GZ v TE
| Jurisdiction | New Zealand |
| Judgment Date | 17 February 2012 |
| Neutral Citation | [2012] NZLCRO 10 |
| Date | 17 February 2012 |
| Docket Number | LCRO 17/2011 |
| Court | Legal Complaints Review Officer |
CONCERNING an application for review pursuant to section193 of the Lawyers and Conveyancers Act 2006
And
CONCERNING a determination of Canterbury-Westland Standards Committee 1
[2012] NZLCRO 10
LCRO 17/2011
Challenge to a decision of the Canterbury-Westland Standards Committee which held that the applicant had breached r2.3 (proper purpose) and r10.1 (respect and courtesy) Lawyers and Conveyancers Act (Lawyers Conduct and Client Care) Rules 2008 and had engaged in unsatisfactory conduct pursuant to s12 Lawyers and Conveyancers Act 2006 (unsatisfactory conduct defined) — parties were both lawyers representing clients in a relationship property dispute — respondents failed to comply with Family Court order to transfer property to applicant's client unencumbered — applicant said they had instructions to file contempt of court proceeding on respondent and his partners and sent copy of draft notice of committal — whether lawyers could utilise contempt proceedings against opposing counsel as a weapon when acting for their clients.
GZ as the Applicant
TE as the Respondent
The New Zealand Law Society
Canterbury-Westland Standards Committee 1
Ms HB and Mr TD were engaged in a relationship property dispute which by 2009 had been ongoing for some years. The parties were legally represented:
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a) Ms HB retained Mr GZ as her barrister.
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b) Ms HB also retained HC, a firm of solicitors in [South Island], to attend to conveyancing matters.
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c) Mr TD retained Mr TC as his barrister.
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d) Mr TD retained the firm of TB (Mr TA) to attend to conveyancing matters on his behalf.
At the time of separation from Ms HB, TD was in control of substantial business assets while Ms HB was in occupation of the family home against which was registered a mortgage to Westpac bank.
Attempts to resolve relationship property matters through negotiation were unsuccessful and proceedings were issued. After further negotiations, an agreement was reached which resulted in Consent Orders being made by the Court. One of the Orders was that the family home would be transferred to Ms HB free of the Westpac mortgage (and any other encumbrances).
To enable that to occur, it was necessary to provide the bank with alternative security, and it was agreed that this alternative security would be provided over other property owned by Mr TD, his parents and his brother.
Prior to agreeing to the terms of the settlement recorded in the Orders, Mr GZ wanted to be satisfied that the settlement could be implemented. He obtained a copy of the discharge of the existing mortgage to Westpac bank over the family home, a copy of the new loan agreement referring to the replacement securities, and a copy of the Authority and Instruction form (the A&I) whereby TB were irrevocably instructed to register the mortgage over the replacement security.
In addition, he received a letter dated 17 October 2008 from Mr TA in which Mr TA advised that “we are therefore in a position to file a solicitor's certificate with the Westpac bank so that the discharge of mortgage on [the existing property] can be registered and the new mortgage over the [replacement security] put in place contemporaneously. As the transaction does not involve raising funds from the bank we are in a position to do this immediately we receive confirmation from Mr TC that a satisfactory agreement has been entered into between Mr TD and Ms HB.”
Further in that letter, Mr TA informed Mr GZ that he had advised the TD family, being Mr TD's parents and brother, that they should seek independent legal advice. He also noted that the agreement of the TD family was conditional on a property agreement acceptable to Mr TD being reached.
Relying on the information provided in this letter and the documents which Mr GZ had obtained copies of, Ms HB then agreed to the Orders being made by the Court which included the following terms:
“2 No later than 24 October 2008:
a. the property at [the family home] shall be transferred unencumbered to the sole name of [Ms HB] such transfer shall be of a “going concern” between two registered entities for GST purposes
3 [Mr TD and ACU Limited] will forthwith take such steps as are necessary to procure a registered easement in favour of the registered proprietor of [the family home] to secure the current supply of drinking water to the property. The costs of creating such easement (including legal fees and disbursements and survey costs) shall be met by ACU Limited.”
ACU Limited was a company controlled by Mr TD.
Ms HB adopted the view that without the water supply easement in place, the property was valueless, and therefore insisted that the easement be registered prior to accepting a transfer of the property. This involved the preparation of an easement plan, and agreement between HC and Mr TA as to the terms of the easement. It was not until April 2009 that these matters were concluded. In addition, registration of the easement required consent of SBS Bank, the mortgagee of the servant tenement.
In the intervening period, Mr TD's winery business had gone into receivership. In a letter dated 28 April 2009, Mr TA advised HC as follows:
“Last week our client's parents reversed their earlier decision in respect of their preparedness to provide security over the [alternative property] and [Mr TD Senior] has communicated this to your client directly. We understand Westpac also became concerned because of arrears which TD informs us have now been brought up to date. Westpac have also indicated they would require a new valuation due to the changing values of coastal properties”
As a result, Mr TA indicated that his client was unable to comply with the terms of the Orders, and proposed that Ms HB take an immediate transfer of the family home subject to the Westpac mortgage.
On 14 May 2009 Mr GZ sent a fax to Mr TC in which he referred to paragraph 2a of the Order and then states:
“In my letter of 1 May 2009 I advised that Ms HB would seek an order for specific performance if Mr TD did not complete settlement within seven days.
Upon reflection, such an application is not necessary. Mr TD is currently in default of a Court Order. Ms HB is therefore entitled to have Mr TD arrested for contempt of Court.
Unless this matter is resolved immediately, Ms HB will act without further reference to you or Mr TD.”
There is no evidence that there was any correspondence with Mr TA following that letter before 26 May when Mr GZ sent a fax to him. The full text of that letter is as follows:
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1. Mr TD, his parents, Mr and Mrs TD, his brother, Mr x TD and your firm are currently in contempt of Court.
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2. For your information I enclose a draft Notice of Motion for committal of Mr TD, his parents and brother and your firm. The draft notice is forwarded as a matter of professional courtesy.
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3. I am instructed that unless my client's conveyancing solicitors, HC advise me no later than 5pm Wednesday 27 May 2009 that you have completed the settlement of Mr TD's relationship property obligations, I am to prepare, file and serve the notice of motion for committal and supporting affidavit without further reference.
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4. I look forward to receiving advice from HC that the transactions have settled.
The draft notice of motion for committal sought an order that the defendants be “committed to prison for contempt of Court namely disobedience of an order of the Family Court of New Zealand”
Mr TA responded by fax dated 27 May which was received by Mr GZ on the following day. In that reply fax, Mr TA reiterated the circumstances which were preventing compliance with the Order.
On 29 May, Mr GZ replied, confirming his instructions to continue with the committal proceedings.
In a further letter dated 21 July 2009, Mr GZ noted:
“Contempt
It is a matter for the Court that orders made in reliance on stated positions are obstructed”
Further correspondence ensued between Mr GZ and Mr TA in which he particularly noted his client's inability to comply with the Orders because Westpac had withdrawn its agreement to accept the replacement securities.
In a letter dated 24 August 2009, Mr GZ wrote to Westpac bank in which he advised the bank that he had instructions “to issue proceedings” against the various parties as well as the bank. That letter did not refer specifically to contempt proceedings.
In any event, matters were settled between the parties by November 2009 and the contempt proceedings were not filed.
Having allowed some time to pass after these events, Mr TE, one of Mr TA's partners, sent an email to Mr GZ on 23 March 2010 in which he referred to what he perceived as the threat to issue committal proceedings by Mr GZ. He made reference to the distress caused to himself and his partners by the threatened proceedings and the disruption to travel plans, as well as to the cost in time and money to which the firm had been put. In addition, the firm had been obliged to consider whether it should continue acting for any members of the TD family given the potential conflict situation which they faced.
Mr TE extended an opportunity to Mr GZ to apologise unequivocally for his actions before lodging a complaint with the Complaints Service of the New Zealand Law Society.
Mr GZ responded on 7 May 2010 advising that the proposal to issue contempt proceedings was not made vexatiously or frivolously. He advised that “it was a considered decision, taken after advice which included an opinion from Mr HD QC”. He held to the view that he had acted in accordance with his professional obligations to the Court, his client, and to Mr TE and his partners.
Mr TE then...
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