Mr Tb v Mr Nx

JurisdictionNew Zealand
CourtLegal Complaints Review Officer
Judgment Date13 December 2012
Neutral Citation[2012] NZLCRO 103
Docket NumberLCRO 80/2011
Date13 December 2012

Concerning an application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006

And

Concerning a determination of Auckland Standards Committee 1

BETWEEN
MR TB
Applicant
and
MR NX
Respondent

[2012] NZLCRO 103

LCRO 80/2011

Legal Complaints Review Officer

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.

Introduction
1

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.

Background
2

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.

3

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.

4

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.

5

Mr TB paid one half of the fee on 31 July 2007 and an account was rendered by Mr NX on 3 August 2007.

6

Mr NX rendered his second account for the balance of the fees on 13 November 2007, which invoice was duly paid by Mr TB.

7

Following significant delays in the progress of the prosecution, Mr NX was ultimately successful in having the proceedings stayed and the charges withdrawn.

8

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.

9

Shortly afterwards, Mr TB lodged his complaint with the New Zealand Law Society Complaints Service on 20 April 2010.

Mr TB's complaint and the Standards Committee determination
10

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.

11

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.

12

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.

13

Mr TB also complained about Mr NX's tardiness in pursuing the insurance claim.

14

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.

15

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.

16

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.

17

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.

18

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.

19

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.

20

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 the

context 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.
21

He then proceeded to consider all of the costing factors relevant to an assessment of Mr NX's fees and at paragraph 22 concluded:

Under the reasonable fee factors paragraph 9.1 I believe that a reasonable fee has been charged. In the circumstances I do not consider that Mr NX has been grossly dishonest in his overcharging of Mr TB in relation to the invoices dated 03.08.2007 for $56,250 and invoice dated 13.11.2007 for $56,250. 2

22

Following comments from Mr NW and Mr TB the Standards Committee proceeded to consider the matter and on 8 March 2011 issued its decision. It formed the view that there was sufficient information before it to conclude that Mr NX's fees were not grossly excessive and therefore proceedings could not have been commenced against Mr NX pursuant to the Law Practitioners Act 1982 and in these circumstances section 351(1) of the Lawyers and Conveyancers Act operated so as to exclude consideration of the complaint by the Standards Committee.

23

Similarly, the Committee considered that there was no “dishonest billing practices” such as would mean that proceedings could have been commenced against Mr NX pursuant to the Law Practitioners Act 1982, and again, this operated so as to exclude consideration of the complaint by the Standards Committee.

24

Mr TB has applied for a review of that determination. He considered that the Committee had “gone off on tangents and got concerned with irrelevant matters.” The basis for his complaint was that he considered the second payment was for the conduct of the hearing which instead of being two weeks duration, lasted only one day. He considers therefore that he is entitled to a refund of part of that payment.

Review
Mr TB's view of the bills
25

Mr TB considers that the first payment of $50,000 plus GST to Mr NX was for preparation of his case, and the second payment of the same amount was for the trial. It must be noted at the outset of this review, that Mr TB is mistaken in interpreting the

bills in this way. Mr NX agreed to act for Mr TB in connection with the prosecution for a total fee of $100,000 plus GST. That fee was not divided up in the way that Mr TB asserts. It was a fee for the total retainer. There was no specific sum allocated to the hearing although it was anticipated at the time that a trial of at least one week would be necessary
26

If the trial had proceeded, it would seem that the time estimated by Mr NX to conduct the defence would have been considerably exceeded.

27

As it happened, the trial did not proceed and Mr NX billed the amount that had been agreed.

28

All fees rendered by a lawyer must be fair and reasonable. That applied as much before the commencement of the Lawyers and Conveyancers Act as after. The difference is that under the Law Practitioners Act only billings that were “grossly excessive” or “dishonest” would result in disciplinary proceedings being brought against the lawyer.

29

Because the bills rendered by Mr NX were rendered prior to the commencement of the Lawyers and Conveyancers Act, but Mr TB complained after the commencement of that Act, section 351(1) requires that a complaint about fees could only be accepted if proceedings of a disciplinary nature could have been commenced against Mr NX under the Law Practitioners Act.

30

Previous decisions of this Office 3 have adopted the approach of the New Zealand Lawyers and Conveyancers...

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