AH v BG
 NZLCRO 37
Concerning An application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006
Concerning a determination of Waikato Bay of Plenty Standards Committee
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
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.
Held: It was common practice for a member of a Committee to be designated to review a complaint in detail and to provide a report to the Committee. The report then formed the basis for discussion by the Committee. However, where it was intended that the Committee member should assume any of the functions and powers of the Committee, a formal delegation of the Committee's functions and powers pursuant to s184 LCA was required.
The letter was not a formal letter of delegation in terms of s184 LCA and did not specify exactly what it was that ZC was to do. It seemed that it was intended that the files be reviewed by ZC with a view to providing a report to the Committee to facilitate discussion. Nevertheless, he proceeded as if those functions and powers were delegated to him, called for the practitioners' files and conducted a hearing. His report also included comments on the conduct of the practitioners which were not part of the brief to a costs assessor. It was clear that ZC contemplated that he was providing a costs assessor's report, and the Committee treated it as such.
The applicants complained about conduct issues. But the Committee viewed the conduct complaints as being part of the costs complaints and did not address them separately. In some cases the Committee relied on ZC's report to deal with the conduct issues. In addition, the Committee did not address a number of other conduct issues: for example, the allegation that the respondent failed to provide correct advice; the alleged failure to include hourly rates in the letter of engagement, and the allegation that client instructions were not followed.
The specific provisions of s144 – s147 (Complaints: investigation) and s184 LCA could not be ignored. In particular, s145 (instrument of appointment) required that a Standards Committee provide a written instrument of appointment to a person appointed as an investigator pursuant to s144 (Power to appoint investigators). The instrument of appointment had to be in writing and had to comply with the requirements of the Act. ZC was not appointed pursuant to this provision. Similarly, s184 required any delegation of the functions and powers of a Standards Committee to be in writing; ZC was not appointed pursuant to this provision.
The letter was not sufficient to delegate the functions and powers of the Committee, or to appoint a costs assessor with powers to call for files and hold hearings with the parties. The power for a Committee to regulate its own procedure pursuant to s142 could not operate to enable a Committee to ignore the specific provisions of the LCA.
Some of the conduct issues mentioned in the complaint had the potential to impact on the costs charged by the firm, and decisions on those issues would need to be taken into account when considering the fees charged by the firm. These were decisions that would need to be made by the Committee.
Matter returned to the Standards Committee for reconsideration.
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.
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.
Ms AH and Mr AG have applied for a review of that determination.
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.
Mr AG was the sole director of ABA and Mr AG and Ms AH each held 5 percent of the shares in the company.
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.
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.
The advice was provided primarily by Mr BH, an associate of the firm, but Mr BG, a partner, also provided advice.
The complaints by Ms AH and Mr AG arise out of these attendances.
The complaints by Ms AH and Mr AG were:
• 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).
The Standards Committee procedure
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.
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.
Upon receipt of the two complaints by Ms AH and Mr AG, the Complaints Service sought a response from the lawyers.
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.
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...
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