As v ZF
| Jurisdiction | New Zealand |
| Judgment Date | 14 March 2011 |
| Neutral Citation | [2011] NZLCRO 13 |
| Date | 14 March 2011 |
| Docket Number | LCRO 59/2010 |
| Court | Legal Complaints Review Officer |
[2011] NZLCRO 13
LCRO 59/2010
CONCERNING An application for review pursuant to Section 193 of the Lawyers and Conveyancers Act 2006
and
CONCERNING a determination of the Auckland Standards Committee 1
of Auckland, Barrister
of Auckland
Mr AS as the Applicant
Mr ZF as the Respondent
Ms ZE as Counsel for the Respondent
The Auckland Standards Committee 1
New Zealand Law Society
Mr AS (the Practitioner) was engaged by a Chinese client (ZE) on 10 September 2008 to help the Respondent (ZF) enlist the services of Mr AT, to represent Mr ZF's son on a charge of murder. All dealings were through Ms ZE as Mr ZF does not speak English.
The Practitioner made contact with Mr AT, who was in Fiji at the time. Mr AT advised that he would act for Mr ZF's son on the basis that an initial retainer of $50,000 was paid prior to his commencing to act. He indicated that he would advise the name of his instructing solicitor on his return to New Zealand.
Arrangements were made for Mr ZF to remit funds to the Practitioner's bank account.
The instructions from Mr ZF also seem to have included instructions to the Practitioner to act in conjunction with Mr AT and the Practitioner advises that he attended virtually daily on Mr ZF's son during the period of his instructions.
During the first week of October, the Practitioner received a letter from Mr AU advising that he was Mr AT's instructing solicitor. The Practitioner advises that in that letter Mr AU instructed him to deduct his fees from the funds held and account to him for the balance.
After deducting the sum of $20,281.25 on account of fees and disbursements, the balance of $29,718.75 was remitted to Mr AU as instructed. The Practitioner's instructions ceased on 10 October 2008.
Mr ZF subsequently instructed Ms ZD to act for him. Ms ZD approached the Practitioner claiming that the fees charged by him were not justified and sought a reduction of fees.
The Practitioner did not accept that his fees were unjustified, but after some discussion, it appears that there was an agreement in December 2008 that the Practitioner would make an ex gratia payment to Mr ZF of $8,000 plus GST.
Ms ZD wrote to the Practitioner on 23 December 2008, recording what she considered to be the arrangement. In that letter, she expressed the payment to be made by the Practitioner as being a reduction in fees. The Practitioner had not agreed to this as it involved an acceptance that his fees had been excessive.
Notwithstanding several attempts by Ms ZD to communicate with the Practitioner, he neither made contact with her or made the payment as agreed.
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• On 5 April 2009, Ms ZD lodged a complaint on behalf of Mr ZF with the Complaints Service of the New Zealand Law Society against the Practitioner in which she alleged:
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• excessive costs;
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• payment of Mr ZF's funds into a personal account, rather than a solicitor's Trust Account;
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• deduction of fees without first rendering an account for approval;
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• failure to honour the arrangements to make payment of the sum of $8,000 plus GST.
After investigating and holding a hearing “on the papers” the Standards Committee issued its determination on 10 March 2010.
It determined that the Practitioner's conduct constituted unsatisfactory conduct in the form of conduct unbecoming, ordered the Practitioner to reduce his fees by $8,000 plus GST and make payment of that amount to Mr ZF. In addition it fined the Practitioner $2,000, ordered costs in the sum of $2,000 to be paid, and ordered publication of the Practitioner's name and details of the decision in LawTalk.
In its determination, the Committee:
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• Noted that by accepting the sum of $50,000 from Mr ZF the Practitioner was in breach of Section 110 of the Lawyers and Conveyancers Act;
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• that whilst there was some excuse for doing so by reason of the pressure of time, the Practitioner should have proactively sought advice from Mr AT as to who his instructing solicitor was;
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• expressed reservations about the appropriateness of the Practitioner's fees, and noted that the Practitioner had failed to provide details of the work done, his time records and other costing information as requested by the Committee;
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• was satisfied that the Practitioner had agreed to refund $8,000 plus GST to Mr ZF and noted that there was no evidence that the Practitioner disputed the agreement;
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• determined that the Practitioner should honour the agreement reached in December 2008.
The Committee also recorded its view that the manner in which the Practitioner dealt with the money received on behalf of Mr ZF, as well as his failure to pay the amount of $8,000 plus GST as agreed in December 2008, not only amounted to a breach of the Practitioner's obligations under Rule 9.3 to comply with the requirements of Regulation 10 of the Trust Account Regulations, but also his obligation under Rule 10 to promote and maintain proper standards of professionalism in his dealings.
The Practitioner has applied for a review of the Standards Committee determination. In support of his application the Practitioner makes the following points:
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(i) The issues raised by Ms ZD on behalf of Mr ZF were inherently unsuited to a hearing confined to the papers because there were a number of issues of credibility which could only be satisfactorily resolved by hearing evidence from the parties.
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(ii) The decision was factually incorrect on material issues, in that it refers to retainer funds being held in a “personal account” when in fact the funds were held in an office account pending instructions from Mr AT.
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(iii) The determination was illogical in that it refers to the fact that the alleged settlement in November 2009 (the mediated settlement) was never confirmed on behalf of Mr ZF, but that the Committee had never referred the terms of thatsettlement to Ms ZD for confirmation, and that if it had done so, it must be assumed that she would have confirmed the terms of the settlement because it was her proposal that formed the basis of the proposed settlement.
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(iv) The Mediator had advised that the proposed terms of settlement required to be approved by NZLS and that no final agreement could be reached at the mediation and hence the Practitioner had written to NZLS on 12 November 2009 advising the terms of the proposed settlement and sought approval of those terms while at the same time undertaking to pay the ex gratia sum of $4,000 to Ms ZD.
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(v) That the determination recorded that there was no evidence that the Practitioner had disputed the agreement reached in December 2008. This statement ignores the letter from the Practitioner to NZLS on 30 April 2009 in which he refuted the various assertions made by Ms ZD.
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(vi) That because the parties agreed to go to mediation at the request of NZLS, the issue as to the appropriateness or otherwise of the Practitioner's fees were never subjected to cost revision. (It must be noted here that the Lawyers and Conveyancers Act 2006 does not provide for cost revision).
The Practitioner then puts forward the following grounds for review:
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(i) That it was unreasonable for the Complaints Service to proceed with the determination and disregard the outcome of the mediation, which the Complaints Service had itself directed the parties to undertake.
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(ii) That the disputed evidence should be resolved by way of a hearing.
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(iii) That no cost revision had been undertaken.
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(iv) That there was no evidential foundation for the determination of the Standards Committee that Mr ZF was overcharged.
The outcome sought by the Practitioner is that:
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(i) The LCRO obtain confirmation from Ms ZD of the terms of the agreement reached at the mediation on 10 November 2009.
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(ii) That the LCRO reverse the determination of the Standards Committee and exercise the powers of the Standards Committee to approve the terms of the settlement agreed between the parties at the mediation as a full and final settlement.
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(iii) In the alternative, that the LCRO reverse the determination of the Standards Committee and refer the issues back to the Standards committee with a recommendation that the Committee reconsider the issues having regard to the terms of the settlement agreed between the parties at mediation.
Although there are some irregularities in the manner in which consent has been provided, this review has proceeded on the basis that both parties have consented pursuant to s206(2)(b) of the Lawyers and Conveyancers Act to it being conducted “on the papers.” This means that it has been conducted on the basis of the information, records, reports, and documents available to the LCRO. It is inferred that the Practitioner acknowledges any issues of credibility have been resolved.
This review is important for the reason that it requires a consideration of the role of mediation in resolving complaints, and the ability of the parties to settle matters between themselves.
Prior to the complaint being made to the Complaints Service, the issue which primarily concerned Mr ZF was the level of the fees charged by the Practitioner.
After discussion between Ms ZD and the Practitioner, it seemed that agreement had been reached, whereby the Practitioner was to pay the sum of $8,000 plus GST, together with the sum of $1,200 held on account of disbursements, to Ms ZD.
Ms ZD sent a letter to the Practitioner on 23 December 2008 recording what she considered to be the arrangement.
The Practitioner failed to make the payments in accordance with the agreement as recorded by Ms ZD, and did not respond, notwithstanding several follow-up requests from Ms ZD.
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