RV v Auckland Standards Committee


[2012] NZLCRO 98

LCRO 299/2011

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


Concerning a determination of Auckland Standards Committee

Auckland Standards Committee

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

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

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.


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.


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

    ) 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 act on their behalf in relation to their proceedings. In addition, they instructed RV to pursue remedies against MBT. 2) The second set of proceedings (known as the “CBH proceedings”) was issued by RX and RY against MBT and HU who was the lawyer who had issued the proceedings. By this stage HU had left the employ of MBT. These proceedings sought to recover wasted expenditure incurred in the faulty CBG proceedings. These proceedings were issued as summary judgment proceedings. 3) The third set of proceedings (known as the “CBI proceedings”) was a claim by the Trust against MBT and HU for the lost opportunity to recover leaky home compensation and associated costs and losses.

A Judicial Settlement Conference was scheduled for the CBG proceedings on 22 November 2005. In the face of opposition from the defendants for any settlement based on the fact that the proceedings had not been brought by the registered proprietor of the property, the settlement conference was abandoned. The focus of those proceedings became how to extricate RX and RY at no cost.


As no response had been received from MBT or HU's insurers to RV's allegations of negligence, an application to amend the statement of claim in the CBG proceedings was prepared alleging a duty of care to RX and RY. The purpose of this was to keep those proceedings extant pending a response. These proceedings were filed on 22 December 2005. In conjunction with that, RV sought an admission of liability from MBT and HU. However, the solicitor for the insurer took the view that an application to amend the plaintiffs in the CBG proceedings would be successful, and declined to acknowledge liability. Thereafter, and until the solicitor acting for the insurers was replaced, the insurer refused to accept liability and negotiate any settlement.


Consequently, RV was obliged to continue with the various sets of proceedings. The application to replace the plaintiffs on the CBG proceedings was unsuccessful but ultimately RV was able to negotiate a discontinuance of these proceedings without costs or expenses being awarded against RX and RY.


The CBH and CBI proceedings were then issued. MBT filed a statement of defence and joined RV's firm as a third party. An application to set aside those third party notices was opposed and the insurers continued to refuse to accept that there had been any negligence on the part of MBT. This position adopted by the insurer added greatly to the costs involved in each set of proceedings.


Ultimately, the CBH and CBI proceedings were settled for $630,000, whilst an additional sum of $25,000 had been recovered from HU.


During the time when he acted for RX and RY and the Trust, RV rendered regular accounts. At the conclusion of the proceedings in November 2008, RV had rendered accounts totalling $1,039,851.71, while the total cost including counsel and mediation fees came to $1,084,333.39. 1


In addition to this cost, RX and RY had also incurred the cost of remediating their leaky home, which had been originally estimated at $250,000 in the CBG proceedings.


RX and RY were dismayed and lodged a complaint with the New Zealand Law Society Complaints Service.

The Complaints

On 23 November 2009 RX and RY wrote to the New Zealand Law Society Complaints Service to complain about RV's costs and related conduct. They did not complain about the quality of RV's work, but about the level of costs, the lack of advice in relation to the costs to which they were exposed, and the cost/benefit of the litigation.


The complaint about fees was straightforward. They had incurred legal costs in excess of $1m to recover $655,000. As noted in their complaint they were “astounded and appalled that [they] could be $400,000 worse off having brought the claims and “won” than if they had not brought the claims at all”.


Their complaints with regard to RV's conduct were summarised in his substantive response to the Complaints Service dated 10 March 2010.

    ) That they were not kept informed of (a) the likely overall level of fees; and (b) what could possibly have been recovered compared to the costs incurred. 2) That they did not receive any written advice as to (a) how costs were calculated; and (b) the cost effectiveness of each stage of the proceedings. 1 The figures referred to by the costs assessors were $1,031,224.90 for RV's fees and disbursements and $1,081,454.70 including counsel and mediation fees. 3) That they had concerns about (a) not being kept informed of the fees; (b) the likely ongoing fees; (c) the cost/benefit comparison of fees compared to likely recovery; (d) the lack of advice to enable them to assess whether to continue with the proceedings.
The costs assessors' report

The Standards Committee appointed costs assessors. Their instructions were to:

    ) Review RV's files and costing records; 2) Request such further information from the complainants or the lawyer as may be necessary for the purpose of their assessment; 3) Contact the complainants and the lawyer to discuss the complaint and the lawyer's response to it; and if they considered it necessary or appropriate to do so, meet with the parties, either jointly or separately; 4) Prepare a report for the Standards Committee which was to include: (a) comments on the fees and whether they considered them to be fair and reasonable for the services provided; (b) if they formed the view that the fee was not fair and reasonable, they were to specify what they considered to be a fair and reasonable fee, or provide a range within which they considered the fees would be fair and reasonable; and (c) to comment about any other matter arising out of their inquiry which might assist the Standards Committee to reach a properly informed decision about the costs complaint.

The assessors reviewed all of the material and met with RX and RY and RV separately. They then held a lengthy informal meeting with both parties present at which statements were provided by each party. Each party was then provided an opportunity to ask and answer questions in the presence of each other. At the conclusion of this hearing RV was asked to provide further information. There were some delays in receiving this information which was described by the assessors as “still being forwarded somewhat on a piecemeal and limited basis down to 29 April 2011 when copies of the Trust account printouts were provided.”


The assessors inspected RV's files and invoices and issued their report.


In considering what a reasonable fee should be, the assessors had regard to judicial comment in Property and Reversionary Investment...

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