XI v North Island Standards Committee
| Jurisdiction | New Zealand |
| Judgment Date | 05 July 2013 |
| Neutral Citation | [2013] NZLCRO 35 |
| Date | 05 July 2013 |
| Docket Number | LCRO 77/2013 |
| Court | Legal Complaints Review Officer |
Concerning an application for review pursuant to section 193 of the Lawyers and Conveyancers Act 2006
Concerning a Notice of Hearing dated 20 February 2013 issued by [North Island] Standards Committee
The names and identifying details of the parties in this decision have been changed
[2013] NZLCRO 35
LCRO 77/2013
LEGAL COMPLAINTS REVIEW OFFICER
Decision as to jurisdiction to review the issuing of a revised notice of hearing — Standards Committee was conducting an own motion inquiry into the conduct of the applicant (principal of law firm) in respect of a fraudulent bank draft the applicant's deduction of fees from the amount in the draft — issued notice of hearing setting out specific and generic matters on which applicant made submissions — subsequently issued revised notice of hearing requesting comments on other specific issues — applicant applied to set aside revised notice and to stay the proceedings — argued that revised notice was in breach of natural justice — whether the issuing of the revised notice was a determination which was subject to review by the Legal Complaints Review Officer.
Background
Mr XI has applied to this Office for review of a resolution by [North Island] Standards Committee to issue a revised Notice of Hearing in respect of an own motion inquiry by the Standards Committee into the conduct of Mr XI.
Mr XI is the principal of the firm XK. That firm's trust account was inspected by the Law Society Inspectorate in October 2011 and a report was provided to the firm on 4 November 2011. The report noted that the firm had been the victim of a fraud, in that a foreign bank draft for €150,000.00 banked by the firm was considered to be fraudulent.
The bank had initially cleared the draft and allowed Mr XI to pay out against it, but subsequently dishonoured the draft and debited the foreign currency account operated by the firm with the amount of the draft. The bank then sought to recover the funds it had credited to the account (and which had been paid out to the client after deduction of fees) from the firm.
On the basis of the Inspectorate Report the Standards Committee resolved under's 130(c) of the Lawyers and Conveyancers Act 2006 to commence an own motion investigation.
A Notice of Hearing was sent to Mr XI on 4 April 2012. That Notice invited Mr XI to make submissions on the issues raised by the alleged conduct including:
a)“That Mr [XI] received a forged bank cheque from [name] Bank to the amount of €150,000. This was put into a foreign currency account and when he had received confirmation that the cheque had cleared, he transferred $24,658.79 to his trust account for which represented fees and transferred €134,926.41 to a bank account in [country].
b)Can Mr [XI] substantiate, quantify and provide evidence of the work he carried out on behalf of his client?”
The Notice then included generic matters to be addressed by Mr XI.
Submissions were provided on behalf of Mr XI by Mr XJ on 3 May 2012. However when the Standards Committee met it noted that the BE Bank had also made a complaint about Mr XI in respect of the same events and resolved to defer the hearing of the complaint to enable both matters to be considered at the same time.
The progress of the matter was delayed while the BE complaint was processed although as it turns out, both matters were not dealt with at the same time, and continued to be dealt with by two separate Standards Committees. On 20 February 2013 Standards Committee 1 which was conducting this own motion inquiry, issued a new Notice of Hearing. In the letter under cover of which that Notice was sent, Mr XI was advised that the Notice replaced the earlier Notice of Hearing dated 4 April 2012. 1
The replacement Notice of Hearing invited Mr XI to make submissions on the issues raised by the alleged conduct, including: 2
i.“Whether Mr [XI] breached Rule 11.4 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (“RCCC Rules”) by failing to take all reasonable steps to prevent a fraud being perpetrated through his practice;
ii.Whether the fee charged by Mr [XI] amounted to a conditional fee agreement and if so, whether it complied with RCCC Rules 9.8 to 9.12; and
iii.Whether the fee charged by Mr [XI] of €15,000.00 (equivalent to NZ$24,658. 79 or 10 per cent of the settlement amount of €150,000.00) was a fair and reasonable fee having regard to RCCC Rules 9 and 9.1.”
The Notice then included the same generic matters as had been set out in the earlier Notice of Hearing.
On 18 March 2013 Mr XI filed an Application for Review with this Office. That application was accompanied by a memorandum of supporting reasons. The relief sought in the application was the setting aside of the Notice of Hearing of 20 February 2013 and an “[i]ndefinite stay of proceedings due to an abuse of process.” 3
By letter dated 20 March 2013 this Office indicated to Mr XI an initial issue to be addressed was whether the Notice of Hearing issued by the Standards Committee constituted a determination which is subject to review by this Office, and referred Mr XI to an earlier decision of this Office ( Lydd v Maryport LCRO 164/2009).
In Lydd v Maryport the applicant sought a review of a decision by the Standards Committee pursuant to s 144 of the Act to appoint an investigator on the grounds that the appointment of an investigator was prejudicial to the applicant. The reasons for these allegations are not relevant to this decision.
The LCRO decided that a decision to appoint an investigator was not a reviewable “determination”, “requirement”, “order” or “direction” in terms of s 194. The LCRO observed that there was no general power to review steps taken by a Standards Committee 4 and referred to the requirement of the Act to deal with complaints expeditiously as required by s 120(3). He held that the only matters that were reviewable by this Office were:–
"a determination pursuant to s 152;
"a requirement pursuant to ss 141 or 147;
"an order pursuant to s 156; and
"a direction given pursuant to ss 142 or 143.
Mr XJ criticised the decision in Lydd v Maryport and made the following submissions: 5
"“In adopting a restrictive approach the LCRO disregarded the impact of the specific wording of s 194 which refers to “ any determination, requirement, or order made, or direction given in relation to a complaint … or on a matter arising from a complaint” and of section 195 “ any requirement in relation to any… matter that the Standards Committee is inquiring into, of its own motion”.” (Emphasis added by Mr [XJ].)
"“The intention for the LCRO's powers of review to have broad application is apparent from the use of the words “ any”, “ in relation to” and “ a matter arising from.”
"The LCRO failed to consider the impact of ss 209 and 211 of the Act which provide the powers of the LCRO on review where the word “decision” is used.
"That all decisions of a Standards Committee are subject to review, rather than being limited as decided in Lydd v Maryport.
"That the LCRO had placed undue emphasis on the requirement of the Act to deal with complaints expeditiously, whereas Parliament had placed far more weight on the requirement to comply with the rules of natural justice, and this requirement is paramount.
"The threshold for the right of review should be the nature and consequences of the decisions in question, rather than a mechanical determination of whether the decision may be categorised as a determination, requirement, order or direction.
Mr XJ noted that the amended Notice of Hearing substantially changed and amplified the issues that Mr XI was expected to deal with, to include matters that were outside the issues raised by the Inspectorate following which the own motion inquiry was commenced. He submits that they are therefore ultra vires issues and affect Mr XI's rights, obligations and interests. He argues that the replacement Notice of Hearing therefore constituted a breach of the rules of natural justice and should be set aside.
Mr XJ invites this Office to adopt a power of review which would broaden the jurisdiction of this Office beyond that previously assumed. Any broadening of the power of review which would affect the directive of the Act to deal with complaints expeditiously must be carefully considered. In saying this, I do not place expedition above the requirements of natural justice. However,...
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