Mrs AM of AUCKLAND v Ms ZM of AUCKLAND
CONCERNING An application for review pursuant to Section 193 of the Lawyers and Conveyancers Act 2006
CONCERNING a determination of the Auckland Standards Committee 3
Mrs AM as the Applicant
Ms ZM as the Respondent
The Auckland Standards Committee 4
The New Zealand Law Society
The names and identifying details of the parties in this decision have been changed.
Application for review under s193 Lawyers and Conveyancers Act 2006 (“LCA”) (right of review) of a decision of Complaints Service of Auckland Standards Committee declining to investigate complaint that respondent had breached r13.1 Lawyers: Conduct and Client Care Rules (2008) (duty of honesty to the court) — applicant alleged respondent provided untrue information to the court regarding applicant's application for interim spousal maintenance — whether respondent had engaged in unsatisfactory conduct under s12 Lawyers and Conveyancers Act 2006 — appropriate penalty — whether applicant entitled to compensation — whether the Standards Committee erred in only referring to judicial remedies open to the applicant.
The issues were: whether the Committee had erred in only referring to judicial remedies open to the applicant, rather than regarding ZM's conduct separately; whether ZM had breached r13.1 of the Rules and had engaged in unsatisfactory conduct pursuant to s12 LCA (unsatisfactory conduct) and if so, what was the appropriate penalty; whether AM was entitled to compensation.
Held: ZM's conduct should have been examined in a disciplinary context and independently of any other avenue that had been open to AM to challenge ZM's submissions. It was clear from the evidence that the outgoings on the party's properties had been paid by rental income which was joint property. Therefore ZM's submissions that her client had been solely meeting all outgoings was incorrect.
Rule 13.1 of the Rules of Conduct and Client Care (duty of fidelity to court) imposed an absolute duty of honesty to the court and to not mislead or deceive the court. ZM had intentionally placed submissions before the court that she knew were inaccurate. All of the information concerning relationship debt and outgoings had been in her possession at the time she had prepared her submissions. The fact that it had been open to AM and her counsel to correct any erroneous information did not exonerate ZM's conduct (Kyle v Legal Practitioners' Complaints Committee (1999) 21 WAR 56). ZM's conduct met the definition of unsatisfactory conduct under s12 LCA.
On the basis that the husband's outgoings were not material to the outcome of AM's application, it could not be said that the erroneous information in ZM's submissions had deceived or misled the court if that information was ultimately not relevant to the final decision. AM had not shown she had suffered any financial loss as a result of ZM's acts or omissions. No compensation order could be made.
ZM's conduct had not been inadvertent or an error, but nor had it not been at the highest level of offending. ZM was ordered to pay a fine of $2,500 under s156(1)(i) LCA (Power of Standards Committee to make orders - fines) and costs of $1,200 to the New Zealand Law Society.
Pursuant to s211(1)(a) of the LCA, the Committee's decision was reversed.
The New Zealand Law Society received and investigated a complaint by Mrs AM (the Applicant) against Ms ZM (the Practitioner) and decided that no further action would be taken in respect thereof. This was a decision made pursuant to Section 138(2) of the Lawyers and Conveyancers Act 2006, which confers upon a Standards Committee a discretionary power to take no further action on a complaint if, in the opinion of the Standards Committee, it is unnecessary or inappropriate to do so.
The Practitioner acted for the Applicant?s husband in respect of matrimonial and property relationship matters. When the Applicant applied for interim maintenance, the Practitioner appeared on her client?s behalf to oppose the application. The application was declined by the Court.
The complaint was that the Practitioner had deceived or misled the Court in her submissions of 7 July [200Z], filed in opposition to the Applicant?s application for interim maintenance, in particular that the Practitioner had submitted that her client was meeting all relationship debt. The Applicant said this information was not correct, and that the Practitioner knew it was not correct. The Applicant contends that the Practitioner breached Rule 13.1 of the Lawyers: Conduct and Client Care Rules 2008 which states:
A lawyer has an absolute duty of honesty to the court and must not mislead or deceive the court.
The Standards Committee had summarised the Practitioner?s response to the complaint, noting that the Applicant was represented by her own counsel throughout, and that there had been a right of reply in the Courtroom to the submissions. The Committee recorded that the Practitioner?s response had been forwarded to the Applicant for comment. The Committee had considered the Applicant?s response to the Practitioner?s explanation.
In declining to uphold the complaint, the Committee expressed the view that the Applicant had the right to take legal advice on matters currently before the Court, including the appropriate legal steps available to challenge the information before the Court. In the Committee?s view this did not prevent the Practitioner from acting in the best interests of her client.
The Applicant sought a review of the Committee?s decision because in her view the Committee had failed to examine the Practitioner?s actions and to consider whether the submissions were misleading. She considered the complaint was not answered by reference to actions she or her counsel took or could have taken, but that the Practitioner?s conduct should be assessed independently of such matters and in its own terms. The evidence provided to support the complaint included copies of correspondence exchanged between the Practitioner and the Applicant?s solicitor, and the Practitioner?s submissions and her client?s supporting affidavit.
A review hearing was held on 1 December 2010, attended by both parties. The Practitioner was accompanied by Counsel. The Applicant was accompanied by a support person. The Applicant reiterated the substance of her complaints, and presented a document setting out the basis of her complaints and the compensation that she sought. Submissions were also made by the Practitioner and her Counsel.
The Applicant and her husband separated in [200X]. The relationship assets (not yet divided) include the family home and adjoining land, commercial properties (one is rented by her husband?s business), and a [holiday bach]. Other assets are not material to this complaint and need not be mentioned. The commercial properties collectively have a reasonably small mortgage, but the bach has a large outstanding mortgage of some [$] which is an interest-only loan. The family home is mortgage-free.
During the marriage the debt on the three commercial properties was met by the rental income which was paid into a joint [bank] account from which was paid the mortgage interest, rates, GST, and other outgoings. The other significant debt (for the purposes of the complaint) related to a mortgage on the parties bach, the interest being paid from the husband?s business income directed through the S account, he also meeting outgoings on the family home. This pre-separation arrangement continued for a time after separation during which time the Applicant occupied the family home.
During the latter part of [200Y] (or perhaps even earlier) disagreements between the Applicant and her husband impacted on these financial arrangements. Some of the financial activity is recorded in the correspondence exchanged between the Practitioner and the Applicant?s lawyer. The pivotal letters are dated 26 November [200Y], 18 March [200Z], 9 April [200Z ], and 7 May [200Z] and record the following activity.
The 26 November [200Y] letter sent by the Practitioner to the Applicant?s lawyer enclosed the rates demand (Council and ARC), and called on the Applicant to pay these as she occupied the house. The letter confirmed that the husband would meet the then outstanding rates on the bach.
On 18 March [200Z] a further letter was sent by the Practitioner to the Applicant?s lawyer reiterating the Applicant?s responsibility for paying the rates, and adding to that the responsibility for payment of house and contents insurance. There is no evidence to show that the husband paid rates on the matrimonial home from the second half of [200Y]. A further letter sent by the Practitioner to the Applicant?s lawyer on 27 March enclosed a copy of the rates demand.
The 9 April [200Z] letter sent by the Practitioner to the Applicant?s lawyer concerned rental money that had been transferred (by the husband) from the joint [bank] rent account to the S account to pay the bach mortgage. The Practitioner had written, “My client arranged for a rental payment to be transferred directly into the (bach) account to ensure the status quo until all matters had been dealt with by the Court.” The remainder of the letter noted that the husband had continued to pay other outgoings (rates, power) on the bach notwithstanding that the Applicant also used it.
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