EL v SV
| Jurisdiction | New Zealand |
| Judgment Date | 31 March 2021 |
| Neutral Citation | [2021] NZLCRO 43 |
| Date | 31 March 2021 |
| Docket Number | Ref: LCRO 98/2019 |
| 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 [Area] Standards Committee [X]
[2021] NZLCRO 43
Ref: LCRO 98/2019
LEGAL COMPLAINTS REVIEW OFFICER
ĀPIHA AROTAKE AMUAMU Ā-TURE
Law Practitioners — application for review a determination by an Area Standards Committee which made a finding of unsatisfactory conduct against the applicant and directed him to reduce fees charged to an estate-the applicant was the trustee and executor of the estate — duty to co-operate with a Standards Committee's inquiry processes — whether he was providing regulated services — whether poor management of client files amounted to incompetence or unsatisfactory conduct — Lawyers and Conveyancers Act 2006 — Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008
In accordance with s 213 of the Lawyers and Conveyancers Act 2006 copies of this decision are to be provided to:
Mr EL as the Applicant
Mr SV as a Respondent
Ms DV as a Respondent
Mr JV as a Respondent
[Area] Standards Committee [X]
New Zealand Law Society
The names and identifying details of the parties in this decision have been changed.
Mr EL has applied to review a determination by the [Area] Standards Committee [X] dated 6 June 2019, in which the Committee made a finding of unsatisfactory conduct against him, fined and ordered him to pay costs and directed him to reduce fees charged to an estate. 1
Mr OM died on 14 March 2013. Probate of his will was granted on 19 July 2013.
The sole surviving executor and trustee of Mr OM's will was Mr EL.
At his death, Mr OM had been living in a de facto relationship with Mrs PE. The two had been partners for almost 40 years, and at the time of Mr OM's death they lived in a home owned by him (the family home/[ABC]). Mrs PE also owned her own home.
The family home was situated on a lifestyle block of about five acres.
Mr OM's will left a life interest in the family home to Mrs PE. He also made specific bequests to two beneficiaries, and divided his residue amongst other beneficiaries.
Mr OM's estate included cash, the family home and one other lifestyle property, also about five acres, and situated close to the family home (DEF). The overall value of the estate was approximately $1.2 million.
D, S and J V (the Vs) were amongst the residual beneficiaries of Mr OM's will. D was Mr OM's daughter, and S and J were two of his grandchildren.
Litigation over Mr OM's estate ensued. This included claims under the Family Protection Act 1955 (FPA), and a claim by Mrs PE under the Property (Relationships) Act 1976 (PRA).
As executor and trustee, Mr EL was the defendant in all of the proceedings.
Mr EL instructed counsel to act in the PRA proceedings, and separate counsel to act in the FPA proceedings.
Matters were finally resolved by 2018.
Over the course of administering Mr OM's estate, Mr EL issued invoices totalling $105,318.75 (GST inclusive).
The Vs lodged their complaint against Mr EL in an email to the New Zealand Law Society Complaints Service (Complaints Service) dated 3 November 2015. 2 They said:
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(a) The cost of administering Mr OM's estate appeared exorbitant given the work done by Mr EL.
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(b) Invoice narration was “woefully lacking” given the fees charged and the frequency of invoicing.
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(c) The administration of Mr OM's properties had not been separately itemised, causing confusion. It made settling a relationship property claim difficult. Furthermore, there was no evidence as to what has been spent in respect of each property, or why.
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(d) Copies of third-party invoices had not been provided, nor any explanation as to work carried out on Mr OM's properties.
The Vs also asked for the following:
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(a) A detailed explanation of the cost of administering Mr OM's estate including Mr EL's timesheets, and a thorough narration of work carried out in relation to each of the invoices. Upon receipt of that information, a formal costs assessment may be required.
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(b) Itemisation of costs incurred in relation to each of Mr OM's properties, including supporting third-party invoices.
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(c) Annual trust account statements.
The Vs subsequently added to the complaint, by raising concern that as well as acting in the administration of Mr OM's estate, Mr EL was also acting for Mrs PE. They suggested that this was a conflict of interests, because Mrs PE had issued PRA proceedings against the estate in respect of the family home.
In submissions to the Complaints Service dated 22 January 2016, Mr EL said:
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(a) He was the sole executor in the administration of Mr OM's estate.
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(b) The administration of Mr OM's estate was complex and involved four different sets of proceedings. Three were under the FPA and one under the PRA.
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(c) As a result, 21 separate files have been generated. They cover a period of nearly 3 years.
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(d) He was the sole defendant in the various actions. Separate counsel were instructed, and Mr EL acted on their advice.
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(e) Invoices were issued approximately monthly. These were invariably accompanied by either a reporting letter or memorandum “setting out the activity for the period in question”. All residuary beneficiaries were kept fully informed.
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(f) Fees were based on recorded time, which has included “routine day-to-day administration”, proceedings to gain possession of a property, attendances at a property to deal with maintenance issues, several attendances at another property in preparation for its sale (as well as the sale itself) and extensive attendances in connection with the litigation.
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(g) None of the claims had (at that stage) been resolved, and Mr EL was reliant upon counsel to deal with litigation.
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(h) Mr EL has not represented Mrs PE in proceedings in which she is a plaintiff. She was independently represented. Mr EL has not discussed that matter with her. Mr EL spoke to her only about maintenance issues in relation to the property she occupied.
Commenting on Mr EL's response, in a letter to the Complaints Service dated 3 March 2016 the Vs said:
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(a) The beneficiaries seemed “to receive bill after bill each month without any explanation as to what services [have been] actually provided”. They said that they were “at a loss as to why the administration of the estate [was] costing so much.”
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(b) Mr EL should not be charging fees for property maintenance as that was “an expensive and unnecessary way to deal with such matters.” His attendances on those matters are “poorly described [and] excessive and unjustified.”
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(c) It was “excessive and unnecessary” to instruct two counsel to deal with the estate litigation. One barrister could effectively have dealt with all of the litigation.
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(d) Apart from the litigation, the estate only required “general and minimal administration”. The monthly invoices were excessive and unreasonable.
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(e) It appears that Mr EL acted for Mrs PE on the sale of her home. That home was included in the estate litigation, and the estate had an interest in it.
The Vs said that it was important that “the costs of administration and maintenance are explained … in plain English with third-party invoices that match the costs incurred for each property.”
The Committee resolved to appoint a costs assessor to examine Mr EL's fees, and provide a report to assist it to determine whether those fees were fair and reasonable.
The costs assessor (the assessor) prepared a report dated 14 June 2018, in which he recommended “a 40% discount on [Mr EL's] overall fees.”
The assessor described this as “a somewhat unscientific approach” but said that he was driven to that recommendation because of Mr EL's “lack of engagement [in the assessment process] and [the lack of] corroborative evidence from which to draw on for the fees.”
In the course of his report, the assessor made the following comments:
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(a) There were 10 separate client-matter files.
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(b) Mr EL's time records were handwritten. Not all timesheets were on files.
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(c) Mr EL's lack of engagement in the assessment process left the assessor “in a difficult position in working through … information.” Several requests were made for a conference with Mr EL, but no responses were received.
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(d) In relation to each of the client-matter files:
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(i) Probate and administration: the review revealed “relatively poor file management” and “the lack of clear time recording to go with the bills” and “the failure to clearly identify … the steps that have been taken and were taken.” Fees between July 2013 and June 2014 “are high”. Fees between June 2014 and July 2015 “do not seem to be adequately represented by the work on the file” and “the timesheets … do not appear to relate to the work billed.” Some later invoices “appeared reasonable”.
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(ii) Sale of [123] property: the overall fee appeared to be fair, but was not backed up by time records.
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(iii) Deed of Family Arrangement: the fee was reasonable, but there were no time records.
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(iv) Sale of [ABC] Road: time records were scant and of no assistance. There were “several visits to the property to assist in work being done but one would question the point of Mr EL doing that at his hourly rate unless it was absolutely necessary”. The fee charged of $6,415 did not appear to be warranted for a “relatively straightforward sale and purchase.”
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(v) Summary judgment (for possession of estate property): Counsel had been briefed, and was successful. As instructing solicitor Mr EL rendered fees of $3,000, but there was no time recording or a copy of an invoice on the file.
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(vi) Mrs PE's PRA claim: the invoice was consistent with the time records.
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(vii) Estate litigation: the invoices were...
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