Te v Wellington Standards Committee 2 v Nt
 NZLCRO 4
Concerning an application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006
Concerning a determination of the Wellington Standards Committee 2
TE as the Applicant
TF as the Applicant's Representative
NT as the Respondent
NS as the Respondent's Representative
The Wellington Standards Committee 2
The New Zealand Law Society
Secretary for Justice
The names and indentifying details of the parties in this decision have been changed.
TE is the executor/trustee of the late NR's Will. NT is NR's daughter and is a beneficiary of his Estate. Her complaints relate to TE's conduct in administering the Estate, and in particular the action taken by TE in attempting to sell the business previously owned and operated by the late NR. NT has also complained about the fees charged by TE.
The Standards Committee has issued three determinations in respect of NT's complaints.
On 20 October 2009, NS lodged a complaint with the New Zealand Law Society Complaints Service on behalf of NT about TE's conduct in administering the Estate of the late NR and about TE's bill of costs dated 25 September 2009.
At the commencement of its determination, the Standards Committee recorded six aspects of the complaint by NT, one of which related to the fees charged by TE. The Committee recorded its determination in the following manner:
The Standards Committee considered this complaint at its meeting on 17 December 2009, held a hearing on 22 April 2010, and formally determined on 6 May 2010 to accept the Costs Assessor's report and, pursuant to section 152(2) of the Lawyers and Conveyancers Act 2006 that the complaint be considered by the Disciplinary Tribunal.
TE applied for a review of this determination on 16 June 2010.
On 18 June 2010, the Standards Committee issued a certificate pursuant to section 161(2) of the Lawyers and Conveyancers Act in which it certified that the amount due by the Estate to TE on account of the bill, was $10,844.11, being the amount assessed by the Costs Assessor as being a fair and reasonable fee (including GST and disbursements).
Upon receipt of the application for review of that determination, this Office sought clarification from the Standards Committee as to whether the determination to refer the complaint to the Tribunal included the complaint about conduct as well as the complaints about TE's costs.
The Standards Committee replied by advising that the determination to refer TE to the Tribunal related only to the complaint about costs and further advised that the complaints about conduct would be considered at the Committee’;s next meeting.
Accordingly, this Office deferred progress of this review application until the Committee had issued its determination with regard to the conduct issues complained of by NT.
The Standards Committee issued its determination concerning TE’;s conduct on 22 March 2011. That determination addressed the matters raised by NT in her submissions dated 23 August 2010 which she had provided in response to the Notice of Hearing issued on 12 August 2010. These submissions were received by the Complaints Service on 27 August 2010 (although the determination refers to the letter as being dated 27 August 2010).
The Committee recorded its determination in the following way:
Having decided to inquire into this complaint and considered it at hearing dates on 28 October 2010 and 17 February 2011, the Standards Committee formally determined on 22 March 2011 to lay charges against [TE] pursuant to section 152(2)(a) of the Lawyers and Conveyancers Act 2006.
The Committee was of the view that [TE's] alleged conduct in relation to the administration of the estate of the late [NR] was of sufficient gravity, if proven, to meet the threshold test for misconduct in s7 of the Lawyers and Conveyancers Act 2006.
TE lodged an application for review of this determination on 2 May 2011.
At the same time as providing submissions for the hearing as to conduct, NT lodged a further complaint about two bills of costs rendered by TE on 25 February 2010. Following consideration of the report from a Costs Assessor (who was different from the assessor appointed in respect of the first bill of costs) the Committee determined that TE's conduct amounted to unsatisfactory conduct and made the following orders:
- Refund to the estate the amount of the bill of costs dated 25 February 2010 for the sale of the late [NR's] business for $5,547.36 – s156(1)(g); 2. Reduce the bill of costs dated 25 February 2010 for estate administration to $1,800.00 plus GST and disbursements – s156(1)(e); 3. Be censured – s156(1)(b); 4. Pay to the New Zealand Law Society a fine of $1,500.00 – s156(1)(i); 5. Pay the Standards Committee's costs of $500 – s156(1)(n).”
TE lodged an application for review of this determination on 5 July 2012.
In 2004 NR signed a will prepared for him by a solicitor employed by TE in which he appointed TE as sole executor and trustee. TE advises that he had acted for NR for some 30 years, but this is disputed by NT, who nevertheless concedes that TE had acted for her father for as long as 15 years.
NR was the sole shareholder and director of a company known as “CCA” which had been established in Wellington in the mid-90s. In 1998, NR relocated the company to Auckland and continued to operate there until his death in May 2009.
The company developed and manufactured shelving systems as well as marketing a range of utility furniture.
In his will, NR left all of his shares in “CCB” to his trustee to hold on trust for his two children, NT and her brother, NQ. The residue of his Estate was to be held by his trustee to pay all debts and the remainder was then to be held for his two children in equal shares.
At the time of his death, NR's assets comprised a life insurance policy for approximately $31,000.00 and his interest in the business. There were also shareholder advances to the company in the sum of $71,897.00 as at 31 March 2009. In the same year, NR had drawn a total gross salary of $8,005.00. The company had no borrowings or creditors and operated out of premises in South Auckland on a monthly tenancy.
TE states that NR had advised him not long before his death that he had modularised the shelving concepts and developed a new website allowing for online sales. He states that NR expressed the view that the business was worth between $400,000 and $500,000.
In his response to the complaint, TE advised the Standards Committee that NR had expressed a desire that in the event of his death, TE was to sell the business and to continue to operate it for as long as was required to obtain the best possible price.
Following NR's death, TE arranged in conjunction with NT, for the company to engage a manager to continue to operate the business until it could be sold, although NS states that the function of the manager was only to enable orders existing at the date of NR's death to be fulfilled.
Notwithstanding the direction in the Will that the shares in the company (referred to in error as “CCB”) were to be transferred to NT and her brother, TE declined to do so. In his reporting letter to the beneficiaries dated 22 September 2009 he advised that the company continued to trade to enable the best possible price to be achieved which he stated was in accordance with the verbal instructions given to him by NR prior to his death.
In a letter dated 9 October 2009 to the beneficiaries, and in response to a direct request from NT to have the shares transferred to her and her brother as provided in the Will, TE advised that in his view the gift of the shares as recorded in the Will failed as there was no company with the name of “CCB” (the company's name was “CCA”).
TE advised that in his view therefore, the shares in the company fell into the residue of the Estate which effectively would be what was realised from the sale of the business. In his letter of 9 October TE acknowledged that it was possible for the beneficiaries to have the shares transferred to them as part of the distribution, of the residue, but noted that NT had instructed him when she was in New Zealand that she did not want to have anything to do with her brother in terms of running the business. He therefore took the view that it was best for him to press forward to arrange the sale of the business as soon as possible.
TE instructed the company accountants to prepare accounts for the period ending at 30 September 2009 and advised that he was arranging for a valuation of the business based on the accounts available at the time. He expressed the view...
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