RV v Auckland Standards Committee

 
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[2012] NZLCRO 98

LCRO 299/2011

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

and

Concerning a determination of Auckland Standards Committee

Between
RV
Applicant
and
Auckland Standards Committee
Respondent

RV as the Applicant

SA as Representative of the Applicant

Auckland Standards Committee as the Respondent

MV as Representative of the Respondent

The New Zealand Law Society

Application for review under s193 Lawyers and Conveyancers Act 2006 of an Auckland Standards Committee determination to lay charges against the applicant with the Lawyers and Conveyancers Disciplinary Tribunal — applicant had acted for clients in a leaky building dispute — proceedings were settled — clients were charged in excess of $1m for three litigations aiming to recover $655,000 — assessors found applicant had charged clients more than double an appropriate fee — whether the Legal Complaints Review Office had jurisdiction to conduct a review of a determination by the respondent to lay charges — whether the respondent had jurisdiction to consider the complaints — whether the costs assessors' reports had contained flaws so that the respondent's reliance on them was unreasonable — whether respondent had exceeded its jurisdiction in determining to lay charges because there was not a real risk that applicant could be suspended or struck off — whether the respondent had erred by not providing adequate reasons for its determination.

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

Held: The complainants conceded that for the purposes of this review (but not by way of conceding any precedent) the LCRO did have jurisdiction to review the determination by the Committee to lay charges. There was consequently no need to consider the underlying issue as to the reviewability of a decision to lay charges although the decision in Orlov v New Zealand Law Society would seem to put that beyond doubt.

However, the approach to be taken when undertaking a review of a decision to prosecute required consideration, particularly in view of Orlov which determined that Standards Committee acted judicially and not as prosecutors when considering whether to lay charges or not. Orlov had appeared to remove any constraints that the LCRO had imposed on itself when considering an application for review of a determination to lay charges. However Deliu v Hong noted that it was appropriate for the LCRO to exercise particular caution before substituting their judgment without good reason, when reviewing the exercise of a discretion. Deliu appeared to be an endorsement of the more restricted approach followed by the LCRO to date.

Section 351(1) LCA (complaints about conduct before commencement of section) provided that if a lawyer was alleged to have been guilty, before the commencement of the section, of conduct in respect of which proceedings of a disciplinary nature could have been commenced under the Law Practitioners' Act 1982 (“LPA”), a complaint about that conduct could be made. In determining the question as to whether or not proceedings could have been commenced, it was not necessary to finally determine that proceedings would have been commenced under the LPA.

The complaints were inextricably linked to the complaint about costs. They alleged a lack of information and/or advice relating to the costs being incurred. It could be considered to indicate indifference and an abuse by RV of his position as a lawyer. It could also be considered to be a departure from acceptable professional standards. That was all that was necessary to require that the complaints be accepted by the Complaints Service. The fact that the fees rendered were 2 1/2 times what the costs assessors considered represented a fair and reasonable fee should not be discounted. If that view was accepted, that constituted significant overcharging. Taking all those factors into account, the complaint concerning fees was such that proceedings of a disciplinary nature could have been commenced under the LPA, and consequently the requirements of s351(1) LCA had been fulfilled.

Regulation 29 Lawyers and Conveyancers Act (Lawyers: Complaints Service and Standards Committees) Regulations 2008 provided that if the Committee must not deal with a complaint if the bill of costs was rendered more than two years prior to the date of the complaint unless special circumstances existed. RV had rendered bills between November 2005 and November 2008. No specific reasons had been provided for the delay in lodging the complaint.

RX and RY had had to fund the repairs on their house and then sell both it and their business. RX's health ahd been exacerbated by the events. It would not be fulfilling the objectives of the LCA to deny RX and RY the opportunity to have the bills of costs considered by the Committee. They were an integral part of the general conduct complaints against RV.

It was not until the proceedings were settled and the final bill rendered that the end result was known to RX and RY. It would be illogical to exclude the earlier bills from consideration. The complaints had arisen out of dissatisfaction with the total costs incurred when compared to the amount recovered. In these circumstances all bills of costs should have been aggregated when they all related to the same matter. This in itself constituted a “special circumstance” such as to justify a consideration of all the bills of costs.

The costs assessors had completed their task in accordance with their instructions. The assessors were lawyers experienced in the type of work undertaken by RV. They had formed a view as to what a fair and reasonable fee would have been and that was what they had been required to do. The evidence in their report would be better able to be properly tested before the Tribunal and RV would have the opportunity of presenting his own evidence for detailed consideration.

A conclusion had been reached that RV's bills of costs were grossly excessive. It followed that there could be a finding of misconduct against RV, which could result in suspension or strike off. In respect of the bills of costs therefore the requirements of the threshold test were met. It was possible that the charges would reflect a view that the RV's strategies had been designed to increase costs, or if not intentionally designed to do so, unnecessarily did so and that RV should have been aware of this.

Because of the inextricable link with the costs themselves, it was a matter which should be put before the Tribunal. There were circumstances where, although strike off or suspension might not be a real risk in respect of an aspect of a complaint, a matter was still best put before the Tribunal for consideration. This could be one of those matters.

The issue of inadequately liaising with the client may not of itself be a charge which placed RV at risk of strike off or suspension. However, the consequences of the alleged shortcomings were evident, and RX and RY would not have consciously pursued the path that had led them to their present circumstances. That lead to the conclusion that the reporting and information provided to RX and RY had been inadequate.

Again this was a matter linked to the level of costs, and to separate this aspect of the conduct out would result in this aspect of the complaint being considered out of context and without reference to the issue with regard to costs.

While s158 LCA (notice of determination) provided that reasons for a determination pursuant to s152 LCA (power of Standards Committee to determine complaint or matter) must be provided, there was no specific requirement to provide reasons if the Committee determined pursuant to lay charges s152(2)(a) LCA (determination that the complaint be considered by the Tribunal). In general terms, while reasons were required to be given by judicial and quasi-judicial bodies, in the case of determination by a Standards Committee to lay charges, it was sufficient if those reasons were brief, and expressed the Committee's views as to the gravity of the complaints.

RV submitted that RX and RY were estopped from denying the reasonableness of the fees rendered. No evidence as to approval and acceptance had been provided, other than the fact that the bills had been paid. Payment of a bill was no bar under the LCA to lodging a complaint about those fees. Acceptance, or even payment, of a bill of costs did not automatically render the fees fair and reasonable. That was something to be determined by objective assessment, and in this case the costs assessors had formed the view that they were not fair and reasonable.

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

Introduction
1

In a determination dated 10 November 2011 Auckland Standards Committee determined to lay charges against RV with the Lawyers and Conveyancers Disciplinary Tribunal. RV has applied for a review of that determination.

Background
2

RV acted for RX and RY and the CBF Trust (“the Trust”) in three separate sets of proceedings.

1
    ) The first set of proceedings (known as the “CBG proceedings”) were issued by MBT and named RX and RY as plaintiffs. In the proceedings, they sought remedies against various parties in respect of their leaky home. After the ten year limitation period had expired, one of the defendants raised the defence that the wrong party had issued proceedings as the home was owned by the Trust. Following identification of this issue MBT were unable to continue acting for RX and RY due to the potential for a claim in negligence against them and on 16 November 2005 RX and RY instructed RV to continue to...

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