests of the consumers of legal services.

[53] Had I been inclined to pursue the question of whether to increase the Committee’s fine, I would have invited submissions to that effect from both parties.

[54] Therefore, I approach this review application on the basis that my options are to either uphold the Committee’s penalty decision, or to decrease the fine and/or the costs it ordered Mr EF to pay.

11 Section 156(1)(i) of the Act.

[55] Decreasing the fine, in practical terms, would involve substituting the sum of

$1,000 for figures of either $750, or $500 – or cancelling the fine altogether.

[56] Such an approach has all the hallmarks of a Review Officer tinkering with a Committee’s assessment about the level of seriousness of a lawyer’s conduct. In real terms, there is no difference between a fine of, say, $500 and $1,000 in relation to the punitive effect of and deterrent message that such a penalty sends.

[57] Moreover, I am satisfied that a fine of $500 would not reflect what I have described as the seriousness of Mr EF’s conduct.

[58] As I have said above, a fine of $1,000 really is at the very low end of the scale of fines that may be imposed.

[59] Mr EF has not pointed to any error of fact (as those facts relate to penalty), law or principle which could possibly justify a reduction in a fine of $1,000. He has not pointed to any, because there are none.

[60] The fine imposed by the Committee more than appropriately takes account of mitigating factors (such as they were) and it is difficult, if not impossible, to conceive of any other factors which could be said to mitigate the level of fine even further.

[61] The question of costs is approached slightly differently. Costs are not designed to punish or deter. They simply reflect the conventional approach of recovering a contribution towards the costs of the Committee’s inquiry processes.

[62] Where those processes have concluded with a conduct finding against a lawyer, it is entirely appropriate for that lawyer to meet some of the costs.

[63] The sum of $500 as a contribution towards those costs also represents the lowest sum that a Committee could order a lawyer to pay. It is but a small token of what the actual costs (and expenses) would be.

[64] There is no basis, whatsoever, for me to interfere with that order.

[65] For completeness, I record that I agree with the Committee’s assessment that it is inappropriate to simply order Mr EF to cancel his invoice, and that this represents adequate penalty.

[66] As the Committee quite correctly observed, the invoice is not payable in any event given that it was improperly issued by Mr EF. It is, in that sense, self-cancelling.

Section 205 of the Lawyers and Conveyancers Act 2006

[67] Section 205(1) of the Act provides:

The Legal Complaints Review Officer may strike out, in whole or in part, an application for review if satisfied that it—

(a) discloses no reasonable cause of action; or

(b) is likely to cause prejudice or delay; or

(c) is otherwise frivolous or vexatious; or

(d) is otherwise an abuse of process.

[68] Section 205 of the Act is expressed in terms substantially identical to the provisions of r 15.1 of the High Court Rules 2016. The principal difference is that r 15.1 is directed to pleadings (which is how claims and defences are expressed in the High Court), whereas s 205 of the Act relates to applications for review.

[69] A strike out application in the High Court under r 15.1 will be made at the early stage of a case: normally very soon after a claim (or defence) has been filed.

[70] On the other hand, s 205 of the Act empowers only this Office to strike out an application for review, not Standards Committees where complaints are initially, and usually finally, adjudicated.

[71] In my view, s 205 of the Act is intended to arm this Office with the summary ability to bar applications for review that lack merit, in order to focus what are limited resources on cases where there is an arguable case for the review application proceeding further.

Reasonable cause of action

[72] In the context of this Office’s review jurisdiction, whether an application for review “discloses no reasonable cause of action” translates neatly to an assessment in the present matter, of whether there is any factual, legal or principled basis for interfering with the Committee’s penalty decision in circumstances where the fine imposed is at the very lowest end of the scale.

[73] For the reasons I have given above at [54] and following, I am satisfied that Mr EF’s application for review discloses no reasonable cause of action. Put another way, I cannot see any basis for saying that the Committee’s fine of $1,000 was excessive or inappropriate in the circumstances of this case.

[74] As well, there is no basis for interfering with the Committee’s costs order. As described by me, it is but a small token towards the actual costs and expenses that would have been incurred by the Committee.

Decision

[75] Pursuant to the provisions of s 205(1)(a) of the Act, Mr EF’s application for review is struck out on the grounds that I am satisfied that it discloses no reasonable cause of action, as that term is explained at [71] above.

Costs on review

[76] When a Committee’s adverse finding is upheld by a Review Officer, costs will be awarded in accordance with the Costs Orders Guidelines of this Office. It follows that Mr EF is ordered to pay costs in the sum of $1,200 to the New Zealand Law Society by 5pm on Friday 27 May 2022, pursuant to s 210(1) of the Act.

Enforcement of money orders

[77] Pursuant to s 215 of the Act, I confirm that the money orders made by me immediately above at [73], may be enforced in the civil jurisdiction of the District Court.

Anonymised publication

[78] Pursuant to s 206(4) of the Act, this decision is to be made available to the public with the names and identifying details of the parties removed.

DATED this 09TH day of MAY 2022

R Hesketh

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 EF as the Applicant Dr JY as the Respondent

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