HB v UC [2024] NZLCRO 148 (26 November 2024)

Last Updated: 15 March 2025

LEGAL COMPLAINTS REVIEW OFFICER

ĀPIHA AROTAKE AMUAMU Ā-TURE

	[2024] NZLCRO 148 Ref: LCRO 180/2022
CONCERNING	an application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006
AND
CONCERNING	a determination of [Area] Standards Committee [X]
BETWEEN	HB Applicant
AND	UC and JW Respondents

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

Introduction

[1] [Law Firm B] has applied on behalf of their client Mr HB, for a review of the determination of [Area] Standards Committee [X] to take no further action on the complaints about Messrs UC and JW.

Background

[2] In June 2019 Mr HB entered into an unconditional contract to purchase a new home in [Town] which had been constructed by the vendor.

[3] The agreement for sale and purchase included the following clause 20:-

“The vendors warrant to transfer the Master Builders Warranty on the property to the purchaser on or before settlement date.”

[4] Mr HB had been dealing with Ms AN, a staff solicitor in the firm ([Law Firm A), and the agreement was sent to her.

[5] Ms AN settled the purchase without checking to ensure the vendor had complied with the warranty.

[6] In July 2021, Mr HB entered into a contract to sell the property and represented to the purchaser that the property was covered by a Master Builders guarantee. That was not in fact correct, as the vendor to Mr HB had obtained a Halo guarantee1 and transferred this to Mr HB.

[7] Before settlement, the solicitor acting for the purchaser of the property from Mr HB put him on notice that their client would be looking to him to indemnify them for any claim not covered by the Halo policy which would otherwise be covered by the Master Builders policy.

[8] [Law Firm B]2 sought an indemnity from [Law Firm A] for any losses that their client may incur because of this, together with other remedies.

[9] [Law Firm A] instructed [Law Firm C] to act for the firm and to respond to [Law Firm B]. [Law Firm C] advised that [Law Firm A] would not be providing them with the indemnity requested or any other of the remedies sought. That resulted in a complaint by [Law Firm B] to the Lawyers Complaints Service on behalf of Mr HB.

Mr HB’s complaints

[10] Mr MG3 lodged a complaint on behalf of Mr HB against “Mr UC and Mr JW as partners of the firm trading as [Law Firm A].” He says:-

“4. At all material times Messrs UC and JW had responsibility as Partners for the purchase file and over the actions of the professional staff in their employ who acted on the purchase of the Property.

5. The purchase of the Property was carried out by Messrs UC and JW in breach of their fundamental obligations under s 4(c) in that no regard was ever given by [Law Firm A] or any professional staff in their employ to Further Clause 20.0 of the Sale and Purchase Agreement dated 24 June 2019, (“the Agreement”).”

[11] Mr MG says there is no reference to cl 20 in the [Law Firm A] file. He asserts:-

1 A Halo guarantee is a guarantee issued exclusively to the members of the New Zealand Certified Builders association.

2 [Law Firm B] did not act for Mr HB on the sale of the property.

3 Mr MG was the solicitor in the firm acting for Mr HB.

“9. Messrs UC and JW acted in breach of their fundamental obligations under s 4(c) of the Act when they or the professional staff in their employ and over which they had responsibility:

1. Failed to have regard to the terms of the Agreement and in so doing failing to identify, record, acknowledge or report to Mr HB the existence of the Warranty under Clause 20.0;
   
2. Failed to make basic inquiries with the vendor as to whether the Master Build Guarantee as stipulated in the Warranty in fact existed prior to settlement;
   

100. Failed to identify that the vendor was in breach of the Warranty under Clause 20.0;
     

4. Failed to identify that the vendor was in breach of the Warranty to Mr HB;
   
5. In any case, failed to refuse settlement until a satisfactory resolution could be reached between the parties given the vendors was in breach of the Warranty;
   
6. Proceeded with settlement while no transfer of the purported Master Build Guarantee from the vendor to Mr HB had been raised or actioned with the vendor or the vendor’s solicitors;
   
7. Proceeded with settlement while the vendor was in breach of the Warranty under Clause 20.0;
   
8. Failed to report to Mr HB that [Law Firm A] had proceeded with settlement in circumstances where the vendor had breached the Warranty.
   

[12] He considered that the response from Messrs UC & JW to the letter 4 in which he put the alleged failures to them ‘denying the failures without qualification may in itself give rise to breaches under the RCCC by Messrs UC and JW worthy of further investigation’.5

[13] Mr MG included with the letter of complaint copies of correspondence which he said were “correspondence between Mr HB and Messrs UC and JW on this matter ...”.

[14] He submits that resolution of the complaint would include reimbursement to Mr HB of legal fees to date ($4,045.35) together with any further legal costs Mr HB may incur “in relation to this matter going forward”.6

[Law Firm A] response7

[15] [Law Firm A] responded:-

4 Letter, MG to Complaints Service (14 October 2021).

5 At [11].

6 At [13].

7 Letter [Law Firm A] to Lawyers Complaints Service (6 December 2021).

“There is no record on our file of any request from Mr HB for [Law Firm A] to take steps to obtain and review the warranty or to arrange for its transfer.”

[16] They argue that the firm’s retainer was limited and “in the circumstances it was reasonable for Ms AN to assume that the transfer of the warranty would be dealt with by Mr HB himself, or by the vendor without the need for any action by us”.8

[17] They say that “the breach of a warranty of any agreement does not create a right to refuse to settle”.9

[18] [Law Firm A] submit that Mr HB had not suffered any loss and that no evidence had been provided as to the difference between the Master Builders warranty and the Halo warranty. They, incorrectly, state that “the agreement does not even accurately refer to a Master Build Guarantee ...”.10

[19] [Law Firm A] conclude their response in the following manner:-

“31. There was a limited retainer in place between Mr HB and [Law Firm A]and [Law Firm A] carried out the work required of it with appropriate skill, care and diligence. In the circumstances, any failure to make enquiries about the Warranty does not amount to unsatisfactory conduct and Mr HB has not shown that he has suffered any loss.”

Mr HB’s comments in reply11

[20] Mr MG responded on behalf of Mr HB. He says that Mr HB does not accept that the retainer was limited in any way, and that [Law Firm A] were retained to attend to all matters connected with the purchase of the property and the terms of the agreement.

[21] Mr HB does not recall signing any documentation to transfer the warranty and concludes “that either the Halo guarantee transferred automatically, or the vendor, NTCL, transferred it to him without his knowledge, and without [Law Firm A] being aware of the vendor’s breach or their attempt to mask the true position.”12

[22] Mr HB asserts that “[Law Firm A] should have realised during the transaction that the warranty was in breach”.13

8 At [18].

9 At [20].

10 At [25].

11 [Law Firm B] to Lawyers Complaints Service (27 January 2022).

12 At [9].

13 At [10].

[23] Mr MG considers that “the substantive remedy for this matter can only be [Law Firm A] agreeing to indemnify Mr HB for any loss for which he may be liable to the new owners ... for the difference (if any) in coverage.”14

[Law Firm A] response15

[24] [Law Firm A] submits that the complaints process is not the appropriate vehicle for this dispute and that Mr HB has remedies against the vendor.

The Standards Committee determination

[25] The Standards Committee identified a single issue to be addressed:-

“39. The question for the Standards Committee was whether [Law Firm A]’s approach, to effectively take no steps in respect of the building guarantee, was appropriate in the particular circumstances or whether it amounted to incompetence. If it was incompetent, the question would then arise whether it warranted a professional disciplinary sanction, and if so, against whom.”16

[26] “The Standards Committee considered that there was merit in [Law Firm A]’s argument that the retainer was limited in the context of an unconditional agreement.”17

[27] The Committee took note that it “could not find any evidence of Mr HB having instructed Ms AN to take any steps in respect of the building guarantee in the period after he entered into the 2019 agreement.”18

[28] It considered that:-

“The wording of Clause 20.0 gives the impression that the transfer of the building guarantee was something which would be attended to by the vendor, without further input by Mr HB as purchaser or his lawyers.”19

[29] The Committee accepted the submission by [Law Firm A] that the firm’s retainer was limited to attending to “the usual transactional ‘nuts and bolts’ of a residential conveyancing.”20

[30] The Committee concluded:-

“46. ... in the absence of clear instructions from Mr HB, the retainer did not extend to taking any steps in respect or the building guarantee, whether by

14 At [19].

15 Letter, [Law Firm A] to Lawyers Complaints Service (11 February 2022).

16 Standards Committee decision (30 September 2022) at [39].

17 At [40].

18 At [43].

19 At [44].

20 At [45].

making enquiries about its nature and quality or by taking steps to ensure it was transferred. It did not consider that Ms AN, and by extension Messrs UC and JW, as her supervisors, had breached their professional obligations, whether under section 4(c) of the Act or Rule 3 of the RCCC.”21

[31] Having reached this view “the Committee determined to take no further action on Mr HB’s complaints pursuant to s 138(2) of the Act namely that, having regard to all the circumstances, any further action would be unnecessary and/or inappropriate.”22

Mr HB’s application for review

[32] Mr MG lodged an application for review of the Committee’s determination on behalf of Mr HB. He submits that there have been incorrect factual assumptions and errors of law by the Committee.

Errors of fact/factual assumptions

[33] Mr MG advises that [Law Firm B] did not act for Mr HB on the sale of the property, contrary to the Committee’s assumption in paragraph [11]. Mr MG considers that the Committee was wrong to determine that “there was no evidence Mr HB had instructed Ms AN to take steps in respect of the build guarantee warranty.”23

[34] Mr MG submits there is ‘plain evidence’ that this determination is incorrect and provides details.24

“d. Mr HB says that the Standards Committee accurately quoted Ms AN’s file note at paragraph 8 here but went on to draw an incorrect and contradictory factual finding at paragraph 43 when it held there was no evidence Mr HB had instructed Ms AN to take steps in respect of the build guarantee warranty. Mr HB instead says that the file note of 9 July 2019 is plain evidence that:

1. He discussed the vendor warranties regarding the appliances and house itself, which included the Warranty at Clause 20.0, with Ms AN during that 9 July 2019 meeting;
   
2. That he settled with Ms AN that her next steps were to ask the solicitor for the vendor about them; and
   
3. Ms AN made a file note to ask the vendor’s solicitor about the vendor warranties.”
   

21 At [46].

22 At [47].

23 Letter [Law Firm B] to LCRO (9 November 2022) at [2(d)].

24 AN file note (9 July 2019).

[35] He argues that the inference to draw from the fact that Ms AN could not recall whether she followed up on the matters referred to in her file note, is that she did not do so.

[36] On this basis, Mr MG submits that the determination by the Committee that [Law Firm A]’s retainer was limited to attending only to the ‘nuts and bolts’ of the conveyancing, is wrong.

Errors of law

[37] Mr MG also submits that the Committee’s determination that the retainer was limited, is an error of law. He says:25

“This is because Mr HB would ordinarily be “irrevocably committed” (as [Law Firm A] allege) to the 2019 Agreement except in circumstances where the vendor has breached a term of the Agreement, or in circumstances where it is clear that a term in the contract will be breached by the vendor, as those circumstances give rise to cancellation under ss 37(1)(b) and 37(1)(c) of the Contract and Commercial Law Act 2017. ...”

[38] He says, “this point is not considered by the Standards Committee”.

[39] Mr MG argues:-

“... it is certainly within the scope of a reasonable and competent lawyer’s retainer acting for the purchaser in an unconditional transaction to check for breaches of the agreement, or breaches that a[re] clearly about to occur by the vendor which give rise to cancellation (and to a right to recover damages) by operation of law and as a part of the settlement process. That is the case whether or not the client has instructed the lawyer to do so.”26

[40] Mr MG says that “... it should have been obvious to [Law Firm A] in the circumstances (i.e. a new build) to inquire of the Warranty (i.e. the Master Build Guarantee) with the vendor’s solicitor, where investigation would have discovered an anticipatory breach giving rise to cancellation.”27

[41] The outcomes sought by Mr HB are:

• (a) Compensation for independent advice prior to making a complaint ($4,045.35).
  

(b) Costs relating to the complaint made to the Standards Committee ($1,174.95).

25 Letter [Law Firm B] to LCRO, above n 23, at [3(c)].

26 At [3(d)].

27 At [3(f)].

(c) Indemnity by Messrs UC and JW.

(d) Costs of bringing the review.

[Law Firm A] response

[42] [Law Firm C] responded to the application for review on behalf of Messrs UC and JW. They say:

1. It is immaterial whether or not [Law Firm B] acted for Mr HB on the sale of the property.
   
2. “There is no evidence that Mr HB followed up with Ms AN about the warranty, instead the transfer of the warranty appears to have been arranged by Mr HB, which is consistent with this not being within the scope of Ms AN’s instructions.”28
   
3. Whilst it may be inferred that the reference in clause 20.0 of the agreement to a “Master Build Warranty” is a ‘Master Builders Guarantee

...’ and “Mr HB should have taken steps to ensure that the guarantee/warranty product was described accurately in the agreement before he signed, if this was important to him. The fact that he did not suggests that the type of product that was being passed over was not important to him.”29

4. “Mr HB has also not provided any evidence to establish that there are material differences in the terms of the Halo Guarantee and the Master Builders Guarantee, such that there might have been any claim for equitable set-off.”30
   
5. In their concluding remarks, [Law Firm C] emphasise that [Law Firm A] had a limited retainer which did not include attendances relating to clause.20
   

Nature and scope of review

[43] The High Court has described a review by this Office in the following way:31

28 Letter [Law Firm C] to LCRO (9 December 2022) at [7].

29 At [10]. Clause 20 of the Agreement does, in fact, refer to a Master Builders warranty.

30 At [12].

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

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.

[44] This review has been conducted in accordance with those comments.

Process

[45] On 22 March 2023, I asked the case manager to send an email to the parties in which I requested the parties and/or their counsel, to comment on the following matters:-

1. Ms AN acted for Mr HB. On what basis is the complaint made against Messrs UC and JW. This issue engages the question as to Ms AN's experience. I refer the parties to the judgment of Fogarty J in A & B v LCRO and Manawatu Standard Committee [2013] NZHC 1100 which includes comments about the degree of supervision required.
   
2. The applicant/complainant, through his solicitors, [Law Firm B], has alleged that the respondents have been 'negligent.' There are a number of decisions of this Office which refer to the fact that claims of negligence are to be pursued before the Court and that 'negligence' is not synonymous with the standards required by the Act (particularly s12(a)) and the rules (particularly rule 3).
   
3. This Office cannot make any order that the respondents are to indemnify the applicant against any losses that may occur in the future. Again, this is a matter to be pursued before the Court.
   
4. I asked the applicant to identify the differences between the Master Builders Guarantee, and the Halo guarantee.
   

The applicant’s response

[46] Mr MG responded on behalf of Mr HB:32

1. Mr MG requested a copy of [Law Firm A]’s letter of engagement.
   

32 Letter [Law Firm B] to LCRO (18 April 2022).

2. Mr MG advised that the crux of Mr HB’s complaints related to breaches of s 4(c) of the Act33 and r 3 of the Conduct and Client Care Rules.34 He submits that these ‘overlap with negligence to the extent that negligence could be used as a “shorthand” for a breach of these rules’.
   
   3. Mr MG acknowledges that neither a Standards Committee or this office can order the respondents to indemnify his clients.
      
   4. Mr MG considers there is no need to identify the differences between the two guarantees given his withdrawal of the request for an indemnity.
      

The respondents’ reply

[47] Ms SP of [Law Firm C] responded:

1. Both parties have agreed that the complaint should be processed against Messrs UC and JW.
   
2. Ms SP submits that there is no need for any limitations on the retainer to be included in the letter of engagement.
   
3. Ms SP considers it is relevant to be advised of the difference between the two guarantees.
   

[48] Both parties subsequently agreed to this review being completed on the papers.

Review

[49] The complaint against Messrs UC and JW was lodged by [Law Firm B] (Mr MG) on behalf of Mr HB. Mr MG attached copies of correspondence between himself, Messrs UC and JW, and [Law Firm C]. The first letter is addressed to:35

“The Partners, [Law Firm A]” and enclosed a draft Deed to be entered into by Messrs UC and JW to indemnify Mr HB against any losses incurred as a consequence of any difference between the Halo Guarantee and the Master Builders Guarantee.

[50] Mr MG listed the alleged failure by [Law Firm A] to “identify any of the above negligent acts” and proposed two outcomes that would be acceptable to Mr HB.

33 Lawyers and Conveyancers Act 2006 (the Act).

34 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (Conduct and Client Care Rules).

35 MG to [Law Firm A] (7 September 2021).

[51] The letter continues:

“... in the absence of your agreement to either of the above proposals, we advise that Mr and Mrs HB will be forced to protect their position by filing proceedings against [Law Firm A] before 12 July 2025 based on losses already incurred in the form of [Law Firm B]’s fees with full quantum relating to the misrepresentation yet to be determined.”

[52] In the complaint lodged by Mr MG on behalf of Mr HB, he asserts a belief that “Messrs UC and JW have acted in breach of their fundamental obligations as lawyers under s 4(c) of the Lawyers and Conveyancers Act 2006 to act in accordance with their fiduciary duties of care in respect of Mr HB.”36

[53] In a subsequent letter to the Complaints Service37 Mr MG also asserted that Messrs UC and JW had breached rule 3 of the Conduct and Client Care Rules.

[54] Section 4(c) of the Act provides:-

(4) Fundamental obligations of lawyers

Every lawyer who provides regulated services must, in the course of his or her practice, comply with the following fundamental obligations:

...

(c) the obligation to act in accordance with all fiduciary duties and duties of care owed by lawyers to their clients:

...

[55] Rule 3 provides:-

In providing regulated services to a client, a lawyer must always act competently and in a timely manner consistent with the terms of the retainer and the duty to take reasonable care.

[56] In his letter dated 27 January 2022 to the Complaints Service, Mr MG suggests that the “Standards Committee.... consider directing [Law Firm A] to indemnify [Mr HB] from any losses that may arise from differences in the level of cover provided to him by the Halo Guarantee vis-à-vis a Master Build Guarantee”.

[57] He also suggested that “a satisfactory resolution ... would include payment of Mr HB’s legal costs by [Law Firm A]”.

36 Letter [Law Firm B] to Lawyers Complaints Service (14 October 2021) at [2].

37 [Law Firm B] to Lawyers Complaints Service, above n 11.

[58] The Orders that a Committee and this Office can impose on a lawyer are set out in s 156(1) of the Act. They do not include the ability to order a lawyer to enter into an indemnity as requested by Mr MG.

[59] It would seem that Mr HB has taken the step of lodging a complaint as an alternative to making a claim in negligence against the respondents.

[60] The only reference to ‘negligence’ in the Act is to be found in s 241(c) which refers to “negligence or competence... of such a degree or so frequent as to reflect on [a lawyer’s] fitness to practice or as to bring his or her profession into disrepute.”

[61] Clearly, any shortcomings on the part of Messrs UC, JW or Ms AN does not reach this level.

Ms AN or Messrs UC and JW?

[62] In the preceding paragraph, I refer to alleged shortcomings on the part of ‘Ms AN’. That raises an important issue.

[63] Mr HB’s complaints followed claims that the firm of [Law Firm A] had been negligent. The firm of [Law Firm A] is not an incorporated company, and there can be no complaint about the firm. Consequently, Mr MG lodged Mr HB’s complaint against Messrs UC and JW.

[64] Ms AN acted for Mr HB on the purchase. It follows therefore, that the only complaint that can be levelled against Mr JW and/or Mr UC, is that they have failed to properly supervise Ms AN.

[65] [Law Firm C] advised:38

At the time of the property purchase in July 2019, Ms AN was approximately eight years PQE. Much of Ms AN’s experience involved conveyancing work. Ms AN was admitted in 2011 and worked at [Law Firm D] before joining [Law Firm A] in May 2013. Ms AN finished working at [Law Firm A] in November 2020. Ms AN was supervised by Mr UC whose office was next door to hers.

[66] It was well within Ms AN’s experience to act, largely unsupervised, on a straightforward conveyancing transaction. Any complaint against Mr UC or Mr JW on this basis cannot be sustained. For this reason alone, Mr HB’s complaint cannot be upheld.

[67] However, rather than dismiss the application for review for this reason, I will address the complaints made by Mr HB.

38 Email Ms SP to [Law Firm B] and LCRO (28 April 2023).

Section 4(c) / Rule 3

[68] Section 4(c) of the Lawyers and Conveyancers Act requires a lawyer “to act in accordance with all fiduciary duties and duties of care owed by lawyers to their clients.”

[69] Section 12(a) of the Act defines unsatisfactory conduct as conduct that “falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer.”

[70] The lack of competence and diligence that Mr HB complains about, is the alleged failure by Ms AN to ensure that the warranty had been complied with.

[71] It needs to be noted that the Agreement for Sale and Purchase contains a number of vendor warranties.39 The Property Law Section of the New Zealand Law Society has published Guidelines (the PLS Guidelines) for lawyers acting for a vendor or purchaser of real estate. Although they do not replace lawyers’ professional obligations, it is reasonable to adopt the view that the Guidelines represent actions that a reasonably competent lawyer should carry out on a standard conveyancing transaction.

[72] In this regard, it is notable that there is no reference to the need to verify that a vendor has complied with each and every warranty.

[73] Mr MG contends that Ms AN should have established that the warranty to transfer a Master Builders warranty had been complied with before settlement, and if not, then Mr HB had the option to refuse to settle or to cancel the Agreement.40 General term

7.5 of the Agreement signed by Mr HB without reference to Ms AN, provides that a breach of warranty does not defer the obligation to settle. The remedy for any breach of warranty is a civil action against the vendor. Mr HB is not without this remedy.

[74] Mr HB was aware of the warranty but did not make any enquiry of Ms AN on how the warranty would be transferred to him, either before or after settlement.

[75] For the above reasons, it cannot be said that Ms AN lacked competence, or did not attend to the transaction with the required degree of diligence.

[76] It is even less possible to suggest that either Mr JW or Mr UC have breached their professional obligations.

39 Agreement for Sale and Purchase (24 June 2019) General Terms of Sale 7.

40 Letter MG to [Law Firm A] , above n 35; Letter [Law Firm B] to LCRO, above n 23, at [3(c)].

Competence

[77] The question that arises therefore, is whether or not either of the respondents, or indeed, Ms AN, met the requirements of r 3 to act competently. I have already stated that the only complaint that can be levelled against Messrs UC and JW is that they failed to adequately supervise Ms AN.

[78] Consequently, it is only if Ms AN can be said to have lacked competence or diligence, that the conduct of Mr UC, as the supervising partner, can be questioned.

[79] Therefore, it falls to be considered whether Ms AN met the required standards.

[80] In R and N Family Trust v EL41 the Review Officer had this to say:

The standard of competence is an objective one. The question is whether the lawyer under scrutiny applied the care or skill that any reasonable lawyer in the same position would have done.

It has been noted that lawyer competence, though pivotal to public confidence in the profession and the administration of justice, lacks any generally accepted meaning; it instead takes its flavour from the perspective of the observer.

[81] As noted, the PLS Guidelines do not include a reference to the need for the lawyer acting for a purchaser, to check that all vendor warranties have been complied with, and the Agreement specifically states that a breach of a warranty does not enable a purchase to decline to settle.

[82] In the decision referred to, the Review Officer continued:42

Not surprisingly, neither the Act, nor the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (the Rules), attempt to lay down a definitive definition of competence, a determination of which must inevitably be attempted through an examination of a variety of factors including, but not limited to, the nature of the retainer and the context in which the conduct complaint arises.

[83] And at [50], the Review Officer refers to an attempt by the American Bar Association, to give some meaning to the word. It said:

Legal competence is measured by the extent to which an attorney(1) is specifically knowledgeable about the fields of law in which he or she practises,

(2) performs the techniques of such practice with skill, (3) manages such practices efficiently, (4) identifies issues beyond his or her competence relevant to the matter undertaken, bringing these to the client’s attention, (5) properly prepares and carries through the matter undertaken, and (6) is intellectually, emotionally, and physically capable. Legal incompetence is measured by the extent to which an attorney fails to maintain these qualities.

41 R and N Family Trust and EL LCRO 205/2015 at [44]–[45].

42 At [46].

[84] Applying these standards, and measured against the recommendations of the PLS Guidelines, Ms AN has fulfilled the duties of a competent and diligent lawyer. Consequently, neither Mr JW nor Mr UC can be said to have not properly supervised Ms AN.

[85] The respondents have met the required levels of competence and diligence and fulfilled their professional obligations to Mr HB.

A limited retainer?

[86] In response to the complaint, [Law Firm A] argued that the firm’s retainer was limited to (in the words of the Committee) “the usual nuts and bolts of a residential conveyancing.”

[87] The Committee places emphasis on the fact that Mr HB entered into an unconditional agreement without seeking advice on its terms from Ms AN.

[88] That is not the issue. Mr HB’s complaint is that Ms AN / Messrs UC and JW did not ensure that the warranty was fulfilled. Mr MG says that Ms AN should have deferred settlement until the warranty had been fulfilled. As noted above,43 that was not an option.

[89] Mr HB points to Ms AN’s file note made on 9 July 2019 as evidence that the retainer was not limited in the way that [Law Firm C] and respondents argue.

[90] The issue is, if it is accepted that the file note evidenced that Ms AN had instructions to, or at least indicated that she would, follow up to ensure the warranty was fulfilled, does this amount to a breach of the Rules or the Act?

[91] The meeting with Mr HB44 took place at 1.15 pm on Tuesday 9th July. Settlement was scheduled for Friday 12th July. The question as to what warranties were available was not a pressing issue to establish prior to settlement, as contrary to Mr MG’s assertions, settlement could not be deferred for any breach of a warranty, and the warranties available on appliances were warranties that would be provided by the manufacturers, not the vendors.

[92] The focus would have been on getting ready for settlement, obtaining the funds to settle, obtaining final title searches, and other matters that must be attended to as settlement draws near.

43 At [73] of this decision.

44 The file note does not record whether Mrs HB was also in attendance.

[93] Ascertaining what warranties were available could have been done at any time following settlement, and Ms AN cannot recall whether she took any steps in this regard. It would seem that neither did Mr HB ask Ms AN to follow up after settlement.

[94] No information is available as to whether Mr HB himself followed up directly with the vendor, which, in the absence of a request to do so, it was reasonable for Ms AN to assume had occurred, and reasonable that she did not consider she needed to, even if the thought crossed her mind.

[95] The question as to whether or not the retainer was limited, needs to be viewed in the context of the circumstances at the time and, specifically considered whether the oversight, if that is what it was, warrants an adverse disciplinary finding.

[96] In this regard, the courts have made it clear that there is a need for decision makers to apply this degree of objectivity to the circumstances which present. In Ragg v Legal Complaints Review Officer, the Court of Appeal enjoined Review Officers to take this step. The Court said:45

When assessing the case against Mr Ragg it was necessary for the Review Officer to consider whether the protection of the interests of the community and the profession justified the formal step of making a finding that Mr Ragg was guilty of unsatisfactory conduct. The possibility of taking no further action under s 152(2)(c) of the Act needed to be considered.

[97] The facts giving rise to Mr HB’s complaint do not in any way affect the interests of the community and/or the profession. They relate purely to circumstances where Mr HB considers Ms AN and / or Messrs UC and JW have been negligent in not ascertaining if the vendor had fulfilled its obligations under the Agreement.

[98] It seems to me that Mr HB and Mr MG perceive that the complaints process is an alternative to pursuing an action in negligence. In addition, it does not seem that Mr HB has suffered any loss and has declined to advise the differences, if any, between the two guarantees.

[99] I also take this opportunity of advising that parties are expected to bear their own costs in making a complaint or pursuing a review through this Office. Consequently, even if the Committee’s determination had been reversed, or significantly modified, there would not have been any order made requiring the respondents to pay Mr HB’s legal fees as claimed.

45 Ragg v Legal Complaints Review Officer [2021] NZCA 579 at [40].

Decision

[100] For the reasons discussed above and pursuant to s 211(1)(a) of the Lawyers and Conveyancers Act 2006, the determination of the Standards Committee is confirmed. The determination is also modified, in a minor way, to include the determination to take no further action on Mr HB’s complaint pursuant to s 138(1)(f) of the Act. Mr HB has an adequate remedy that it would be reasonable for him to take, namely, pursuing [Building Firm A], the vendor of the property sold to him, for breach of the warranty.

Anonymised publication

[101] Pursuant to s 206(4) of the Lawyers and Conveyancers Act, I direct that this decision be published in an anonymised format on the website of this Office.

[102] I also authorise the respondents to provide a copy of this decision to Ms AN if they wish to do so.

DATED this 26TH day of NOVEMBER 2024

O Vaughan

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 HB as the Applicant

Messrs UC & JW as the Respondents [Area] Standards Committee [X]

New Zealand Law Society