The New Zealand Law Society of Wellington v Mr Zj of Auckland

• Jurisdiction: New Zealand
• Judgment Date: 04 April 2011
• Neutral Citation: [2011] NZLCRO 11
• Date: 04 April 2011
• Docket Number: LCRO 200/2010
• 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 the Auckland Standards Committee 2

BETWEEN

The New Zealand Law Society of Wellington

Applicant

and

MR ZJ of Auckland

Respondent

[2011] NZLCRO 11

LCRO 200/2010

Application for review of Auckland Standards Committee decision — shortcomings on the part of the practitioner identified in five areas — omissions had been rectified and practitioner had sought assistance where needed — Committee resolved to take no further action pursuant to s152(2)(c) Lawyers and Conveyancers Act 2006 (power of Standards Committee to determine complaint or matter) — NZLS noted that the practitioner's conduct had involved serious breaches of the professional rules and Committee had made no adverse finding against practitioner — whether remedial action taken by the practitioner negated the need for punitive action.

Counsel

In accordance with s.213 of the Lawyers and Conveyancers Act 2006 copies of this decision are to be provided to:

The New Zealand Law Society as the Applicant

Mr ZJ as the Respondent

The Auckland Standards Committee 2 The New Zealand Law Society

DECISION

1 The Standards Committee issued a decision in August 2010 following an own motion inquiry into the conduct of Mr ZJ (the Practitioner) concerning the operations of his firm's Trust Account. The own motion investigation was the result of a report prepared by the New Zealand Law Society Inspectorate in February 2010, which found “serious failures” on the Practitioner's part to comply with the Trust Accounting requirements of the Lawyers and Conveyancers Act 2006, the Trust Account Regulations and the Rules of Conduct and Client Care.

2 The Standards Committee had identified five areas in which there were shortcomings on the part of the Practitioner. The bulk of its decision sets out the steps taken by the Practitioner to remedy the various matters that had been uncovered.

3 Having noted that the omissions had been rectified and that the Practitioner had sought the assistance of an expert to address past problems, updated and corrected outstanding matters and established procedures for staff training, the Committee was satisfied that the remedies undertaken by the Practitioner were sufficient and that great improvement had been made. On that basis the Committee resolved to take no further action pursuant to Section 152(2)(c) of the Act.

4 The review applicant is the New Zealand Law Society (NZLS). The NZLS noted the Committee's satisfaction with the remedies undertaken by the Practitioner, and it's decision to not to take a punitive approach by making no adverse finding against the Practitioner. The NZLS noted that the Practitioner's conduct had involved serious breaches of the professional rules and that the Committee had made no adverse finding against the Practitioner.

5 The review application was made because the NZLS sought clarification of where such matters sit in the spectrum of unsatisfactory conduct, and in the interests of ensuring both the consistency and quality of the Complaints Service as required by Section 124(e) of the Lawyers and Conveyancers Act 2006. The NZLS referred to the stated purposes of the Act as is set out in Section 3, which is to maintain public confidence in the provision of legal services and to recognise the status of the legal profession. The NZLS questioned whether the remedial action taken by the Practitioner should have been taken into account in mitigation of penalty rather than the substantive decision to take no further action.

6 Responding to the application, the Practitioner basically outlined the background to how the trust account problem had arisen and the steps he had taken to remedy the concerns that had been identified by the Inspectorate. The Practitioner considered that the Standards Committee had in fact recognised that there had been no serious discretions warranting the use of punitive action. He wrote that by acknowledging that at worst the matter calls for a finding of unsatisfactory conduct the NZLS was clearly not suggesting that the Committee made a significant error in judgment.

7 The Practitioner concluded his submissions with, “If the NZLS wishes to review the Committee's decision the NZLS is effectively questioning the soundness of the Committee's decision and we do not believe that the seriousness of this matter warrants the NZLS exercising its discretion in undermining the authority of the Committee in that way.”

8 The Standards Committee advised that it did not wish to comment on the application.

9 Both parties have agreed that the Application may be determined without a formal hearing and therefore in accordance with section 206(2) of the Lawyers and Conveyancers Act 2006 the matter is being determined on the material made available to this office by the parties

Considerations

10 This review application is unusual in that it was made by the NZLS. However, Section 197(1)(a) of the Lawyers and Conveyancers Act 2006 provides for a review application to be made by the NZLS and to do so is entirely appropriate in respect of a Standards Committee decision to take no further action where a lawyer's conduct has, in the NZLS view, involved a serious professional failing. That the NZLS sought clarification of “where such matters sit in the spectrum of unsatisfactory conduct” is consistent with its the functions in relation to the Complaints Service, in particular Section 124(e) which requires the NZLS “to ensure throughout New Zealand both the consistency and quality of the complaints service.”

11 I have reviewed all of the information on the file. The Practitioner's conduct that led to the own motion investigation is outlined in considerable detail in the Report of the New Zealand Law Society Inspectorate following an audit of the Trust Account of the Practitioner's firm in around early 2010.

12 A considerable number of failures were identified at that time by the New Zealand L

• • bank reconciliation

• • trust account records

• • NZLS certificates

• • overdrawn firm's accounts

• • letters of engagement provided not complying with the Conduct and Client Care Rules.

13 The Inspectorate's report included specific details of the various failures, making reference to records not being located at the time of inspection, some still not having been located several months later, errors and failures in trust account records and reconciliations, and failure to provide, or provide on time, NZLS certificates and in some case certifying such certificates as “clean” when there were unresolved issues with those reconciliations. The report informed the Practitioner of his responsibilities for administration of the Trust Account and of his failures to have complied with the regulations which included the failure to have taken appropriate measures to verify the correctness of and sign all...