WP v MB
| Jurisdiction | New Zealand |
| Judgment Date | 23 June 2020 |
| Neutral Citation | [2020] NZLCRO 98 |
| Date | 23 June 2020 |
| Docket Number | Ref: LCRO 090/2019 |
| 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]
[2020] NZLCRO 98
Ref: LCRO 090/2019
LEGAL COMPLAINTS REVIEW OFFICER
ĀPIHA AROTAKE AMUAMU Ā-TURE
Law Practitioners — application for review of a determination of a Standards Committee to take no further action in respect of his complaint about the conduct of the respondent — failure to honour an undertaking in a timely manner — 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 WP as the Applicant
Mr MB as the Respondent
[Area] Standards Committee [X]
New Zealand Law Society
Mr WP, a partner with [Law Firm A], has applied for a review of a decision by the [Area] Standards Committee X (the Committee) to take no further action in respect of his complaint about the conduct of Mr MB, a lawyer who at the relevant time was in sole practice in his own firm, [Law Firm B].
Mr MB's client, the [C Family Trust] (the vendor), owned a commercial property in [City] (the property) which it sold to Mr WP's client, [Company D] (the purchaser).
The property was occupied by five tenants. 1 The lease documents were held by Mr MB on behalf of the vendor.
As discussed in my later analysis, the agreed settlement date was Friday, 26 October 2018 deferred until the following Monday, 29 October pending clarification sought by the purchaser of the tenancy documents held by Mr MB.
On Monday, 29 October 2018, Mr MB provided (by email) his undertaking to Ms RC, a lawyer and associate at [Law Firm A], that he “held”, and would “forward” to [Law Firm A] “on completion of settlement”, the tenancy documents listed. The documents described included a “Copy Agreement to Lease” in respect of the third tenancy document for [GL], and original documents in respect of the other tenancies.
Mr MB delivered (by letter) the tenancy documents to Ms RC on 31 October 2018. One of the tenancy documents was a “Copy Agreement to Lease” whereas his undertaking specified an “Original Agreement to Lease”. Another included “a certified copy of the Agreement to Lease”, whereas the undertaking recorded an “Original Agreement to Lease”.
Having subsequently found both original agreements to lease on his file, Mr MB forwarded them to [Law Firm A] five weeks later.
Mr WP lodged a complaint with the Lawyers Complaints Service (LCS) on 15 November 2018. 2
He claimed that Mr MB did not honour the undertaking, and sought disciplinary action against [Mr MB] as considered appropriate by the Committee. He said in reliance on Mr MB's undertaking, his client purchaser settled the purchase “in the expectation it was receiving original lease documentation”.
Mr WP explained that on the agreed settlement day, Friday, 26 October 2018, Ms SP, a legal executive employed by Mr MB, informed Ms RC that [Mr MB] held (a) original lease documents for four tenancies, and (b) a “[c]ertified copy” of the documents for the fifth tenancy, which [Ms SP] confirmed by email at 4:43 PM that day. 3
He said settlement did not occur on 26 October due to “the vendor's failure to provide certainty” concerning those documents.
He said on the following Monday, 29 October, in response to his request to Mr MB for “clear undertakings as to what lease documentation” Mr MB held, and “would be forwarded” to him, Mr MB provided an undertaking at 1:14 PM.
Mr WP said contrary to Ms SP's statement (by email) on 26 October 2018 that the document evidencing the third tenancy ([GL]) was an “Original Agreement to Lease”, the document for that tenancy described in Mr MB's undertaking was instead described as a “Copy”.
He said “[n]otwithstanding that change”, his client purchaser instructed him to complete settlement of the purchase “on the basis [Mr WP] would receive the lease documentation specified in [Mr] MB's undertaking” which he said Mr MB “purported to send” him on 31 October 2018.
Mr WP later stated that Mr MB (a) “ha[d] now complied with the undertaking he gave”, and (b) “does not dispute the key issues”. 4
He said the “real question” for the Committee to consider was “whether Mr MB held the relevant lease documents”, namely, originals of the second ([Company F), and fourth ([DW]) tenancies, “at the time [Mr MB] said he did” in the undertaking.
He said Mr MB's response to his complaint was “equivocal on the point”, but [Mr MB's] 9 November 2018 email that the documents forwarded were “all the documents [Mr MB] ha[d]” left “no doubt”. That is, Mr MB did not have those two documents at the time the undertaking was provided.
Although, as noted above, Mr WP later said Mr MB had complied with the undertaking, he claimed Mr MB “failed or refused to honour the undertaking in a timely manner”.
Mr WP stressed “the importance of undertakings in the profession”. He said whilst Mr MB's 8 November email expressed “confidence” the “correct documentation had been delivered”, the “correct position” was that Mr MB “failed or refused to honour the undertaking” by (a) “ignoring [Ms RC's and Mr WP's] correspondence”, (b)
“suggesting” the undertaking “did not cover these documents”, and (c) stating that the documents [Mr MB] forwarded to [Law Firm A] were “all the documents [Mr MB] ha[d]”I refer to Mr MB's response in my later analysis. 5
The Standards Committee delivered its decision on 20 May 2019 and determined, pursuant to s 138(2) of the Lawyers and Conveyancers Act 2006 (the Act), that no further action on the complaint was necessary or appropriate.
The Committee stated that while “question[ed]” by Mr WP (a) it “appear[ed]” Mr MB was able to comply with his undertaking when given by him, and (b) Mr MB had complied with the undertaking “after a short delay”.
In reaching that conclusion the Committee referred to the parties' “accept[ance]” that the documents Mr MB undertook to deliver had since been delivered, “albeit somewhat belatedly”.
The Committee noted that “there may have been an administrative error” by Mr MB who mistakenly thought he had “provided all documents required by the undertakings”.
The Committee stated that Mr WP's complaint concerned Mr MB's undertaking “to provide original or certified copies” of five lease agreements to Mr WP on completion of settlement of the sale of the property.
The Committee explained the importance to lawyers acting in property transactions being able to rely on colleagues' undertakings “without question in order to complete remote settlements in an orderly manner” thereby “allow[ing] [the] transactions to flow smoothly”.
For that reason, the Committee stated that lawyers ought “only give undertakings” where “unquestionably able to comply with” the undertaking.
The Committee stated Mr MB's incorrectly said in his 8, and 9 November 2018 emails to Ms RC, and Mr WP respectively that (a) his undertaking did not “cover the documents being requested” when “clearly it did”, and (b) “all the documents [he] held had been sent” when that “was not the case”.
The Committee described Mr MB's statements made in response to Ms RC's question whether he had complied with his undertaking” as “unfortunate and inadequate” observing this had led to Mr WP's complaint.
Instead, the Committee said Mr MB “should have checked his files to confirm the correct position”.
Mr WP filed an application for review on 1 July 2019 in which he asks that the Committee's decision “be reviewed in accordance with the law as to undertakings”.
He says the Committee accepted that “in light of Mr MB's responses” to [Law Firm A], and “in the absence of [his] complaint” it seemed “unlikely that the undertaking would have been complied with”.
In his submission, by concluding Mr MB had complied with the undertaking, “albeit somewhat belatedly”, which did not meet the threshold for a finding of unsatisfactory conduct, the Committee had “incorrectly applied the law and failed to recognise Mr MB's conduct is a breach of an undertaking”. 6
Referring to a decision of the High Court, Mr WP submits Mr MB's undertaking was “clear and unequivocal”, and there were “no unique features” which suggested that [Mr MB's] breach of undertaking “was a result of an honest error” by [Mr MB]. 7
In Mr WP's submission the Committee “failed to recognise and address” that although Mr MB “eventually complied”, there was “nonetheless a clear breach” of the undertaking.
Mr WP says his view that Mr MB's provision of the undertaking was “at the very least…reckless” is supported by Mr MB's “subsequent conduct” which “indicate[d]” [Mr MB] “may never have had such documentation”.
He maintains that whilst Mr MB undertook [Mr MB] “held certain documents” to be “provided on completion of settlement”, in “clear breach of the undertaking” Mr MB subsequently (a) suggested the undertaking “did not apply to certain documents”, and (b) stated he had provided all the documents in his possession.
Mr WP says Mr MB had not explained why [Mr MB] denied, in his 8 November response, the undertaking “covered” such documents. He says he interpreted Mr MB's further 9 November response to mean [Mr MB] either “did not hold the documents”, or, was “wilfully indifferent to honouring the undertaking”.
In his response, Mr MB says he has nothing further to add to his comments in response to...
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