W v Auckland Standards Committee 3 of The New Zealand Law Society Coa

• Jurisdiction: New Zealand
• Judge: Randerson J
• Judgment Date: 30 August 2012
• Neutral Citation: [2012] NZCA 401
• Docket Number: CA646/2011
• Court: Court of Appeal
• Date: 30 August 2012

BETWEEN

W

Appellant

and

Auckland Standards Committee 3 of the New Zealand Law Society

Respondent

[2012] NZCA 401

Court:

Ellen France, Randerson and Wild JJ

CA646/2011

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal from High Court on questions of law — W was a law practitioner, charged under s112(1)(a) and (c) Law Practitioners Act 1982 (powers of New Zealand Disciplinary Tribunal in respect of charge against practitioner) in relation to an undertaking he had given — before the New Zealand Lawyers and Conveyancers Disciplinary Tribunal. W had conceded (on the basis of an expert opinion) that undertaking had been breached by failing to hold the funds until a “satisfactory resolution” of the matter had been reached — accepted W had been negligent — whether W was guilty of negligence, in his professional capacity, of such a degree as to tend to bring the profession into disrepute.

Counsel:

K A Muir and C M Moody for Appellant

G M Illingworth QC and M A Treleaven for Respondent

• A The appeal is dismissed.

• B The questions of law as modified in [38] are answered in [41]–[52] of this judgment.

• C This matter is now referred back to the New Zealand Lawyers and Conveyancers Disciplinary Tribunal for consideration of the appropriate penalty.

• D Publication of the name or identifying particulars of the appellant is prohibited until final disposition of this matter by the New Zealand Lawyers and Conveyancers Disciplinary Tribunal.

• E The appellant must pay costs to the respondent as for a standard appeal on a band A basis with usual disbursements.

JUDGMENT OF THE COURT

REASONS OF THE COURT

(Given by Randerson J)

Introduction

1 The appellant W is a law practitioner who has been found guilty of a disciplinary offence relating to an undertaking he gave to another practitioner in 2006 in the context of a contractual dispute. 1

2 He was charged by the respondent (the Standards Committee) under s 112(1)(a) and (c) of the Law Practitioners Act 1982 (the 1982 Act) which provides:

112 Powers of New Zealand Disciplinary Tribunal in respect of charge against practitioner

• (1) Subject to this Part of this Act, if after inquiring into any charge against a practitioner the New Zealand Disciplinary Tribunal –

  • (a) Is of the opinion that the practitioner has been guilty of misconduct in his professional capacity; or

  • …

  • (c) Is of the opinion that the practitioner has been guilty of negligence or incompetence in his professional capacity, and that the negligence or incompetence has been of such a degree or so frequent as to reflect on his fitness to practise as a barrister or solicitor or as to tend to bring the profession into disrepute;

  • …

  • it may if it thinks fit make an order under this section.

3 Although the charges were laid under the 1982 Act, they were dealt with by the disciplinary bodies established by the Lawyers and Conveyancers Act 2006 (the 2006 Act) in accordance with the procedures established by that Act. 2

4 The New Zealand Lawyers and Conveyancers Disciplinary Tribunal (the Disciplinary Tribunal) found W not guilty of either of the offences charged 3 but the Standards Committee appealed to the High Court under s 253 of the 2006 Act. Duffy J agreed that the professional misconduct charge under s 112(1)(a) was not established but found W guilty of the negligence charge under s 112(1)(c). 4

5 Under the 1982 Act, appeals to the High Court had to be heard by not less than three Judges, but there was no right of appeal to this Court. 5 Under the 2006 Act, a single Judge of the High Court may hear appeals from orders or decisions of the Disciplinary Tribunal and there is a right of appeal on questions of law if leave is granted. 6 Duffy J subsequently granted leave to appeal to this Court on the following questions: 7

• 1. (a) What is the degree of negligence or incompetence that is required before conduct is deemed to be of such a degree as to tend to bring the profession into disrepute (“the threshold”)?

  • (b) Did W's negligence on this occasion cross that threshold?

• 2. (a) In what circumstances does an honest error not arising from indifference or a casual approach call for punishment under s 112(l)(c)?

  • (b) Do these circumstances apply in this case?

• 3. (a) In considering the issue of whether or not the negligence or incompetence is of such a degree as to bring the profession into disrepute, is the appropriate test the reaction of the reasonable public informed of all the relevant circumstances?

  • (b) Would the standing of the profession necessarily diminish in the eyes of the public in these circumstances?

• 4. (a) Should the circumstances leading to the appellant's error and the surrounding circumstances and consequences be excluded when

  considering whether or not the negligence or incompetence was of such a degree as to bring the profession into disrepute?

  • (b) Which of the preceding and surrounding circumstances and consequences are relevant in this assessment?

• 5. (a) Is the issue of whether or not the undertaking in question should be honoured or enforced a discrete issue, which should not be conflated with the issue of whether or not a disciplinary consequence should follow?

  • (b) Have the issues been conflated in this case?

• 6. Does the law relating to the interpretation of undertakings still require an ambiguous undertaking to be construed against the interests of the solicitor who drafted or gave it, or does the law now require the intention of the undertaking to be ascertained in light of all the relevant circumstances in line with the decision in Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5; [2010] 2 NZLR 444

6 For reasons we later discuss, these questions can be significantly reduced in scope.

The facts

7 There is no real dispute about the factual background. We largely adopt the summary of facts in the judgment of Duffy J. 8

8 In early 2006 there was a contractual dispute over payment for building work between a developer, D Ltd, and its head contractor, C Ltd. W acted for D Ltd. Another lawyer, Mr R, acted for C Ltd. C Ltd said it was entitled to payment of $91,003.64 for works it had undertaken and which had been certified for payment by the project engineer. D Ltd disagreed. D Ltd argued that its advance payment of $100,000 to C Ltd was sufficient to cover this payment. In early January 2006, work halted on the project. The parties' respective solicitors tried to see if the matter could be resolved. D Ltd threatened to end the contract and engage another contractor.

9 On 10 January 2006, Mr R emailed W stating that C Ltd was willing to meet with D Ltd to discuss a resolution but insisted that the disputed payment ($91,003.64) had to be paid to C Ltd before any meeting took place to discuss the

issue. This proposal was not acceptable to D Ltd and W responded by email setting out the undertaking that became the subject of the disciplinary proceedings

10 W's email response needs to be set out in full:

Thanks for your email. I have advised my client to make all future communications through our firm. However, I am instructed that Mr Sellick of your client continues to phone mine, the most recent being this morning. Please accordingly advise him to cease such communications as well.

My client is not prepared to pay the $91,003.64 as a condition of meeting, and treats such condition as further evidence of your clients continued efforts to frustrate the contract and delay resolution of issues.

In the meantime I advise and undertake that my client has paid the

$91,003.64 into my trust account which I hold pending satisfactory resolution of this matter. My clients position is that your payment claim and consequently your notice, are defective. My client will accordingly defend any legal proceedings issued for its recovery. It will also treat the suspension of works, following on as it does from your clients repeated failures to perform the contract, as unlawful and as a repudiation of the contract, for which my client will be entitled to cancel and appoint a new contractor.

I note my client has already issued a default notice under clause 14.2.l (a) of the contract which expires Friday 13/1/06.

My client accordingly puts yours on notice that it will cancel the contract and appoint a new contractor at 5pm on Friday 13/1/06 unless your client meets with mine beforehand and a resolution is reached to my clients satisfaction at that meeting.

I look forward to hearing from you.

(Emphasis added)

11 Representatives of D Ltd and C Ltd met very briefly on 13 January 2006 but without resolution of the dispute.

12 Soon after, C Ltd commenced summary judgment proceedings in the District Court for recovery of the $91,003.64 it alleged was owing. Judge Joyce refused to grant summary judgment. 9

13 After Judge Joyce delivered judgment, Mr R wrote to W. This communication is not available but on 22 May 2006, an associate of W's firm responded to Mr R in these terms:

…

You have misinterpreted [W's] email of 10 January 2006 and have not put it in context of correspondence between our respective firms.

This firm did not give an open undertaking. The undertaking was given in the context of my client proposing a meeting between our respective clients before 13 January 2006 to resolve the matter. Your client refused to meet before that time and as indicated in [W's] email, a new contractor has now been appointed to complete the works. Accordingly, the matter has now been resolved to our client's satisfaction.

My client has been informed by the new contractor appointed that your client had contacted it and advised it that if it took on the work it would be breaking the law. If your client continues to interfere with the completion of the works and my client's contractual relationships with third parties in relation to the works any additional costs or losses resulting will be included in...