AZ of [North Island] v MR YX of [North Island]

JurisdictionNew Zealand
CourtLegal Complaints Review Officer
Judgment Date25 March 2011
Neutral Citation[2011] NZLCRO 18
Docket NumberLCRO 175/2010
Date25 March 2011

[2011] NZLCRO 18

LCRO 175/2010

Concerning an application for review pursuant to S 193 of the Lawyers and Conveyancers Act 2006


Concerning a determination of the Waikato-Bay of Plenty Standards Committee 1


of [North Island]


of [North Island]


AZ as the Applicant

YX as the Respondent

The Waikato Bay of Plenty Standards Committee 1

The New Zealand Law Society

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


The Applicant and her former solicitor Mr BA, were Trustees of a Trust known as the AAQ Trust (the Trust).


Mr BA had retired from his former firm in [North Island] and the Applicant consulted with Mr YW (Mr YW) of the firm, AAR in [North Island] with a view to Mr YW assuming the role of solicitor for the Trust, and specifically to document the retirement of Mr BA and appointment of the new Trustee.


Mr YW himself was intending to retire the following year and after his retirement the firm became known as AAS. I will refer to the firm therefore as “AAS”; as it was following Mr YW's retirement that the matters complained of arose.


The Trust owned three properties, one in Auckland and two in [North Island]. Consequently, in addition to the Deed to effect the retirement of Mr BA and appointment of a new Trustee, it was necessary to register a transfer of the title to these properties into the names of the new Trustees.


Westpac Bank had a mortgage over the property in X and one of the [North Island] properties and a file note on the firm's file, presumably by Mr YW, referred to a need to obtain the consent of the Bank to the transfer to the new Trustees.


The file note also records a figure of $1,000, which is acknowledged to be the amount indicated by Mr YW as being the estimated cost of the legal work to attend to this. Unfortunately, there is no indication on the file note whether this figure included GST and disbursements. The Applicant says that it did. The Respondent, Mr YX, says that it represented the fee only and did not include disbursements. Mr YX, however does not say whether he considers it included GST or not, but it is assumed for the purposes of this review that his position is that it did not.


It is relatively clear however that Mr YW intended that the sum of $1000 would cover the cost of documenting the change of Trustee, obtaining the bank's consent to the transfer, and effecting a change of the registered proprietors of the properties into the names of the new Trustees.


The Applicant wished to appoint her sister as the replacement Trustee. This presented a problem identified by Mr BA, that the Trust Deed contained a provision that one of the Trustees of the Trust had to be independent of the Applicant's family. There were to be two Trustees, the Applicant and her sister. Consequently, to appoint the Applicant's sister as a Trustee, the Trust Deed had to be varied to delete the restriction as to who could be a Trustee.


This had not been anticipated by Mr YW and was not included in his estimate of costs.


In addition, when he wrote to the bank to seek its consent to the transfer, the bank advised that it required the existing mortgages to be discharged, a Deed of Novation to be executed, new mortgages prepared and executed by the new Trustees, and registered. All of this would not have been within Mr YW's contemplation when he provided his estimate.


In the course of this being carried out, the Applicant decided that she wished to refinance the Trust's loans with Kiwibank. Kiwibank had an arrangement whereby a straightforward refinancing was carried out at no cost to the customer. This was not an arrangement whereby the work was carried out by the client's lawyer whose fees were reimbursed to the client, but involved Kiwibank doing the work itself in conjunction with a firm of solicitors retained by Kiwibank for this purpose.


Because the titles to the properties had not been transferred at the time the refinancing was to take place, Kiwibank was unable to attend to the refinancing in the usual way and it was necessary for Kiwibank to instruct AAS to carry this out.


Because the documentation required by Westpac involved discharging the existing mortgage, and registering a new mortgage for Westpac, it appears that the Kiwibank mobile manager formed the view that there should be no additional cost for AAS to complete and register the mortgage to Kiwibank.


There are two points to note here:

  • (i) The estimate from Mr YW only contemplated that Westpac would consent to the transfer and not require replacement documentation; and

  • (ii) Contrary to the view expressed by the Kiwibank mobile manager, refinancing would necessitate attendances additional to those required to complete the work required by Westpac.


Consequently, in addition to the necessity for the Trust Deed to be varied, AAS was to be involved in additional work to that anticipated by Mr YW even if Westpac were to remain the Trust's lender, and further work would be required if the Westpac facilities were to be replaced by Kiwibank.


It was also noted late in the piece, that the registered proprietors of one of the [North Island] properties still included the Applicant's ex-husband, who had retired as a Trustee of the Trust. Although a Deed of Retirement had been executed, it seems that registration of a transfer recording the name of the new Trustees had been overlooked. AAS was subsequently involved in additional attendances to effect this.


Before all of this work was completed, Mr YW retired and Ms YV, a legal executive in the firm, assumed responsibility for the file.


In September 2009, the Applicant had asked Ms YV to advise what the legal costs would be to refinance the Westpac facilities. Ms YV had advised that the costs with regard to the Trust would be in the vicinity of $1200 to $1500 plus GST and disbursements, and the cost to effect the refinancing would be in the vicinity of $600 to $800 plus GST and disbursements.


The Applicant pointed out that Mr YW had advised her that costs with regard to the Trust would be no more than $1000, and that in an earlier conversation with Ms YV, she had indicated that the cost to refinance would be between $500 and $600.


Ms YV responded by email dated 2 October 2008, agreeing to keep to Mr YW's estimate with regard to the costs relating to the Trust but pointing out that the estimate of costs with regard to the refinancing included two properties which involved additional costs to a “standard”; refinancing. She agreed, however, to fix the costs of refinancing at $600 plus GST and disbursements.


Because the Kiwibank mobile manager had advised the Applicant there was no additional work necessary to put the Kiwibank security in place, and because there was some misunderstanding as to whether the fee estimated by Mr YW included GST and disbursements, the Applicant expected that all of the work would be carried out for her by Ms YV for no more than $1000.


The refinancing was completed and the total costs charged by Ms YV was $1,600 plus GST and disbursements, a total of $2,348.


The Applicant was unaware of this until she received the report from Ms YV following completion of the work, and realised that the amounts drawn down by Ms YV from Kiwibank included sufficient to make payment of the firm's costs and disbursement.

The complaint

The Applicant was unhappy about this and met with Mr YX on 24 February 2010 to discuss the matter. It would appear that Mr YX advised her that the firm was not prepared to offer any further concessions to her by way of a reduction in fees. The Applicant followed that meeting up with a letter on 28 February 2010 with a request that Mr YX reconsider the firm's position.


Mr YX responded by letter dated 14 April 2010, and in conclusion, advised that he considered “the fees charged were reasonable and met the estimate originally given by Mr YW”;.


The Applicant lodged a complaint with the Complaints Service of the New Zealand Law Society on 17 April 2010. With the complaint form the Applicant included copies of the correspondence between the Applicant and Mr YX and included a request for “the Complaints Officer to make a fair and reasonable settlement amount”;.

The Standards Committee decision

The Standards Committee determination names Mr YX only as the person complained about. In fact, the complaint form completed by the Applicant referred to Mr YX and Ms YV as the persons against whom the complaint was lodged.


The Standards Committee resolved pursuant to s138(2) of the Lawyers and Conveyancers Act 2006, to take no further action in respect of this complaint. This decision was reached for the following reasons:–

  • [a] that the Standards Committee had no jurisdiction to consider complaints about costs that are less than $2,000 pursuant to Regulation 29(b) of the Lawyers and Conveyancers Act (Lawyers: Complaints Service and Standards Committees) Regulations 2008;

  • [YX] that it was not accepted that the practitioner had acted without instructions and the Applicant had not objected to the solicitors undertaking the work;

  • [BA] that the costs rendered were within the estimate provided by Mr YW and were considered reasonable;

The application for review

The Applicant is unhappy with the decision of the Standards Committee for the reason that she considers the Committee's assessment of her complaint is unfair. It is noted that the Applicant refers to her complaint as being against Mr YX, but as the complaint was lodged against Mr YX and Ms YV it is appropriate that the review proceed on that basis.


The outcome sought by the Applicant is a reimbursement for the costs charged by...

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