Woods v Legal Complaints Review Officer

• Jurisdiction: New Zealand
• Judge: Kos J
• Judgment Date: 08 April 2013
• Neutral Citation: [2013] NZHC 674
• Docket Number: CIV 2011-454-257
• Court: High Court
• Date: 08 April 2013

Under the Judicature Amendment Act 1972

In The Matter Of an application for a review of a decision of the Legal Complaints Review Officer

BETWEEN

Dallas Woods

Plaintiff

and

Legal Complaints Review Officer

First Respondent

and

James Pearce

Second Respondent

[2013] NZHC 674

Judges:

Kos J

CIV 2011-454-257

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

Application for judicial review of a decision of the Legal Complaints Review Officer (“LCRO”) which found the plaintiff practitioner guilty of unsatisfactory conduct under s12 Lawyers and Conveyancers Act 2006 (unsatisfactory conduct defined) in the preparation of a will — client stated house was owned jointly or was in her husband's name — title not checked — house actually owned as tenants in common — deceased's share fell into the residue of her estate and passed to her child from a previous marriage — whether the decision was manifestly wrong in fact and law — whether the LCRO had erred in law as to the extent of jurisdiction by conducting a hearing de novo rather than a review.

Counsel:

G A Paine for Plaintiff

G Mason as Amicus

1 A terminally ill woman attends a solicitor to make a will. The major asset owned by the woman is her interest in a house she owns together with her husband. The woman believes they own the house “jointly”, or else that it is registered in the husband's name. If, as expected, she predeceases her husband, he will receive her share. She does not want the title checked. So no one checks it. The will simply provides for disposition of the house in the unlikely event her husband predeceases her. All the rest of her estate is to go to her son from an earlier relationship.

2 After she dies it is discovered the house was owned by the couple as tenants in common. Her half share in the house therefore falls into residue and goes to the son. The husband now has to make arrangements to buy out the son's entitlement.

3 The husband complains that the solicitor had failed to check the ownership position before the will was executed, or to counsel his wife on the consequences of the assumed ownership position being incorrect. He does not believe that what ended up happening is what his wife intended.

4 A Law Society Standards Committee dismisses the complaint. It is however upheld by the Legal Complaints Review Officer (LCRO). The solicitor applies for judicial review of the LCRO decision. After hearing the application I dismissed it, upholding the LCRO decision, with reasons to follow. These are the reasons.

Facts

5 On 22 October 2008 Mrs Pearce went to the Terrace End Law Centre, a firm of solicitors in Palmerston North. Mrs Pearce was terminally ill. She had cancer, and she died less than a year after the attendance. Her reason for going to the solicitors was to have a will prepared.

6 There she met the plaintiff, Ms Dallas Woods. She was the principal practitioner at the Terrace End Law Centre. She had not met or acted for Mrs Pearce before.

7 Ms Woods got Mrs Pearce to fill in a form. It identified her major assets. These were modest: an interest in a house at Feilding (in which she lived with her husband), three bank accounts and a motor car. She told Ms Woods that the house was in the name of her husband. On the form, Ms Woods noted, “Joint?”

8 When the matter went before the Legal Complaints Review Officer (LCRO) Ms Woods gave the following evidence:

LCRO: I would just like to ask you, in what way are these notes reflecting this lady's understanding that the house was owned as tenants in common?

Ms Woods: She didn't know they were tenants in common. LCRO: She thought it was jointly owned?

Ms Woods: Hmm or in his name, one of the two.

9 Ms Woods had not acted on the purchase of the house by Mr and Mrs Pearce six years earlier. This followed:

LCRO: I have never yet known a lay person, or hardly ever, who knew the difference legally between joint and owned property.

Ms Woods: Well they do when they leave my office I assure you. They do because I explain it very carefully. The main difference is what happens on death, that's all that has to be explained. The difference is if you die, the other person gets it. The other way is it goes into your will.

10 Ms Woods prepared the will on the basis that the house was “jointly owned”. That appeared to be Mrs Pearce's understanding of things. Either that or that the house was solely in her husband's name. Ms Woods gave evidence that she had explained carefully the difference between joint ownership and co-ownership as tenants in common. It does not appear that she gave advice on entitlement under the Property (Relationships) Act 1976 in the event that the property was in fact registered in Mr Pearce's name alone. As to checking Mrs Pearce's understanding, Ms Woods said the following in a letter to the Standards Committee:

Mrs Pearce refused to have the title of the house checked. She was told it was only $10.00. She refused. She was adamant that the house was to be mentioned in the will. I believe that was because she was told to make a will to deal with it. The point she made was that if the house became hers solely, it was to be shared equally between the children. That is, she expected to become the sole owner if her husband passed away. The concept of ownership was clearly explained to her.

11 Ms Woods has sworn an affidavit in support of the present application for judicial review. In that affidavit she says:

Paragraph 9 is slightly different to the evidence Ms Woods gave before the LCRO, where she allowed Mrs Pearce may also have said that it was registered in her husband's name.

• 9. I had discussions with Mrs Pearce with respect to the Will. With respect to the house there is a comment that it was presently owned with her husband – jointly. This was what Mrs Pearce told me.

• 10. I discussed with her at some length the question of ownership because I spent 10 years in the Public Trust drafting Wills and administering Estates and this was an explanation we were trained to make very clear to a married/partnered person. I explained to her the difference between tenancy in common and joint ownership on death and I have little doubt that she completely understood that. Notwithstanding the wording of the Will, I advised that we search the Title to check as they had separate families, but Mrs Pearce wasn't concerned and wasn't prepared to and said no.

12 Over the course of the next week Ms Woods prepared a will. Mrs Pearce executed it before two witnesses on 30 October 2008.

13 The operative gifting clause, clause 4 is as follows:

• 4. If my husband dies before me, I give the house and land at 10 Sandon Road, Feilding (which is presently jointly owned with my husband) or my principal place of residence at my death and the contents thereof (excluding my personal effects, jewellery and watches) to be divided equally per capita among my son NICHOLAS DAVID PEARCE and my step-children ALAN RUSSELL PEARCE and KAYE FRANCES PEARCE living at my death. If my son, or one, or both, of my step-children die before me, leaving a child or children living at my death, then that child shall take, or those children shall take equally, the share which the parent would have otherwise taken under this clause.

14 Clause 5, which follows, is a residue clause. After payment of debtors and expenses, the residue all goes to her son Nicholas.

15 On the assumptions that the property was jointly owned and that Mrs Pearce predeceased her husband (which given her state of health was expected), her interest would have been transmitted by operation of law to him. If, on the other hand, it was a tenancy in common, then a distinct devisable interest arose. The way the will was drafted, it would fall into residue.

16 It is plain from the evidence of Ms Woods, and the way in which the will is expressed that the common assumption of the testatrix Mrs Pearce and the draftsperson, Ms Woods, was that the house was owned in joint tenancy. Indeed clause 4 says so expressly: “which is presently jointly owned with my husband”.

17 The will reflects that assumption in two distinct ways. First, it expressly assumes Mrs Pearce's inherent survivorship right in the (unlikely) event that Mr Pearce predeceased her. The “house and land” is then hers, and she gifts it to her son and her two step-children equally. Secondly and implicitly, it assumes Mr Pearce's survivorship right to Mrs Pearce's interest in the (more likely) event that she predeceased him. It does so by making no express provision for gifting of that interest to him. Because there was no need to do so.

18 Mrs Pearce died on 9 September 2009.

19 Following probate, the assumption on which the will was prepared – that the house was owned by Mr and Mrs Pearce as join tenants – proved unfounded. The house was owned by them as tenants in common. As a result, Mrs Pearce's half share in the house fell into residue and passed to her son Nicholas, under clause 5.

20 The consequence was that Mr Pearce unexpectedly found himself facing sale of the house in order to meet Nicholas' entitlement. In the end a dispute between them was resolved by the grant to Mr Pearce of a life interest in the house.

A complaint

21 On 16 June 2010 Mr Pearce wrote to the New Zealand Law Society to lay a complaint about the conduct of Ms Woods. The complaint is summarised by the Standards Committee Manawatu No 1 in these terms:

The complaint in essence alleges that Ms Woods failed to prepare the will for the complainant's deceased wife in a form that met the wishes of the deceased's wife. In addition, Ms Woods failed to confirm the ownership of the family home and if she had done so, then she would have discovered that the title was as tenants in common and counselled her to change that.

The last word, “that”, in context means the will.

Standards Committee decision

22 The Standards Committee reached a...