MR GS v MR TM

 
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[2012] NZLCRO 3

LCRO 133/2011

CONCERNING An Application For Review Pursuant To Section 193 Of The Lawyers and Conveyancers Act 2006

And

CONCERNING A Determination of The Southland Standards Committee

BETWEEN
MR GS of [North Island]
Applicant
and
MR TM of [North Island]
Respondent
counsel

In accordance with s.213 of the Lawyers and Conveyancers Act 2006 copies of this decision are to be provided to:

Mr GS as the Applicant

Mr TM as the Respondent

The Southland Standards Committee

The New Zealand Law Society

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

Application for review of Standards Committee decision declining to uphold a complaint against legal practitioner — respondent practitioner acted for applicant in respect of a property transaction — property had a concrete pole which supplied electricity and telecommunication to neighbouring properties — had to be removed at applicant's expense — Certificate of Title (CT) and Land Information Memorandum Report (LIM report) failed to mention existence of pole but it was disclosed in Council's geotechnical report — photos showing pole on cover of geotech report and property advertisement (Trade me link) — whether there was a professional failure on part of practitioner in not discovering existence of pole — whether existence of pole was discoverable by usual enquiries undertaken by a lawyer in relation to property purchases.

The issue was: whether the failure to identify the pole and advise on its legal implications was a professional failure on the part of the practitioner; and, whether the existence of the pole was discoverable by any of the usual enquiries undertaken by a lawyer in relation to his client's property.

Held: No easement was registered on the CT and neither TM nor his staff had undertaken an inspection of the site. Only the geotechnical report had any mention of the pole. The pictures showing the pole were unlikely to have disclosed it as falling within the boundary of the land. It appeared to be situated on the edge of the footpath.

A lawyer's perusal of documents or information would not in the normal course of events include downloading images from an advertisement. The extent of legal enquiry undertaken by a lawyer in advance of a purchase was generally confined to examining the legal documents associated with, or relevant to, the property, and any issues arising from those documents. The pole was referred to in the geotech report but GS had been explicitly told that TM and his staff would not provide advice on the report, and he would need to consult an engineer. The existence of the pole was not discoverable by any of the usual enquiries undertaken by a lawyer in relation to a client's property purchase.

Lawyers seldom ventured out of their offices to inspect a property that their client wished to purchase, and this could not be considered a professional failing. GS was aware of the pole and did not mention it to his lawyer. It was not until some months after settlement that he discovered that he now owned it. He was an experienced developer who had several times inspected the property. The evidence suggested that he himself may not have perceived the pole as being on his property.

TM did not fail in his professional duty. Decision of the Standards Committee confirmed.

DECISION
1

Mr GS (the Applicant) sought a review of a Standards Committee decision that declined to uphold his complaint against Mr TM (the Practitioner).

Background
2

The Practitioner had acted for the Applicant when he purchased a vacant section from the [North Island] City Council. The property had a concrete pole situated on the section and near to the edge of the footpath. The Certificate of Title (CT) for that property did not record any easement in relation to that pole.

3

The Applicant wished to build a house on the site and had obtained a copy of the LIM report which he forwarded to the Practitioner's office together with the TradeMe hyperlink relating to the sale advertisement of the land. The [North Island] City Council had also provided to the Applicant a geotechnical report that he also sent on to the Practitioner's firm.

4

The purchase file was handled by the Practitioner's legal executive, Ms P, who undertook the usual enquiries, and eventually attended to settlement of the purchase.

5

The Applicant was subsequently advised by his architect that the concrete pole would need to be removed in order to site the garage. The Applicant made enquiries and learned that the pole supplied electricity and telecommunication lines to the neighbouring properties. He was also informed that since the pole was situated on private land that he now owned, that any costs associated with its removal were his responsibility. It seems he was also informed by the Council that had the matter been brought to the Council's attention prior to settlement, the Council would have met the costs of removing it. The cost was assessed at around $20,000.

6

The Applicant brought the matter to the attention of Ms P at the Practitioner's office, and sought clarification of the costs (if any) for the firm's involvement with the issue. He was given a fees estimate of not less than $5,000.00. He informed Ms P that he was disappointed at the fee estimate and referred to the fact that no advice had been given concerning legal issues surrounding the pole. In his view the law firm had failed to identify and alert him to the absence of a legal easement and the implications for him if he purchased the land. He referred to the pole showing in the LIM report, this apparently referring to the Geotechnical report which referred to the pole in Appendix C. He considered that the law firm had an obligation to resolve the matter at their cost.

7

He also stated that he had spoken to several lawyers who had said that the Practitioner ought to have ensured that an easement was in place at the time of his purchase.

8

The Practitioner responded that no easement relating to the pole appeared on the CT, and that they had no knowledge of the pole or of any issues relating to its ownership. The Practitioner considered that inquiring into legal aspects of the pole was not a matter falling within the matters on which they had been instructed.

Complaint
9

The Applicant eventually made a complaint with the New Zealand Law Society concerning the Practitioner's “poor service”, in particular to the failure to have identified and alerted him to the absence of a standard legal easement for the pole, and the...

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