JurisdictionNew Zealand
Judgment Date10 February 2011
Neutral Citation[2011] NZLCRO 5
Docket NumberLCRO 90/2010
Date10 February 2011
CourtLegal Complaints Review Officer

[2011] NZLCRO 5

LCRO 90/2010

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


Concerning a determination of the Auckland Standards Committee 2

Ms AH of Australia
Mr ZS of Auckland

Ms AH as the Applicant Counsel for the Applicant

Mr ZS as the Respondent

The Auckland Standards Committee 2 The New Zealand Law Society


The Respondent was an Executor of the Wills of Mr and Mrs B, the Applicant's parents.


Mrs B died in 2005 and Mr B died in 2007.


The Applicant's brother, Mr GB was a co-executor of both Wills.


During their lifetimes, Mr and Mrs B had each established Trusts. The Respondent and Mr GB were Trustees of each Trust.


Following the death of Mr B, the Trustees proposed that the assets of the Trusts be distributed equally between Mr GB and the Applicant to give effect to the wishes of Mr and Mrs B as expressed in their Wills.


The Applicant had been adjudged bankrupt, and the Respondent and Mr GB wished to be satisfied that any distribution to the Applicant would not be subjected to “claw-back” by the equivalent in Australia of the Official Assignee in Bankruptcy.


They also requested that the proposed distribution be consented to by the Applicant's family, who were also discretionary beneficiaries under the Trusts.


A deed was prepared by the Respondent with regard to the proposed distribution, which included an acknowledgement of the proposed distribution and an indemnity in favour of the Trustees.


The Applicant requested various pieces of information with regard to the administration of both the Estates and the Trusts from the Respondent, which were eventually supplied to her.


The Applicant was unhappy with the content of the information provided and lodged a complaint with the Complaints Service of the New Zealand Law Society.


The complaint as noted in the Standards Committee's decision was that:

    The Applicant did not accept the figures provided by the Respondent with regard to administration of the Trusts. 2. She did not accept the fees. 3. That no interest had been paid in respect of loans to Trusts established by her brother and members of his family. 4. There were discrepancies in payments to the IRD. 5. “Controlled money” transactions. 6. There had been no accounting for interest received on term loans.

In addition, her complaint related to the difficulties which she had encountered in obtaining the documents and information from the Respondent.


It must be noted at this stage that the Standards Committee made no specific reference to the complaint concerning “controlled money transactions” and I am unable to discern from the file exactly what the Applicant is referring to in this regard. Consequently, this aspect of the complaint has not been considered by me, but in the overall context of the complaint, I consider that this does not affect the outcome of this review.

The Standards Committee decision

A significant portion of the Standards Committee file and investigation was taken up with the complaint about costs.


The Committee was required to consider the jurisdictional issue as to whether the Applicant was a person who was entitled to lodge a complaint concerning costs pursuant to section 160 of the Lawyers and Conveyancers Act 2006 (the Act).


The outcome of these deliberations was that the Committee determined that the Applicant did fall within the class of persons who could complain about a lawyer's bill of costs pursuant to section 160.


A costs assessor (Mr S) was appointed by the Committee, and following the determinations referred to in paragraphs 14 and 15, Mr S submitted his report.


The Committee then proceeded to consider that report together with all of the material before it and formed the view that the threshold provisions of section 351(1) of the Act had not been reached in respect of the costs and conduct issues that arose prior to 1 August 2008.


In relation to the matters complained of in respect of conduct after 1 August 2008, the committee formed the view that any further action was unnecessary and resolved to take no action pursuant to the provisions of s 138(2) of the Act.

Application for review

The Applicant has applied for a review of that decision.


The substance of the application is set out in a letter dated 26 May 2010 from lawyers instructed by the Applicant in Australia, (H Lawyers). In that letter, H Lawyers allege breach of fiduciary duties as a Trustee by the Respondent in failing to provide “a just and true statement of the monies received on behalf of the Trust and how [the Respondent] has paid out those monies.”


This allegation of breach of fiduciary duties, is extended to an allegation of a failure to act professionally in the administration of the Estate, or that monies have been misappropriated.


These allegations are somewhat broader than the original complaint, and it must be recognised that the role of the LCRO is to review decisions of the Standards

Committees. As such, the review is restricted to matters raised in the original complaint.


In general terms, the Applicant requests a general review of the file and the Standards Committee's decision.


The outcome sought by the Applicant is:

    “That the Respondent provide a just and correct statement of his administration and distribution of the [Applicant's] parents' Estate and the Discretionary Trusts”. 2. That the Respondent attend to finalisation of the Estates and winding up of the Discretionary Trusts within 60 days. 3. The amount of legal costs charged by the Respondent be reviewed.
The applicable law

The Act came into force on 1 August 2008.


The conduct complained of by the Applicant took place both before and after that date.


In respect of conduct which took place prior to 1 August 2008, section 351 of the Act provides that complaints may be made to the Complaints Service established by the New Zealand Law Society only if the conduct complained of is conduct in respect of which proceedings of a disciplinary nature could have been commenced under the Law Practitioners Act 1982.


The Costs Revision process established under the Law Practitioners Act 1982 is by virtue of the repeal of that Act, no longer available. Consequently the issue to be determined in respect of bills rendered prior to 1 August 2008, is whether the practitioner can be accused of gross or dishonest overcharging, and therefore conduct unbecoming, as noted by the Standards Committee.


With regard to other matters of conduct complained of, the conduct complained of must therefore be capable of being considered as being either misconduct, conduct unbecoming, or negligent or incompetent to the requisite degree, before the Applicant can face disciplinary charges.


The Act introduced a new category of unsatisfactory conduct. This is defined in Section 12 of the Act as being:

  • (a) 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; or

  • (b) Conduct that would be regarded by lawyers of good standing as being unacceptable including:

    • (i) Conduct unbecoming; or

    • (ii) Unprofessional conduct;

  • (c) Conduct consisting of a contravention of the Act or any Regulations or Practice Rules made under the Act; or

  • (d) Conduct consisting of a failure on the part of a lawyer to comply with a condition or restriction to which a practising certificate held by the lawyer is subject.


In general, unsatisfactory conduct will be conduct which is not so egregious as to amount to misconduct, but is still...

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