Redruth v Dereham

 
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[2010] NZLCRO 35

LCRO 154/2010

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

and

Concerning a determination of the Auckland Standards Committee 3

Between
Mr Redruth on behalf of Etl
Applicant
and
Mr Dereham
Respondent

Mr Redruth as the Applicant

Mr S as the Applicant's Counsel

Mr Dereham as the Respondent

The Auckland Standards Committee 3

The New Zealand Law Society

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

Application for review of a decision of the Auckland Standards Committee which declined to uphold a complaint against the respondent — applicant received legal advice as to the possibility of a claim of negligence against other lawyers concerning the preparation of a relationship property agreement — claim raised issue involving a lawyer's duty to a third party and was dismissed in Court — opinion did not include a comment on litigation risk — whether a lawyer could be subject to disciplinary action in providing a legal opinion that turned out to be wrong — whether the Committee erred in taking into account other opinions provided to the applicant.

Held: Previous authorites had held that professional sanctions could be imposed against lawyers for giving incorrect advice. The other two lawyers that R had consulted had estimated the chances of success as 30%, which indicated that D's opinion was not so untenable as to have one which could not have been reasonably entertained by a lawyer. R had previous litigation experience and admitted that lawyers would usually include a comment about litigation risk, which had been absent from D's opinion. R had been represented by counsel throughout and it was unlikely that R would have been advised to proceed on the basis of an opinion which had not included any comment on the litigation risk.

R's complaint had raised the issue of his reliance on D's opinion. The Committee had been obliged to consider that aspect of the complaint and it had been open to the Committee to examine that question with reference to all of the available material.

R had been fully aware of the litigation risk at the time he instructed the lawyers to file the proceeding. It would have been naive and unrealistic to confine R's decision solely on the written advice of D for a decision made by R when he had been fully aware, from a range of legal opinions, of the litigation risks.

Pursuant to s211 Lawyers and Conveyancers Act 2006 LCA (powers exercisable on review) the decision of the Committee was confirmed.

DECISION

1

The New Zealand Law Society received a complaint from Mr Redruth (the Applicant) against Barrister, Mr Dereham, (the Practitioner). The complaint related to an opinion provided by the Practitioner concerning legal liability of three lawyers. The complaint arose in respect of the legal opinion pertaining to only one of those lawyers, Mr F (or rather his Estate), hereafter referred to as “F”. The Practitioner opined that a legal claim lay against the Estate, a proposition that was rejected outright in a Judgment later delivered by Randerson J in May 2009.

Background & Chronology
2

When the Applicant and his former partner separated he discovered that a property agreement that he had believed was valid, was in fact not legally binding for the reason that it had not been certified by either of the lawyers acting for him or his former partner. The Applicant sought legal advice as to its enforceability.

3

In January 2008 an opinion obtained from WH provided an overall scoping of the legal landscape concerning potential claims.

4

In late March 2008 a further opinion was sought from Mr H; he considered potential liability against three lawyers who had been involved with the Agreement. The potential liability of F was discussed only in the context of a contract-based claim, with the conclusion that there was no basis for such a claim..

5

In early April 2008 the Practitioner was asked to provide an opinion. He provided a written opinion that discussed the legal liability against all three lawyers. In respect of a claim against F, the Practitioner opined that a claim lay in tort, having identified relevant principles in the case of Connell v Odlun [1993] 2 NZLR 257, a case where the Court of Appeal had concluded that a lawyer could owe a duty of care to a person not his client.

6

In later April the Applicant sought a further opinion, this time from Mr L of ME. This opinion supported the grounds for a claim against F in tort, which was assessed at about a 30% chance of success.

7

On 5 May 2008 Mr S (the Applicants counsel) sent the L opinion to the Practitioner and instructed him with regard to the matter, beginning with sending letters to prospective defendants.

8

On 14 May 2008 there was a meeting at Mr S's office, attended by him and the Applicant, and also the Practitioner and Mr L. The purpose of the meeting was to discuss litigation; at that point in time no proceedings had yet issued.

9

In August 2008 a Statement of Claim was prepared by the Practitioner and Mr L and filed.

10

In September a strike-out application was filed in respect of the claim against F.

11

On 10 October 2008 a meeting took place between the Practitioner and Mr L, who met later that same day with the Applicant to discuss the strike-out application.

12

In November 2008 submissions on the strike out application were received from the defendants.

13

In January 2009 an opinion was sought from RF, which was available on 30 January 2009. The RF opinion referred to materials that had been considered, which I have understood to include the various (prior) opinions, the proceedings and the synopsis of submissions of counsel for the plaintiff opposing the strike-out application. Against this background Mr RF opined that all professional negligence claims against all three lawyers should be discontinued on such terms as could be negotiated. In relation to the proceeding against F, Mr RF considered there would be difficulties in establishing breach of any relevant duty owed to the Applicant, and he further expressed the view that the Applicant's reliance on Connell v Odlun was unlikely to be successful.

14

In February 2009 Mr S forwarded the RF opinion to another lawyer, S, and sought his response to it. In his letter, Mr S referred to various aspects of the RF opinion, a letter that was cc'd to the Applicant, and also copied to the Practitioner.

15

On 25 February a further meeting was held to further discuss the strike-out application. A decision was made to nevertheless continue with the claim.

16

In May 2009 the matter was heard before Randerson J, who, grating the strike out application in relation to F, concluded that there was no basis for such a claim.

17

The Practitioner had rendered fees to the Applicant which, at the date of the complaint, remained unpaid. It was apparent from the evidence that the Practitioner had attempted to recover his fees through the District Court and had obtained a default judgment that was later set aside for the reason that the Applicant had meanwhile lodged this complaint against the Practitioner. In its decision the Standards Committee included a reference to comments that had been made by the District Court Judge.

The complaint
18

The essence of the Applicant's complaint was that the Practitioner had given erroneous advice to him, advice that he had relied on, which turned out to be incorrect. He could see no basis for paying the Practitioner the remainder of his fees for that reason.

The Standards Committee decision
19

The Standards Committee investigated the complaint pursuant to s.152 (2)(c) and determined to take no further action against the Applicant.

20

In setting out its reasons the Standards Committee referred briefly to the background of the matter and the evidence. The Committee noted that the conduct complained of had occurred prior to 1 August 2008, that the complaints were essentially allegations of negligence and/or incompetence, and considered whether, in the light of the threshold set by s.351 of the Lawyers and Conveyancers Act 2006, (which precludes complaints against lawyers in respect of conduct occurring to 1 August 2008 unless the alleged conduct was such that proceedings of a disciplinary nature could have been commenced under the Law Practitioners Act 1982), concluded that the conduct complained of did not reach the required threshold. The Committee noted that in relation to such allegations, the negligence or incompetence would have had to be of such degree or frequency as to impact on the Practitioner's fitness to practice, or would otherwise tend to bring the profession into disrepute. On these considerations, the Committee decided to take no further action.

Reasons for review
21

The Applicant sought a review of the Standards Committee decision essentially because he considered that the Standards Committee had taken into account and been persuaded by irrelevant considerations, and had failed to consider relevant matters. Written submissions presented by Mr S (for the Applicant) summarised the “irrelevant considerations” as:

  • (a) Comments by a District Court Judge

  • (b) The time between the conduct occurring and the complaint being made

  • ...

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