MR VG v MS AB

• Jurisdiction: New Zealand
• Judgment Date: 10 May 2013
• Neutral Citation: [2013] NZLCRO 17
• Date: 10 May 2013
• Docket Number: LCRO 263/2011
• Court: Legal Complaints Review Officer

Concerning An Application For Review Pursuant To Section 193 Of The Lawyers And Conveyancers Act 2006

And

Concerning A Determination Of A [North Island] Standards Committee

BETWEEN

Mr Vg

Applicant

and

Ms Ab

Respondent

[2013] NZLCRO 17

LCRO 263/2011

Application to review a Standards Committee determination that the applicant's bill was too high — bill was for less than .2000 — applicant acted as a solicitor for the respondent's mother's estate — applicant's law firm was under investigation by the Standards Committee and assets were moved to the Committee's account — applicant's bill included work related to distribution of assets while under Committee's control — respondent said that work covered by bill would not have been done if the applicant's firm had not been investigated — issues also relating to taxation of monies — whether the Standards Committee had jurisdiction to review the bill as fee did not exceed .2,000 — whether the fee was appropriate — whether the determination indicated prejudgment and a lack of impartiality.

Ms AB as the Applicant

Mr VG as the Respondent

Mr VF as a related person or entity

[A North Island] Standards Committee

The New Zealand Law Society

DECISION

Background

1 Mr VG seeks a review of [a North Island] Standards Committee. The Committee considered a complaint by Ms AB in respect of a bill rendered by Mr VG. The Committee found the bill to be too high and ordered that it be reduced.

2 Mr VG acted as solicitor to Ms AB's mother's estate. Ms AB was the main beneficiary of the estate (and therefore any costs charged by Mr VG reduced the share of the estate to which she was entitled).The facts surrounding the complaint are that:

• a. On reaching [a certain age], Ms AB would be entitled to receive assets from her deceased mother's estate. Mr VG was one of two trustees of the estate, the other being his business partner, Mr VH.

• b. On 17 June 2010, Ms AB was advised by the Law Society that [Law Firm 1], for whom Mr VG and Mr VH worked, was being investigated by the Hawkes Bay Standards Committee. By that time, the funds that were becoming due to Ms AB had been in the firm's trust account for eight years. As part of the intervention by the Committee the funds were taken into the control of the New Zealand Law Society (NZLS).

• c. Some time later Ms AB received her funds in September 2010, directly from the NZLS.

• d. In February 2011, Ms AB received a bill from Mr VG for the sum of .1148.75, for legal services provided by Mr VG in relation to the final administration of the trust fund.

The Complaint

3 Ms AB believes that if [Law Firm 1] had not been investigated, the work covered by the bill would not have been carried out. Ms AB sought waiver of the bill, on the basis that [Law Firm 1]'s alleged misconduct had caused her stress. She also commented in later correspondence that for the duration that [Law Firm 1] held the estate funds, they were taxed at the incorrect rate of 39%. Ms AB maintained that Mr VG had previously been given her IRD details and she sought a rebate of the sum taxed in error.

Mr VG's response

4 Mr VG denied the grounds of Ms AB's complaints, stating that all work done by him was done after the intervention of the NZLS, and was appropriate and necessary. Mr VG stated that he had reduced the bill by 20 % in light of Ms AB voicing concerns about delay in her obtaining her funds.

5 Mr VG said that the file showed attendances necessary to preserve the funds for distribution and also to ensure their safe distribution to Ms AB, and in particular that as Ms AB was confused by her communication with the NZLS it was his attendances with the NZLS that cleared the way for her to receive her funds.

6 Mr VG denied that he had ever received Ms AB's tax number although he had asked for it.

Standards Committee Decision

7 The Standards Committee considered the complaint and the responses of Mr VG and Ms AB in detail, and it issued its decision on 18 October 2011.

8 The Committee's views were as follows:

• a. Although the bill sent by Mr VG to Ms AB was for less than .2000, the Committee decided that there were special circumstances that enabled it to exercise its discretion to inquire into the bill in accordance with the exception to the general rule that bills below that amount would not be inquired into. 1

• b. There were two aspects to Ms AB's complaint:

  • i. The interest earned on Ms AB's account was taxed at a much higher rate than it needed to be. The Committee concluded that as Mr VG had acknowledged that [Law Firm 1] were partly to blame for this situation, it was not appropriate to charge for attendances related to the taxation of Ms AB's fund; and

  • ii. The bill sent to Ms AB in relation to charges for attendances by Mr VG after the Committee had taken control of the estate's funds. The Committee concluded that Mr VG had failed to give due consideration to all of the relevant considerations surrounding the rendering of the account and that his fee was in Breach of Rule 9 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008.

9 The Committee noted: 2

It is not appropriate for the practitioner to seek payment from the complainant for the time he spent in assisting her to recover the money she was entitled to and which would have been paid to her but for the necessity of the committee's intervention in the practitioner's firm.

and determined that there was unsatisfactory conduct as defined by s 12(c) of the Act on the part of Mr VG. The Committee ordered that Mr VG's account be reduced from .975.00 to .325.00 and a certificate be issued pursuant to s 161(2) of the Act for .325.00 (plus GST and Disbursements).

10 Finally, the Committee decided not to publish details of the parties or the matter.

Application for Review

11 On 23 November 2011, this Office received an application from Mr VG for a review of the Standards Committee's decision. The stated grounds for the application related to the following:

• a. the jurisdictional issues regarding the fee for Mr VG's legal services (for .975);

• b. the fee for work done by Mr VG after the intervention by the Standards Committee and when Mr VG was employed by [Law Firm 2]. Mr VG maintained that the fee was appropriate in light of the work he did on behalf of Ms AB in relation to both the taxation matter and his obligations as trustee of Ms AB's estate;

• c. that the decision by the Committee to exercise its discretion to deal with the complaint, and the language it used in correspondence, indicated prejudgment and a lack of impartiality; and

• d. that the committee misinterpreted or misunderstood the factual matrix, or simply made the wrong decision.

12 On 18 January 2012, Ms AB responded to the application for review. She reiterated that the work charged for would not have been necessary had the NZLS not intervened in the affairs of [Law Firm 1]. Ms AB said with regard to the taxation matter, merely because Mr VG had no record of her IRD number did not mean that she did not provide it to him.

13 Mr VG, in a letter dated 2 February 2012 commented:

• a. that he had provided Ms AB with information relating to the steps necessary to wind up the estate, that the legal work he did was justified and that the process was not necessarily a simple one;

• b. the Committee took into account the taxation issue, when Ms AB indicated that she had decided not to pursue it;

• c. that even if the funds had been appropriately taxed, the active management of them would have resulted in annual accounts and the expense associated with them; and

• d. Ms AB's losses, if any, were minimal.

Analysis and review

Jurisdictional issue

14 Regulation 29 of the Lawyers and Conveyancers Act (Lawyers: Complaints Service and Standards Committees) Regulations 2008 provides:

• If a complaint relates to a bill of costs rendered by a lawyer or an incorporated law firm, unless the Standards Committee to which the complaint is referred determines that there are special circumstances that would justify otherwise, the Committee must not deal with the complaint if the bill of costs-

  • (a) was rendered more than 2 years prior to the date of the complaint; or

  • (b) relates to a fee that does not exceed .2,000, exclusive of goods and services tax.

15 Mr VG argues, in effect, that:

• a. as the fee for his legal services was under .2000, the Committee should have declined jurisdiction; and

• b. the Committee elected to deal with the complaint as an “;own motion” matter because previously Mr VG had been a partner in [Law Firm 1], which was the subject of a NZLS intervention in June 2010.

16 The question is whether special circumstances existed for the Committee to deal with the complaint. The term ‘special circumstances’ is not defined, but the leading authority on what constitutes special circumstances is the case of Cortez Investments v Olphert and Collins 3. The case involved an application to the court under's 151 of the Law Practitioners Act 1982 for an...