XG v BC

 
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[2013] NZLCRO 33

LEGAL COMPLAINTS REVIEW OFFICER

LCRO 131/2011

Concerning an application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006

Concerning a determination of [a North Island] Standards Committe

BETWEEN
MR XG
Applicant
and
MR BC
Respondent

Complaint that a practitioner refused to pay a bequest from his trust account until the beneficiary provided identification in the form of a driver's licence with photographic ID — beneficiary objected on privacy grounds — practitioner referred to the Land Information New Zealand standard for verification of identity which was ratified by the New Zealand Law Society — whether practitioner was entitled to insist on the photographic identification before paying the bequest.

The issue was whether BC was entitled to insist on the driver's licence identification before paying the bequest.

Held: The parties were invited to attend a mediation to enable them to agree on a form of identification that would meet each of their requirements. BC was not prepared to consider alternatives to his requirements.

Under r12(6) Lawyers and Conveyancers Act (Trust Account) Regulations 2008 (transfers or payments from a client's trust money), BC needed the authority of the executors of the estate before making any payment to beneficiaries. The executors had delegated their responsibility to identify the beneficiaries to BC. XG, as with a number of the beneficiaries, was not known to the executors or to BC. BC therefore required all beneficiaries to provide photographic ID with all details being legible.

Both BC and the Standards Committee referred to the Land Information New Zealand standard for verification of identity for registration under the Land Transfer Act 1952, taking note that this had been endorsed and ratified by the New Zealand Law Society.

It was difficult to understand how providing photographic identity such as a driver's licence or passport directly to BC would establish that XG was who he said he was. It was for the bank to establish XG's identity when he opened an account, and the requirements of r12(6)(c) were that payment to a third party had to be in a form that permitted the crediting of the money owing to the account of the intended payee.

The LINZ verification required that the certifier compare the photo ID with the person standing in front of him or her, and certify that they were one and the same person. This was the added security that was seemingly omitted from BC's requirements, although he did subsequently indicate that he was prepared to accept a photograph of XG with a declaration by someone who had known him for a number of years. However, this would not establish that a payment credited to a bank account in the name of XG would be received by the correct person.

The trust account belonged to BC and it would be wrong for the Standards Committee or the LCRO to insist that BC make a payment to XG. In the present case, it was the executors of the estate who had an obligation to perform the terms of the will and they could not delegate that responsibility to BC. As neither party would agree to a pragmatic solution, XG should direct his attention to the executors of the estate.

Both parties had to carry some responsibility for their unbending adherence to their positions, but in the circumstances no further action was appropriate in respect of this matter. XG had to look to his remedies elsewhere. It was unfortunate that BC had declined to consider any other proposals and in so doing had made somewhat derogatory remarks about XG, and others.

Introduction
1

Mr XG has sought a review of the determination by [A North Island] Standards Committee to take no further action in respect of his complaint about Mr BC who required identification from Mr XG before he would pay Mr XG a bequest due to him from his trust account.

Background
2

Mr XG is a beneficiary of an estate.

3

Mr BC acts for the executors in the administration of the estate.

4

The amount due to Mr XG was approximately $29,000 and the funds to make payment of this amount were held in Mr BC's trust account. The executors instructed Mr BC to make payment to Mr XG provided he was satisfied as to Mr XG's identity.

5

Mr BC requested all beneficiaries of monetary bequests (of which there were 70) to provide photographic ID such as a driver's licence or passport as proof of identity. The photographic ID was to include all data, including the expiry date and the relevant number.

6

Mr XG objected to this on privacy grounds. He provided a copy of his licence (verified by a JP) but obliterated all details apart from his name and signature. This was attested to by a JP who certified that he had sighted the original driver's licence.

7

Mr BC rejected this on the basis that a copy of the original licence (showing all details) was not provided. He also rejected another photograph provided by Mr XG in which he had covered his face with his hair.

8

Mr BC declined to make payment to Mr XG unless his requirements as to identity were satisfied.

9

Mr XG complained to the New Zealand Law Society Complaints Service.

10

The Standards Committee recorded its determination in the following way: 1

Mr BC is acting on the express instructions of the executors and, to comply with the trust account rules is entitled to satisfy himself as to the standard of acceptable identification. The Committee compared this to the identity requirements for the Financial Transactions Reporting Act 1996 and for regular e— dealing with Land Information NZ.

The complainant provided copies of his Driving Licence with the face and unique identifier obscured as well as providing photographs of himself with his hair over his face but with his identify confirmed by a JP. The Committee believes that Mr BC was acting appropriately in not accepting either of these as adequate identification. The practitioner has told the complainant that if he does not have some form of photographic identification, a photograph of himself along with the statutory declaration from somebody who has known Mr XG for a number of years would be reasonable.

The Committee noted that there has been some sort of a ruling from the Privacy Commissioner but the Committee believes that Mr BC is perfectly entitled to nominate the form of reasonable identification that he requires to make payment from his trust account.

The Committee believes that Mr BC is acting reasonably and would be...

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