DL v WR
 NZLCRO 46
Concerning an application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006
Concerning a determination of the Wellington Standards Committee 1
In accordance with s.213 of the Lawyers and Conveyancers Act 2006 copies of this decision are to be provided to:
Mr and Mrs DL as the Applicants
Mr WR as a Respondent
Mr WQ as a Respondent
Mr WP as the Respondents Counsel
The Wellington Standards Committee 1
The New Zealand Law Society
The Secretary for Justice (with Applicants' details anonymised)
Mr and Mrs DL were the tenants of premises in [North Island].
The lease provided for the tenant to pay outgoings. Rather than providing invoices for the outgoings, the landlord adopted an arrangement whereby the tenant was to make regular payments on account of outgoings at the same time as rental payments. This process is provided for in paragraph 3.5 of the lease. Paragraph 3.6 of the lease provides that details of the actual outgoings are to be provided as at 31 March in each year of the tenancy.
The DL sublet part of the premises and the subtenants paid rent at various times directly to the landlord.
The monthly payments made by the DL were irregular, and they state that neither the landlord or themselves kept adequate records to enable the amounts due to be readily identified from time to time.
Mr and Mrs DL also claimed that certain amounts should be set off against the payments due to the landlord.
The end result was that there was a considerable degree of uncertainty over the amount that was actually due to the landlord.
In June 2009 the landlord applied for summary judgement against the DL in the sum of $164,175.88 plus interest and costs.
Mr and Mrs DL instructed ABL Legal to represent them. Their first meeting was with Mr WR. He reviewed the proceedings and subsequently reported to Mr and Mrs DL. With their agreement, Mr WR enlisted the aid of Mr WQ, who was a staff solicitor in his office with some four years experience.
Mr and Mrs DL disputed the amount claimed by the landlord and provided their own spreadsheets. These spreadsheets showed that the landlord owed Mr and Mrs DL $82,395.88 which was a result in part of taking into account amounts that Mr and Mrs DL alleged the landlord owed them for “contra” deals. In addition, Mr and Mrs DL considered that they were entitled to counterclaim for damages.
The areas in contention were identified by the landlord's solicitors as being (i) the correct amount of rental due from October 2006 (ii) the outgoings due in terms of the lease (iii) the claims for set off (iv) the sum of the payments made (v) how interest was to be calculated.
By December 2009 it became clear that there were legal and factual disputes necessitating representation by a solicitor with greater experience than Mr WQ. Mr WR was unavailable to assist and consequently Mr WO was instructed.
Submissions were prepared and sent to Mr WO. The matter was set down for a defended summary judgement hearing on 22 January 2010.
On the day of the hearing Mr WQ attended the Court together with Mr DL and Mr WO. Prior to the hearing, Mr WO and Mr WQ met with the landlord's counsel to discuss the issues.
Liability was not an issue. Mr and Mrs DL were clearly liable under the lease. The question was one of quantum.
Prior to the hearing Mr WO had prepared his own calculations, and had come to the view that the minimum liability for Mr and Mrs DL was $80,000.00.
The landlord's counsel had also carried out a similar exercise and come to the view that the minimum amount that was due to the landlord was $75,000. He had prepared a spreadsheet which recorded how this figure was arrived at. This spreadsheet was tabled at the negotiations.
Discussions took place, some of them in the presence of Mr DL, and some not.
After clarification that the premises had been re let from an earlier date than had been claimed by the plaintiff, the sum of $50,000.00 was agreed as an amount at which the claim could be settled.
Leaving aside what Mr and Mrs DL understood to be their options, the facts are that they agreed to settle at the sum of $50,000.00 and judgement was entered for that amount by consent. There was no provision for the judgement debt to be paid by monthly instalments.
On the Tuesday following the hearing (which was on a Friday) Mr DL emailed Mr WR and commenced his email with the words “I thanked [Mr] [WQ] for his work on Friday. I thought his representation to be very good”.
He then went on to say that “I have to say though that I consider it did not go well”.
He then raised several matters where he considered Mr WO had not been provided with sufficient “tools to work with”.
One of these related to the commencement date of the new lease which the landlord had deposed was 1 August 2008, whereas the lease had commenced on 1 June 2008.
Another matter raised by Mr DL related to the sum of $15,000.00 which Mr and Mrs DL claimed was due to them as an incentive payment by the landlord.
Mr DL also noted that he and his wife would be in a difficult situation because he did not expect the landlord to agree to the judgement debt being paid off at the rate of $500.00 per month.
Correspondence ensued between Mr DL and Mr WR culminating in a complaint being lodged with the Complaints Service of the New Zealand Law Society on 16 June 2010 by Mr and Mrs DL.
Mr and Mrs DL complain that they had received inadequate representation and poor advice leading to an unjust award. The matters complained of involved:
- ) Lack of preparedness. 2) Lack of advice. 3) Lack of diligence in spreadsheet analysis. 4) Not taking cognisance of their statements that the landlords were lying. 5) Not detailing the options sufficiently. Telling Mrs DL that she had no option whatsoever. 6) Engaging a barrister who wasn't comprehensively briefed and who appeared to have a mindset that the landlord's position was correct and that his role was solely that of a damage control negotiator. 7) Being unable to go to the Court for a decision, due to the fact that Mr WO had the fixed opinion that they owed the plaintiff a minimum of $80,000.00.
Subsequent to the complaint being lodged, the landlord filed bankruptcy proceedings against Mr and Mrs DL. In the course of those proceedings, an affidavit was filed on behalf of the landlord in which it was deposed as follows:
Prior to the hearing [the landlord's] lawyer prepared a schedule adopting the “best case scenario” for Mr and Mrs [DL]. It calculates the rent, outgoings and interest due on the basis that, unless there was clear evidence to the contrary, the sum due and the rent paid accorded with Mr [DL] own spreadsheet. A copy of the schedule is annexed and marked “C”. Even adopting the best case scenario for them, the [DL] owed [the landlord] approximately $75,000.00.
This spreadsheet was sent by Mr and Mrs DL to the Complaints Service under cover of a letter in which Mr DL stated he had never seen the revised spreadsheet and that it had been withheld from him by Mr WO and Mr WQ at the District Court.
Having decided to inquire into the complaints and holding a hearing on the papers which included all submissions received from the parties, the Standards Committee determined to take no further action on either of the complaints against Mr WR or Mr WQ. The Standards Committee provided the following reasons:
- ) Mr WR gave proper advice, drafted and filed appropriate pleadings, obtained an adjournment and, in conjunction with Mr WQ, properly briefed Mr WO. He was not present at the hearing. 2) Mr WQ also properly represented the complainants. There was no untoward pressure to accept any settlement offer. There was a negotiation before the hearing which is not unusual and both complainants were consulted on the settlement offer and agreed to it. The quantum represented a significant discount on the claim being pursued by the creditor. If it was agreed, the repayment of $500 per month should have been in the written agreement but it is doubtful this was the case as the creditor disputes it and Mr DL signed the agreement without reference to it. 3) The complainants appear to have later regretted entering into the settlement agreement and blame their legal advisors for that position but that is not a well founded complaint. This was a commercial dispute and was properly dealt with in that context.
Mr and Mrs DL have applied for a review of that decision.
A review hearing was held in Wellington on 8 September 2011. In attendance, were Mr and Mrs DL, Messrs WR and WQ and their counsel Mr WP, and Mr WO.
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