AH v BG

JurisdictionNew Zealand
Judgment Date19 July 2013
Neutral Citation[2013] NZLCRO 37
Date19 July 2013
Docket NumberLCRO 52/2012
CourtLegal Complaints Review Officer

Concerning An application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006

and

Concerning a determination of Waikato Bay of Plenty Standards Committee

Between
Ms AH
Mr AG
Applicant
and
Mr BG
Mr BH
Respondent

[2013] NZLCRO 37

LCRO 52/2012

Application for review of a Standards Committee determination not to take further action in respect of a complaint about costs and unsatisfactory conduct — review dealt with the need for Committees to be clear in their processes when investigating and considering complaints, and for costs assessors to limit the content of their reports to a consideration of the bills of costs only — member of Standards Committee was requested to deal with complaint about costs but was not appointed by a formal letter of delegation pursuant to s184 Lawyers and Conveyancers Act 2006 (“LCA”) (Delegation of functions and powers) — prepared report which dealt with unsatisfactory conduct issues in addition to the costs issues — whether the investigating member had acted outside his jurisdiction whether the Standards Committee should have had regard to the report — whether the power of the Standards Committee to regulate its own procedure under s142 LCA (procedures of Standards Committee) overrode the provisions of s144-147 LCA (complaints — investigations) and s184 LCA.

Ms Ah and Mr Ag as the Applicants

Mr Bg and Mr Bh as the Respondents Mr BI as a related person or entity

Waikato Bay of Plenty Standards Committee

The New Zealand Law Society

Introduction
1

Ms AH and Mr AG lodged complaints on behalf of themselves personally and on behalf of ABA (in liquidation), against Mr BG and Mr BH of the firm BAB. Mr AG was the sole director of ABA. Although the company is in liquidation, any person may complain about the conduct of a lawyer 1 and consequently Ms AH and Mr AG were able to lodge complaints about the lawyers' conduct.

2

The Complaints Service progressed the complaints together and the Standards Committee issued a single determination to take no further action in respect of either complaint.

3

Ms AH and Mr AG have applied for a review of that determination.

4

This review has some degree of importance, as it refers to the need for Standards Committees to be clear in the processes to be followed when conducting investigations and considering complaints, and for costs assessors to limit the content of their reports to a consideration of the bills of costs only.

Background
5

Mr AG was the sole director of ABA and Mr AG and Ms AH each held 5 percent of the shares in the company.

6

ABA was engaged to carry out extensive repairs to a property owned by Mr and Mrs AI, and a dispute arose between the company and them.

7

Ms AH and Mr AG consulted BAB for advice as to what steps to take in respect of the dispute. Following an adverse adjudication conducted pursuant to the Construction Contracts Act 2002 further advice was sought in relation to a statutory demand issued by Mr & Mrs AI for payment of the amount ordered by the adjudication.

8

The advice was provided primarily by Mr BH, an associate of the firm, but Mr BG, a partner, also provided advice.

9

The complaints by Ms AH and Mr AG arise out of these attendances.

The complaints

10

The complaints by Ms AH and Mr AG were:

The Standards Committee procedure

  • • An allegation that they were advised that Mr BH's charge-out rate was

  • • $170 + GST per hour, but were charged at $310 + GST per hour. Included in this is a complaint that the charge-out rates of Mr BH and Mr BG were not included in the letter of engagement.

  • • A general complaint about the quantum of the bills of costs rendered by the firm. 2

  • • An allegation that Mr BH had no previous experience with a Construction Contracts Act adjudication which resulted in unnecessary costs. This complaint also relates to Mr BH's charge-out rate.

  • • Failure to investigate and/or raise an allegation of a conflict of interest on the part of the Adjudicator.

  • • Failure to follow instructions from Ms AH and Mr AG that no information in writing was to be provided to the lawyer for Mr and Mrs AI

  • • Failure to listen to the clients and to address their concerns.

  • • Mr BH communicated with the lawyer for Mr and Mrs AI against specific instructions, thereby incurring costs.

  • • Incorrect advice by Mr BH as to time limits for applying to set aside the statutory demand.

  • • Work carried out by Mr BG exceeded the “quick look” that was approved by Ms AH and Mr BH.

  • • Failure by Mr BG to seek information from the company accountant.

  • • Failure to advise Ms AH and Mr AG within the necessary time limits (or at all).

11

It is important to acknowledge from the outset that it is common practice for a member of a Standards Committee to be designated to review a complaint in detail and to provide a report to the Committee. The report then forms the basis for discussion by the Committee. This process may be adopted in respect of complaints about conduct issues or costs. There can be no objection to this process as it facilitates discussion by the Committee in making a determination.

12

However, where it is intended that the Committee member should assume any of the functions and powers of the Committee (for example, meeting with the parties) then a formal delegation of the Committee's functions and powers pursuant to s 184 of the Lawyers and Conveyancers Act 2006 (the Act) is required.

13

Upon receipt of the two complaints by Ms AH and Mr AG, the Complaints Service sought a response from the lawyers.

14

That response was received from BAB on behalf of both lawyers by way of a letter dated 17 March 2011, and forwarded to Ms AH and Mr AG on 21 March. The letter did not invite any response from them, but they provided a comprehensive response by way of letter dated 11 April, which was then sent to BAB on 15 April 2011.

15

On the same day (15 April 2011), the Legal Standards Officer wrote to Mr ZC, who was the then Convenor of the Committee. That letter said: 3

I enclose a copy of my small file in this matter. Unless I am reading it incorrectly, this complaint concerns costs only but covers a number of factors that give rise to the composition and structure of those bills of cost.

Both are under the statutory limit and probably are not of sufficient grounds to consider this [sic]. However the issues raised are a lot more detailed than many in such matters and you may feel it appropriate to consider these.

The bills are relatively minor and unless you particularly wanted to engage the services of a costs assessor, the Committee is able to do it themselves and you may wish to consider that yourself on the merits as to whether they are appropriate bills. Otherwise we can simply decline jurisdiction.

I have copies of all the proceedings as well.

16

The Standards Committee files that I have been provided with include the same letter on both files – there was no differentiation between the complaint on behalf of the company and the complaint by Ms AH and Mr AG personally. This view is reinforced by a letter from Mr ZC to Mr ZF on 18 April 2013 4 where Mr ZC says “I don't doubt that the same letter was sent to me in respect of both complaints.”

17

It would seem that the letter refers only to the two bills of costs which were for less than $2,000, as it refers to declining jurisdiction to consider same as provided for by Reg 29 of the Complaints Service and Standards Committees Regulations. 5

18

What is important to note is that this letter was not a formal letter of delegation in terms of s 184 of the Act and did not specify exactly what it was that Mr ZC was to do. It seems to me that it was intended that the files be reviewed by Mr ZC with a view to providing a report to the Committee to facilitate discussion.

19

BAB replied to the further comments by Ms AH and Mr AG by letter dated 5 May 2011, and that letter was sent by the Legal Standards Officer to Mr ZC on 9 May, with a letter which read “I enclose a copy of a recent letter from the solicitors that you may wish to consider in conjunction with your report”. 6

20

The next item on both files is a report from Mr ZC dated 1 November 2011 the content of which is important to note.

Mr ZC's report
21

Mr ZC's report is 24 pages long and is a comprehensive report. It commences “Costs assessor's report on bills rendered by [BAB branch], to [ABA] and to [Mr AG] and [Ms AH]”. 7

22

It then records the four bills of costs rendered to the company and the two bills of costs rendered to Ms AH and Mr AG. 8

23

There is then a heading “My role” under which the following paragraph is recorded:-

3. This file was referred to me by the Standards Officer to revise the bills but, in addition to the complaints about costs, there are complaints of unsatisfactory conduct against [BAB] associate [Mr BH] and [BAB] partner [Mr BG]. These complaints are closely related to the costs questions and cannot be considered in isolation.

24

In the following paragraph Mr ZC refers to a submission by BAB 9 that the two bills of costs which were for amounts of less than $2,000 should not be revised because they were below the threshold. 10 He goes on to state “…because they are part of a sequence of regular bills on the same matter[s] I have not isolated them. This has not affected the end result.” 11

25

Mr ZC convened a “brief oral hearing” with Ms AH, Mr AG, Mr BG, and Mr BH, at which the allegation that Ms AH and Mr AG were advised that Mr BH's hourly rate was $170 + GST was discussed.

26

Other matters explored at the hearing included the issue as to what Mr BG was instructed to do, Mr BH's perceived lack of experience, and a grievance that the work had been delegated largely to Mr BH, when Ms AH and Mr AG had engaged BAB because they had been recommended to a specific partner in the firm. I have not noted this last matter as being included in the complaints although it...

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