Mr and Mrs Gq v Mr to
 NZLCRO 2
Concerningan Application for Review Pursuant to Section 193 of the Lawyers and Conveyancers Act 2006
Concerninga Determination of the Auckland Standards Committee 2
Mr and Mrs GQ as the Applicants
Mr TO as the Respondent
The Auckland Standards Committee 2
The New Zealand Law Society
The names and identifying details of the parties in this decision have been changed.
Application for review of decision of Auckland Standards Committee 2 not to take further action — applicant's mother instructed practitioner to prepare powers of attorney — practitioner was appointed property attorney along with the client's son, who was also welfare attorney — client assessed with dementia — following failed inquiries of applicant, practitioner instituted summary judgment proceedings for repayment of funds advanced to applicant — client died and practitioner became executor of will and therefore plaintiff in the summary judgment proceedings — whether the practitioner had breached professional obligations by not advising client against appointment of her son as attorney — whether practitioner ought to have taken steps when first instructed to establish full details of his client's assets and liabilities — whether the institution and continuation of the summary judgment proceedings incurred unnecessary costs
The issues were: whether TO had breached his professional obligation by not advising his client against appointment of her own son as her welfare attorney and property attorney; whether the appointment created a conflict of interest; whether TO had an obligation to undertake an exercise to establish full details of his client's assets and liabilities; whether the institution and continuation of the summary judgment proceedings resulted in the unnecessarily incurring costs; and whether there was any breach of duty in terms of the administration of the estate.
Held:The role of a solicitor to an estate was distinct from his role as executor and trustee . A failure to carry out a function which was clearly that of an executor would not result in breach of professional standards.
Even though the Law Society recommended against the appointment of a beneficiary as the attorney, it was not uncommon for a family member to be appointed. In any event, a lawyer had to abide by his client's instructions. No conflict arose from the appointment itself. Any conflict would arise from the exercise of the power and the actions of the donee would then be brought into question, not those of a lawyer carrying out his instructions. The appointment of an attorney was not particularly complex, and the donor was best placed to make an assessment of the suitability of the proposed attorney.
Further, the appointment was made prior to the commencement of the Lawyers and Conveyancers Act 2006“LCA”). Any disciplinary proceedings therefore would be under the transitional provisions of the Act. This required the conduct complained of to be of a degree of egregiousness far greater than a simple failure to follow or advise on a Law Society recommendation.
It was Mrs HA who instructed TO that she wished to appoint her son as the welfare attorney. It was not the role of TO, as the solicitor instructed to prepare the powers of attorney, to interrogate his client and provide an opinion as to the appropriateness of the appointment. Neither did a client who instructed a lawyer to prepare a power of attorney expect the lawyer to undertake a general estate planning exercise. It is generally a limited retainer to simply prepare the power of attorney. It would have been inappropriate to embark on any such exercise as it would have expanded his brief beyond what he was instructed to do.
Even if he had enquired and been told that Mrs HA was satisfied with the arrangement, it is doubtful that there would not have subsequently been a duty on him as attorney and executor to investigate the nature of the arrangement. The steps that the GQs argued that TO should have taken would not have attached to his duty as a solicitor. They would have been a function of his role as an attorney, and consequently, no professional standards issues could be attached.
Even though the GQs urged that the loan advanced to them by Mrs HA was to be set off against their share in the estate and so the summary judgment proceedings were unnecessary, the alleged loan document contained a number of deficiencies and the attorneys could not accept it. The commencement and continuation of the proceedings were therefore not without a cause.
In addition, although the proceedings were for repayment of the loan, the amount due to Mrs HA's estate needed to be established, and for that purpose the discovery which TO pursued was also relevant. It could not therefore be said that the proceedings were without merit and that the costs should not have been incurred. TO had a duty as attorney, and subsequently as executor, to take steps to identify accurately Mrs HA's assets.
TO was acting as the executor, and if the GQs considered that he had not met his obligations as an executor, then remedies available through the courts were to be pursued. It was not a matter which was properly addressed in a professional standards forum. As to estate administration costs, no formal accounts were rendered by TO. Until accounts were produced they could not be the subject of a complaint.
This is a review of the Standards Committee decision dated 24 February 2011 in respect of a complaint lodged by Mr and Mrs GQ concerning the conduct of Mr TO. The Standards Committee decision refers to Mr GQ only as the complainant and he is the sole complainant listed in the complaint form, although it was signed by both Mr and Mrs GQ. The review application has been filed by both of them and they have specifically noted that the complaint is by both of them. They have therefore both been included in this decision as the Applicants.
In its decision, the Standards Committee made a number of errors in its recitation of the facts which Mr and Mrs GQ have noted in their application for this review. I have noted those and where I have recorded facts which differ from those as recorded by the Standards Committee, then the record of the facts herein will constitute a modification of the Standards Committee decision in this regard.
The facts giving rise to the complaint by Mr and Mrs GQ are well known to the parties, and recorded in the Standards Committee decision. However, it is necessary to briefly summarise the facts to provide context for this decision.
Mrs HA (Mrs GQ's mother) first consulted Mr TO in January 1997. At that time, she instructed him to prepare a will for her. He received further instructions from her again in December 2003 to effect changes to her will, and a draft of the changes was sent to her at that time.
In August 2004 she requested amendments to that draft which were made, and the will was signed in September 2004.
In January 2006 she again made contact with Mr TO to instruct him to prepare Enduring Powers of Attorney for her. She wished to appoint her son GR as her Personal Care and Welfare Attorney, and GR and Mr TO as her Property Attorneys. GR and Mrs GQ (Mrs) were Mrs HA's only two children.
At the time of making those Powers of Attorney, Mr TO met GR for the first time.
In July 2008, Mr HA advised Mr TO that Mrs HA had been placed in residential care.
Shortly thereafter, Mr and Mrs GQ became aware of the appointment of Mr HA and Mr TO as Attorneys, and on 19 August 2008, Mr GQ sent Mr TO a fax in which he advised that in a telephone conversation with his wife, Mrs HA had advised his wife that she wanted to alter the “present setup”.
The question as to whether Mrs HA had capacity to make decisions became relevant, both as to whether she had the capacity to alter the existing documentation and as to whether it was necessary for the Property Attorneys to assume management of her affairs.
In April 2008 a Supports Needs Assessment of Mrs HA had been carried out by the Auckland District Health Board, and it was noted that Mrs HA suffered from dementia. The report does not state the degree of dementia suffered by Mrs HA and otherwise noted Mrs HA's desire to stay in her own apartment for as long as possible.
Following the communication from Mr GQ, Mr TO sought a report from Mrs HA's family doctor (Dr X) who had provided medical care for Mrs HA over the previous ten years. In his report dated 24 August 2008, Dr X recorded his view that Mrs HA was incapable of managing her own affairs. His opinion was provided on the basis of a specific Mental State Test conducted by him in April 2008.
On the basis of Dr X's report, Mr TO formed the view that he needed to ascertain in more detail the nature of Mrs HA's financial arrangements with Mr GQ which she had mentioned at the times that she had consulted with Mr TO with regard to her wills. As a result, correspondence passed between Mr TO and Mr GQ in which Mr TO asked for further details of the financial arrangement on several occasions.
Mr GQ resisted providing this information, for the reason that he did not want this information being provided to Mrs GQ's brother.
On 4 December 2008, Mr TO made formal demand of Mr and Mrs GQ for repayment of the funds. A further demand was made on 13 January 2009, and having received no reply, Summary Judgement...
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