Mr Tb v Mr Nx
 NZLCRO 103
Legal Complaints Review Officer
Concerning an application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006
Concerning a determination of Auckland Standards Committee 1
The names and indentifying details of the parties in this decision have been changed.
Application for review of a determination of the Auckland Standards Committee to take no further action in respect of a complaint about fees charged by the respondent — in 2004 the applicant had been charged with offences under the Resource Management Act 1993 and instructed the respondent to act on his behalf — parties agreed on a fee of $100,000 — applicant claimed he was only to pay if charges were successfully defended and he recovered costs — respondent succeeded in having charges stayed — respondent did not supply full information and time records to assessors — Law Practitioners Act 1982 applied — whether respondent had engaged in dishonest or gross overcharging under the LPA — whether the Committee had jurisdiction to consider the accounts as they were rendered more than two years ago and were barred from review by r29 Lawyers and Conveyancers Act (Lawyers: Complaints Service and Standards Committees) Regulations 2008 (complaints relating to bills of costs — was rendered more than 2 years prior to the date of the complaint) — whether special circumstances existed under r29 so the complaint could be considered.
The issues were: whether the Committee had jurisdiction to consider the accounts under r29; if not whether special circumstances existed under r29 so the complaint could be considered; and, whether NX had engaged in dishonest or gross overcharging under the LPA.
Held: There was nothing in the Regulations or s351 LCA that indicated that r29 did not apply in respect of bills rendered prior to 1 August 2008. Consequently, the Standards Committee had no jurisdiction to consider a complaint about bills of costs which were more than two years old at the time of the complaint, unless special circumstances existed. If special circumstances were found to exist, then s351(2)(b)(iii) LCA prevented a consideration of any bill of costs rendered prior to 1 August 2002.
Special circumstances existed because of the fact that the final impact on TB personally was not known until the insurance claim had been finalised, resulting in a payment to him of only $30,000. That occurred in February 2010 and TB lodged his complaint in April 2010. If the insurer had met all of the costs, the amount of NX's bills would have been irrelevant to B. Instead he was obliged to personally fund $70,000 plus GST.
There had been two assessors’ reports, and a consideration by the Standards Committee, all of which have concluded that NX's bills had not constituted gross or dishonest overcharging. Nothing had been presented to change that holding. Nor was there any evidence that the fee was only payable if NX was successful and all costs were recovered. Pursuant to s211(1) LCA (powers exercisable on review) the determination of the Standards Committee was confirmed.
TB's application for review had been justified. The amount of the fee was significant and it was not unreasonable for him to consider that there should be some refund. He had also been dissatisfied with the overall service provided by NX. The matter had also been delayed by NX's intransigence in complying with the request for his files, scheduling of hearings where NX failed to appear, and the appearance of counsel at hearings with minimal instructions resulting in additional hearings, and attendances.
It was just that NX should be ordered to contribute to the costs of the review. NX had considerably increased the costs of this review by his actions referred to above. The Costs Orders Guidelines referred to a range of orders from $1,200 to $2,400 to be recovered in successful review applications. These amounts had been assessed as being approximately one half of the costs of a review hearing. As the review had consumed at least more than two times the resources than it otherwise should have, there was a costs order against NX at the midway-point of the range referred to in the guidelines of $1800.
Mr TB has applied for review of the determination by Auckland Standards Committee 1 to take no further action in respect of his complaint about fees rendered by Mr NX. This decision is remarkable more for the events which occurred during the course of the review than the outcome.
In December 2004 Mr TB was charged with offences under the Resource Management Act. In July 2007 he instructed Mr NX to act on his behalf to defend the charges.
It is accepted by both parties that Mr NX agreed to act for Mr TB for a fee of $100,000 plus GST but there is disagreement between Mr NX and Mr TB as to the basis on which the fees were to be paid.
Mr TB says that he only agreed to pay the fee if the charges were successfully defended and he recovered his legal costs. Mr NX says that the fee was a fixed fee.
Mr TB paid one half of the fee on 31 July 2007 and an account was rendered by Mr NX on 3 August 2007.
Mr NX rendered his second account for the balance of the fees on 13 November 2007, which invoice was duly paid by Mr TB.
Following significant delays in the progress of the prosecution, Mr NX was ultimately successful in having the proceedings stayed and the charges withdrawn.
Mr TB also sought Mr NX's assistance in connection with an insurance claim to meet his legal costs which the insurance company was resisting. This dispute was resolved resulting in a payment by the insurance company of $30,000.
Shortly afterwards, Mr TB lodged his complaint with the New Zealand Law Society Complaints Service on 20 April 2010.
Mr TB forwarded the two invoices rendered by Mr NX with his complaint. He advised that his brief to Mr NX was that he would agree to Mr NX's “huge fee” only if he could win and that he could recover costs expended.
He noted that the first invoice was for preparation of the case, for which he considered Mr NX had done “next to nothing”. He advised that Mr NX did not have any staff available to conduct this preparation and in the end that Mr TB himself had done a lot of the work. He advised that he also engaged a private investigator and the services of another law firm to provide resource management expertise which Mr NX did not have.
He then says that the second invoice was for the actual trial which was set down for two weeks but in the end occupied only one day where the issue of delay was argued.
Mr TB also complained about Mr NX's tardiness in pursuing the insurance claim.
Mr NX instructed Mr NW to represent him in connection with the complaint. Mr NW responded to the Complaints Service on 24 June 2010 and objected to the Law Society accepting the complaint. He argued that the provisions of Regulation 29 of the Standard Committee Regulations 1 prevented consideration of bills of costs which predate the complaint by more than two years. The bills of costs were dated 3 August 2007 and 31 August 2007, and the complaint was lodged on 20 April 2010.
The Complaints Service issued a Notice of Hearing on 2 September 2010 which noted the issues to be addressed as:
• overcharging; and
• whether the Committee had jurisdiction to consider the accounts.
Mr NW provided brief submissions in response to the Notice of Hearing in which he again raised the jurisdictional issue. He also noted that the Committee had not called for a costs assessor's report.
At its hearing on 17 September 2010 the Standards Committee resolved to call for a report by a costs assessor and adjourned the matter until the report was available.
The costs assessor's report was provided on 3 February 2011. In this report, the assessor referred to “the paucity of information supplied by Mr NX” and noted that the only reference to time records had been supplied in a letter from Mr NW to the Complaints Service in which he advised that “Mr NX's time records show that his [Mr NX's] office recorded $193,202 in time.” The assessor also noted that despite the Society requesting the time records from Mr NX, these had not been provided.
In paragraph 4 of his report the assessor stated:
Notwithstanding that the Committee made it quite clear that it would deal with the matter on the papers, still no time records were made available. Therefore the writer must reach a decision based on the information contained on the Society files.
Prior to this, the assessor had referred to the basis on which he had approached the review. This was with reference to the provisions of section 351 of the Lawyers and Conveyancers Act. At paragraph 2.3 of his report the assessor stated:
The Standards Committee has therefore referred this matter to the writer in thecontext of a costs complaint as to whether there has been “grossly dishonest overcharging”. I have been asked to consider each bill and indicate whether overcharging is present. If no overcharging is present then there will be no jurisdiction to deal with the matter.
He then proceeded to consider...
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