KW v WB

JurisdictionNew Zealand
Judgment Date20 April 2012
Neutral Citation[2012] NZLCRO 33
Date20 April 2012
Docket NumberLCRO 118/2010
CourtLegal Complaints Review Officer

Concerning An application for review pursuant to Section 193 of the Lawyers and Conveyancers Act 2006 and Concerning a determination of the Auckland Standards Committee 4

Between
KW

of Auckland

Applicant
and
WB

of Auckland

Respondent

[2012] NZLCRO 33

LCRO 118/2010

Application for review of Standards Committee decision declining to uphold complaint against law practitioner for transferring funds held in the practitioner's trust account to client's new lawyers — practitioner relied on joint instructions from lawyers representing practitioner's client and his former wife in relationship property distribution matter — funds came from sale of their home — client complained he had been acting for himself in respect of sale and purchase transaction and that money was transferred without reference to himself — whether r10.2 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 prevented practitioner from contacting client directly — whether practitioner entitled to rely on instruction from lawyers advising in relation to relationship property matter.

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

DECISION
Background
1

The Standards Committee declined to uphold a complaint made by KW (the Applicant) against law Practitioner, WB (the Pracitioner), and the Applicant seeks a review of that decision.

2

The Practitioner acted for the Applicant and the Applicant's wife (they were separated at the time) in relation to the sale of their home, and after the transaction was complete, the Practitioner's firm held in its Trust Account the balance of the proceeds on an interest bearing account. Settlement appears to have taken place in October 2009. The Practitioner was acting at the time on the joint instructions of the Applicant and his former wife.

3

The Applicant and his former wife engaged different lawyers in relation to their relationship property distribution. On 18 December 2009 the Practitioner received joint instructions from the solicitors acting for the Applicant and his former wife, instructing the Practitioner to pay the sum of $80,000 into the trust accounts of each of those lawyers, which the Practitioner did. The Practitioner relied on the instruction of the Applicant's lawyer in taking this action, but did not contact either the Applicant or his former wife personally prior to transferring the monies.

4

The Applicant complained that the Practitioner had transferred the money to his other lawyer without his (the Applicant's) consent. The complaint was that the transfer had been made, and without reference to himself.

5

In reply, the Practitioner explained that in transferring the sum of $80,000 to the trust accounts of the lawyers acting for the Applicant and his former wife respectively, he was acting on the joint instructions of their lawyers. He considered the direction of the Applicant's lawyer to be an appropriate authority. He explained, with reference to Rule 10.2 of the Conduct and Client Care Rules 2008 (the Rules), that the fact the Applicant was by that time represented by another lawyer prevented him from contacting the Applicant directly.

6

The Standards Committee canvassed these transactions and considered the responses of both parties, but considered it was unnecessary to take any further action in the circumstances and resolved pursuant to section 138(2) of the Lawyers and Conveyancers Act 2006 (the Act) to take no further action.

Review application
7

The Applicant sought a review citing the following grounds:

  • • He was acting for himself in relation to the sale and purchase and this did not involve his later lawyer. (He could see no barrier to the Practitioner contacting him over the sale proceeds).

  • • He did not authorise his relationship property lawyer to receive the $80,000 into their Trust Account.

  • • He expected the Practitioner to contact him before transferring any money.

  • • The Practitioner relied solely on the advice of another lawyer without any reference to himself which he considered to be plainly wrong.

  • • The outcome he wanted was a decree that no New Zealand law firm is to rely on instructions from another New Zealand law firm without first referring the matter and seeking instructions from the first New Zealand law firm's client.

8

This review was undertaken on the papers pursuant to, and in accordance with, section 206 of the Lawyers and Conveyancers Act 2006.

9

Several investigative steps were taken by this office. First, the Practitioner was asked to consider the application of Rule 10.2 in the light that his retainer with the Applicant was solely in relation to the property conveyance, while the Applicant's other lawyer was dealing with an entirely different matter. He was asked particularly to explain the assertion that the Applicant's other lawyer represented the Applicant in relation to the release of the client's funds held by the Practitioner.

10

The Practitioner responded that on completion of the conveyance, there was no agreed division about the funds that were held in the firm's Trust Account until agreement could be reached by the parties or the matter be determined by a Court. The Practitioner wrote “at that point in time our brief was finished apart from the eventual distribution of the funds.” He explained that the firm's role changed from being conveyancing solicitors to solicitors holding funds until the relationship property dispute had been determined.

11

The Practitioner continued that in his view there was no reason why he should have communicated with the Applicant, since the lawyers representing the Applicant and his wife respectively had jointly signed a direction to release the funds and he considered that the firm should be able to rely on that.

12

The Applicant was invited to respond to the Practitioner's letter. Commenting on the Practitioner's description of his role, he disagreed with the statement that the Practitioner's brief was finished apart from the distribution of the funds. The Applicant said this statement “was incorrect as distributions of funds agreed to by the parties was the responsibility of [the Practitioner's firm]”. He continued that the Practitioner...

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