Iv v Ec and Hl
| Jurisdiction | New Zealand |
| Judgment Date | 21 December 2020 |
| Neutral Citation | [2020] NZLCRO 239 |
| Date | 21 December 2020 |
| Docket Number | Ref: LCRO 21/2019 |
| Court | Legal Complaints Review Officer |
CONCERNING an application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006
AND
CONCERNING a determination of [Area] Standards Committee [X]
[2020] NZLCRO 239
Ref: LCRO 21/2019
LEGAL COMPLAINTS REVIEW OFFICER
ĀPIHA AROTAKE AMUAMU Ā-TURE
Law Practitioners — application for a review of the determination by a Standards Committee to take no further action with regard to his complaints about the conduct of the respondent lawyers — the plaintiff had signed documents in hospital after suffering a stroke — obligations when obtained a signature for an Enduring Power of Attorney and assessing capacity — use of information barriers (Chinese Wall) and conflicts of interest — lengthy gap between the actions complained of and when the complaint was lodged — Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules — Lawyers and Conveyancers Act 2006
In accordance with s 213 of the Lawyers and Conveyancers Act 2006 copies of this decision are to be provided to:
Mr IV as the Applicant
Ms EC and Mr HL as the Respondents
[Area] Standards Committee [X]
New Zealand Law Society
The names and identifying details of the parties in this decision have been changed.
Mr IV has applied for a review of the determination by [Area] Standards Committee [X] to take no further action with regard to his complaints about the conduct of Ms EC and Mr HL.
Ms EC is the principal of EC Law. At the time, Mr HL was a Senior Associate in the firm.
Mr IV's complaints relate to the conduct of the lawyers in conjunction with the execution by him of Enduring Powers of Attorney and the sale of two properties owned by a Trust of which he was a Trustee.
A major feature of this complaint is that the events Mr IV complains about took place in November 2012. The complaint was lodged in May 2018.
Mr IV was the sole director and shareholder of [PT] Holdings Ltd. The company operated a business in [Town A] which was managed by Ms RG. The company was in financial difficulties.
Mr IV was one of two Trustees of [PT] Trust. His accountant, Mr DF, was the second Trustee.
The Trust owned a property which was in two titles 1 and shared a common access. Mr IV had constructed a house on the property comprised in one of the titles.
The Trust borrowed a significant sum to support the business. The company's financial position did not improve and the company and the Trust were unable to meet their obligations.
Mr IV says he “had a massive stroke on 1 November 2012” and was hospitalised.
On 5 November, Mr IV's daughter (Ms HS) rang EC Law, and left a message for Ms EC with a request for her to prepare Enduring Powers of Attorney (EPOA) for her father as well as a Power of Attorney and Deed of Delegation for Ms RG to act in his place as trustee of the Trust.
Ms EC prepared the Powers of Attorney and attended Mr IV at the hospital for the purpose of having the documents signed. Mr IV says that this was on the day following his stroke. Ms EC says it was on 7 November. The documents are dated 7 November and Ms EC has produced her diary for this day, which shows an attendance on Mr IV on 7 November.
Prior to suffering his stroke, Mr IV had been negotiating to sell [Lot AB], and part only of [Lot CD]. Negotiations continued and an Agreement for the sale of the whole of [Lot CD] was concluded and dated 13 November 2012. Subsequently, an Agreement for the sale of [Lot AB] to a different party was entered into on 18 February 2013. Both Agreements were signed by Mr IV himself.
EC Law was nominated as the lawyers for both vendor and purchaser for the sale of [Lot CD].
Mr IV's first complaint is about the manner in which his signatures to the Powers of Attorney were obtained. He says that when Ms EC attended on him at the hospital, he was “in no fit state of mind to be doing so” and doesn't “really remember much about it at all”.
He says that the doctor at the hospital told him that he “doesn't give permission for 6–10 days after a major illness” for the person to sign any documents. Mr IV says also, that the appointed attorneys would not have been the persons he would have chosen. He also asserts that Ms EC attended on him late in the night when there were no doctors on duty. 2
Mr IV's other complaints relate to the sale of the properties, which he says, were sold at an undervalue. He also objected to Mr HL acting for the Trust on the sale of the two properties, and refers to the conflict which arose when the firm also acted for the purchaser of [Lot CD]. 3
Mr IV refers to a number of other issues which are not addressed in this decision, as they relate to decisions made, and transactions carried out, by the Attorneys, which cannot be considered by the Complaints Service or this Office on review.
The Standards Committee addressed the following issues with regard to Mr IV's complaints: 4
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a. Whether Ms EC breached any of her professional obligations when preparing the EPOAs and arranging for their execution by Mr IV;
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b. Whether Ms EC's and Mr HL's actions in respect of the properties breached any of their professional obligations; and
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c. Whether Ms EC and Mr HL breached any of their professional obligations in relation to the other aspects of Mr IV's complaint.
The Standards Committee recorded Ms EC's response with regard to this matter: 5
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a. Ms HS contacted her on 5 November 2012 and asked her to prepare the EPOAs;
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b. she and Mr DF visited Mr IV on 7 November 2012;
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c. the visit was within usual business hours; and
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d. Mr IV was well aware of the reason for her visit and willingly executed the EPOAs.
The Committee accepted the evidence provided by Ms EC as confirming that she had attended on Mr IV on 7 November during usual business hours. 6
The Committee says: 7
The Committee notes Mr IV has not provided any evidence he lacked capacity to execute the EPOAs at the time of signing, or that Ms EC visited the day after his stroke. In the absence of such evidence, the Committee accepts Ms EC's assertion Mr IV was cognisant and willing to execute the EPOAs when she visited with Mr DF on 7 November 2012.
It continued: 8
The Committee does not consider any of Mr IV's complaints regarding the EPOAs are supported by the available complaint material. It concludes Ms EC acted in accordance with her professional obligations in respect of the EPOAs.
The Committee's decision records the requirements of rr 6.1, 6.1.1, and 6.2 of the Conduct and Client Care Rules, 9 which relate to a lawyer (or a firm) acting for both parties on a matter. The Committee said: 10
Ms EC and Mr HL both say an information barrier was established, with different members of the firm acting for Mr IV and the purchaser. They say both parties were informed the firm also acted for the other. …
The Committee also noted the evidence provided by Ms RG in an affidavit relating to the various matters raised by Mr IV in his complaints. Ms RG deposes that
The Committee determined that there was not “a more than negligible risk that the lawyer may be unable to discharge the obligations owed to 1 or more of the clients”. 12
It says: 13
… The negotiation over price and subsequent conveyancing work was managed by different staff with an information barrier in place, allowing each to act in their client's interests. Further, there was nothing to indicate a particular risk of conflict between the parties (and no such conflict arose).
The Committee determined: 14
For these reasons the Committee was satisfied Ms EC and Mr HL complied with their professional obligations in respect of the sale of the properties. It accordingly resolved to take no further action on this aspect of the complaint.
The Committee declined to consider any other matters raised by Mr IV in his complaints as they related to actions taken by the attorneys which are not matters that can be addressed in a complaint about the lawyers.
Mr IV has applied for a review of the Standards Committee determination. His supporting reasons are discursive and do not bear repeating to any great degree. In summary, he objects to the manner in which his signatures were obtained to the Powers of Attorney and to EC Law acting for both the [PT] Trust and the purchaser of [Lot CD]. He attributes ulterior motives to Ms EC and Mr HL which are not supported by any evidence and will not be referred further in this decision.
The outcome Mr IV seeks is for the return of the properties to him on the basis that the Powers of Attorney are ‘illegal’. He refers to other matters which were not before the Standards Committee, and do not form part of this review.
Mr IV complained about both Ms EC and Mr HL. Distinct issues arise when considering the conduct of each lawyer, but the Standards Committee has addressed the complaints about both lawyers in the same decision. However, neither lawyer has objected to this, and this review proceeds on the same basis.
There are two issues which need to be considered on review:
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(a) Ms EC's conduct with regard to the Powers of Attorney; and
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(b) Mr HL's conduct when acting for the [PT] Trust when another lawyer in the firm acted for the purchaser.
On 5 November, Ms HS rang EC Law, and left a message for Ms EC “re POA for Mr IV”. Ms EC acted on the instructions of Ms HS and prepared...
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