Mr UJ v Mr OO


[2013] NZLCRO 14

LCRO 143/2012

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


Concerning a determination of a [South Island] Standards Committee


Mr UJ as the Applicant

Mr OO as the Respondent

Mr ON as a related person or entity

A [South Island] Standards Committee The New Zealand Law Society

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

Review of decision to take no further action in respect of complaint that applicant's counsel (the respondent) had acted in a conflict of interest situation by signing a notice of claim in favour of the applicant's wife (pursuant to loan refinancing agreement) while acting for the applicant in a relationship property dispute — respondent signed notice as “solicitor for claimant” — notice of claim registered in return for transferring ownership into applicant's sole name so that applicant could obtain mortgage refinancing — applicant alleged a conflict of interest in breach of r6 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (client interests) — Standards Committee had already dismissed another complaint by applicant against the respondent involving the same course of dealing — whether signing notice of claim resulted in a more than negligible risk — whether issue estoppel applied to disciplinary hearings.

The issue was whether OO had breach r6 CCCR by signing the notice of claim; and whether issue estoppel applied.

Held: The application to transfer UK's legal interest to UJ needed to be signed as being correct pursuant to s164 LTA (correctness of instrument to be certified). OO had been asked to do that, and authorised to do so by UK's barrister. It was unclear why OO had signed the document, rather than a representative from UK's solicitors. It might be possible to argue that when he had signed signing the document, OO had acted on behalf of both parties. However, OO had never met UK, received any instructions from her, or issued any engagement documents. It seemed unlikely therefore that UK was ever his client. The address for service for UK was recorded on the notice of claim as at the offices of Law Firm C. That clearly indicated that Law Firm C were acting on behalf of UK.

There was evidence that OO had acted as an agent when he had signed the disputed document. Rule 6.1 CCCR stated that a lawyer could not act for more than one client where there was a more than negligible risk that the lawyer might be unable to discharge the obligations owed to one or more of the clients. On the facts, it seemed that there was less than a negligible risk that OO may have been unable to discharge the obligations owed to UJ and UK. In terms of him certifying as correct the notice of claim for UK, that would have involved a minimal amount of time. His motive for signing the document was to achieve the best result for UJ, as was in accordance with the instructions that UJ had given to him. On the facts it was difficult to see how signing the document could have created a risk that he could not thereafter continue to discharge the legal obligations that he owed to UJ. The reasoning of the Standards Committee was sound and its decision to take no further action was appropriate.

Clients had a largely unfettered right to complain in respect of the conduct of a lawyer. However, caution had to be exercised when those complaints were persistent and repeated. UJ had availed himself of the right to complain about the conduct of OO previously. The second complaint was laid nearly two years later after the Standards Committee had dismissed the first complaint (and just before that decision was upheld by the LCRO).

Section 138 LCA provided for a number of grounds upon which a Standards Committee might resolve to take no further action including where the length of time that had elapsed between the date when the subject matter of the complaint arose and the date when the complaint was made was such that an investigation of the complaint was no longer practicable or desirable. The matters at issue had occurred in 2008 and the complaint currently under consideration was made in 2012. There was value in finality. That had to be balanced against the seriousness of the conduct complained about. It was for this reason that the powers of the Committee under s32 LCA (complaints about practitioners) were discretionary. In cases such as the present, it could have been open to the Standards Committee to decline to consider this complaint further on the basis of the delay in making the complaint pursuant to s138(1)(a) LCA.

The fact that the complaint was a second complaint about the same course of dealing was also relevant. The courts were reluctant to allow a litigant to raise in later proceedings, a cause of action which might properly have been brought in earlier proceeding. While the jurisdiction of the Standards Committee and the LCRO was not bound by the strict rules of issue estoppel or cause of action estoppel given its disciplinary and protective jurisdiction, such considerations were relevant to the exercise of the discretion of the Standards Committee to take no further action under s138 LCA. For those additional reasons, the decision of the Standards Committee to take no further action was appropriate.

Pursuant to s211(1)(a) (powers exercisable on review) LCA, the decision of the Standards Committee was confirmed.


This review relates to the conduct of Mr OO when he acted for Mr UJ. The assertion of Mr UJ is that Mr OO acted in breach of his professional obligations when he signed as ‘correct’ a Notice of Claim by Mr UJ's wife against property of which Mr UJ was the registered proprietor. Under his signature on that document Mr OO is noted as “solicitor for the claimant”. The claimant was Ms UK. It was alleged by Mr UJ that this was in essence a conflict of interest.


It is important to note that this review relates to the second complaint that Mr UJ has made in respect of Mr OO. The first complaint was made in January 2010 and was wide ranging. It was dismissed by the Standards Committee and the Standards Committee decision was upheld on review by this office in March 2012.


The facts surrounding both complaints are that in early 2008, Mr UJ instructed Mr OO to act on his behalf in relation to a property relationship matter involving Mr UJ and his ex-wife (Ms UK). Mr UJ and Ms UK had been married for approximately one year when a dispute arose over the matrimonial property, [Dot]. [Dot] is a small locality in the [South Island]. The property was subject to a mortgage with Bank A.


By the time Mr UJ instructed Mr OO, Mr UJ had represented himself in:

  • a. A Family Court hearing in [date in 2007], relating to division of relationship property, in which the Court decided that the property was to be split 65:35 in favour of Ms UK; and

  • b. An appeal to the High Court, in [date in 2007], of the Family Court's decision on apportionment of the relationship property. Mr UJ initially acted for himself, but a Barrister, Mr UL, appeared at the hearing. The appeal was only allowed in part, with the matter being remitted back to the Family Court for reconsideration of the shares to be awarded to Mr UJ and Ms UK.


After the second Family Court hearing, the relationship property was ordered to be split 62:38 in favour of Ms UK. Mr UJ instructed Mr OO to appeal that decision and in a decision issued in 2008, the appeal was disallowed.


Mr UJ then instructed Mr OO to lodge proceedings for leave to appeal the earlier High Court decision. Leave to appeal to the Court of Appeal was granted.


By now, Bank A had issued a default notice after Mr UJ failed to make the necessary payments. Mr UJ proposed refinancing and obtained a loan offer from Bank B. In order to obtain the loan to discharge the loan, secured by the Bank A Mortgage, Mr UJ needed [Dot] to be in his sole name. Mr UJ and Ms UK therefore agreed that Ms UK would transfer her ownership of [Dot] to Mr UJ, but the transfer would not be a complete transfer of Ms UK's interest in the property. Mr UJ was to hold the property in trust for himself and Ms UK, pending finalisation of monies due by one party to the other in terms of the Family Court judgment or the outcome of the appeal in the High Court in [date in 2008].


In consideration for the transfer of title to Mr UJ:

  • a. Law Firm A were to hold in their trust account $36,250, in an interest-bearing deposit pending the outcome of the appeal to the High Court;

  • b. At the conclusion of that appeal, the sum of $36,250 and interest was to be paid to Ms UK, unless the outcome was that a lesser amount should be paid;

  • c. Mr UJ was to execute an agreement to mortgage the property to Law Firm A, and a caveat was to be lodged to protect the agreement to mortgage. The purpose of this was to enable Law Firm A to use the undrawn portion of the Bank B loan to enable $9000 costs and any further costs to be paid to Ms UK at the conclusion of the High court appeal;

  • d. Ms UK was also entitled to lodge a Notice of Claim against [Dot], pending payment of this sum; and

  • e. When all of Ms UK's interest in [Dot] was satisfied by payment of monies due, and all awards of costs, she would withdraw the Notice of Claim.


The terms of the agreement were recorded in a memorandum, which was sent by...

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