BG of Auckland v YQ of Auckland

JurisdictionNew Zealand
CourtLegal Complaints Review Officer
Judgment Date04 April 2011
Neutral Citation[2011] NZLCRO 21
Docket NumberLCRO 161/2010
Date04 April 2011

[2011] NZLCRO 21

LCRO 161/2010

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


CONCERNING a determination of the Auckland Standards Committee 4

BG of Auckland
YQ of Auckland

Ms BG as the Applicant

Mr YQ as the Respondent

The Auckland Standards Committee 4

The New Zealand Law Society


An application for review was made by Ms BG (the Applicant) for the review of a Standards Committee decision declining to uphold her complaint against Mr YQ (the Practitioner).


After the Applicant and her husband separated the matrimonial home was sold. They instructed the Practitioner to do the conveyance. The Practitioner took the required steps to obtain a Letter of Engagement from both of them, completed the conveyance, and in accordance with his undertaking, held the balance of funds in his Trust Account undispersed until such time as the parties reached agreement concerning division of relationship property.


At that time the Practitioner was also acting for the Applicant's husband in matters arising from the separation, such as relationship property division and child-related issues. This was known to the Applicant at the time she agreed to allow the Practitioner to do the legal work on the sale. The Applicant was represented by a barrister, Ms BH, in these other matrimonial matters.


The Standards Committee file that was obtained for the review contained copies of numerous exchanges between Ms BH and the Practitioner concerning relationship property and other matters involving the care of children, and also the drafting of a Section 21 agreement. The nature of the letters suggest that that the relationship break up was not amicable.


The Applicant eventually filed complaints against the Practitioner. She alleged that the Practitioner (a) had a conflict of interest, (b) had lied, and (c) had failed to stick to the facts. Other general allegations were raised concerning the Practitioner's competence. The Practitioner denied all of the allegations.


The Standards Committee's decision records that the Committee considered the information provided by both parties, and the comments of each party in response, before deciding that no further action was necessary. The Standards Committee resolved to take no further action pursuant to Section 138(2) of the Lawyers and Conveyancers Act 2006. This confers a discretion on a Standards Committee to take no further action if, in the course of the investigation of the complaint, it appears to the Standards Committee, having regard to all the circumstances of the case, that no further action is necessary or appropriate.


The Applicant sought a review on the grounds that the Committee failed to recognise that there was “ a clear case of conflict of interest”. The remainder of her review application concerned allegations of incompetence on the part of the Practitioner, in particular in relation to calculations in the financial distribution between the parties. It is not clear whether the Applicant also challenged the Standards Committee's conclusions in respect of other parts of her original complaints, but overall she is clearly dissatisfied with the outcome.


Both parties have agreed that the Application may be determined without a formal hearing and therefore in accordance with section 206(2) of the Lawyers and Conveyancers Act 2006 the matter is being determined on the material made available to this office by the parties.


The Applicant has concerns about the Practitioner's conduct and the manner in which he represented her husband, and particularly insofar as that impacted on her. My review of the file includes considering the way that the Standards Committee dealt with the complaint. I shall address the principal complaints in turn.

Conflict of interest complaint

The conflict of interest complaint arises in the context of the Practitioner representing both the Applicant and her husband in the sale of the matrimonial home, while at the same time representing the husband in relation to the relationship property distribution and other related matters. The Applicant perceives this to have been a conflict on the part of the Practitioner. She says she received no legal advice about this.


The Lawyers: Conduct and Client Care Rules prohibits a lawyer from acting for two (or more) parties whose interests are in conflict. This is governed by Chapter 6 of the Rules which states that a lawyer must not act for more than one client on a matter in any circumstances where there is more than a negligible risk that the lawyer may be unable to discharge the obligations owed to one or more of the clients. There is a qualification which provides that the Rule does not apply when the consent of all parties concerned is obtained in advance unless it becomes apparent that the lawyer will not be able to discharge his obligations owed to all of the clients.


There are several reasons why the above circumstances do not raise a conflict of interest situation for the Practitioner. First, it is clear from the above that a conflict arises only if the lawyer acts for one or more parties in respect of “a matter”. The Rule clearly contemplates that it applies when the Practitioner is acting for two (or more) parties in respect of the same matter, and where those interests might conflict. This would arise for example if each of the parties sought a different outcome in respect of the matter, and in such a case the Practitioner could not advance the interests of one client except at the expense of the interests of the other party. The “matter” in respect of which the Practitioner acted for both parties concerned the legal work to complete that sale.


Second, there is nothing to suggest that the parties' interests were in conflict with regard to the sale. Both wanted the house sold. There was no disagreement about their objectives when instructing the Practitioner, namely that the house should be sold and the proceeds held by the Practitioner pending division of the relationship property. They had a common interest in selling the house.


If it is the Applicant's perception that a conflict arose due to the fact that the Practitioner was also acting for the husband in other matters, this is a mistaken view of the nature of a conflict of interest. The prohibition arises only where the Practitioner acts for two or more individuals in relation to “a matter”, and where the parties interests are conflicting, such that the practitioner cannot serve the interests of both parties in relation to that matter. This contemplates a lawyer acting in the same matter for the clients, and recognises that theinterests of both parties cannot be adequately served where there is a conflict in the interests of the clients in respect of that matter.


The prohibition in Rule 6 does not apply where the Practitioner is also acting for one of the parties in a separate “matter”, even where this involves a conflict with the other party. In this case the Practitioner acted only for the husband respect of other matters such as the property distribution and child care arrangements, and the section 21 Agreement. No part of the conveyancing work impinged on these other issues.


The Applicant's interests were fully protected by the undertaking given by the Practitioner to hold the proceeds in his trust Account until such time as agreement had been reached. There is no suggestion that the Practitioner failed to honour that undertaking. I have seen no evidence of any conflict that would have prevented the Practitioner in acting in these separate matters or that the interests of the clients were compromised by his having done so.


It seems that the Applicant saw this somewhat differently. She alleged that because of the conflict the Practitioner was confused about whether “relationship...

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