XI v North Island Standards Committee


[2013] NZLCRO 35


LCRO 77/2013

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

[North Isalnd] Standards Committee

The names and identifying details of the parties in this decision have been changed

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.

The issue was whether the LCRO had the jurisdiction to review the resolution of the Committee to issue a revised notice of hearing.

Held: The LCR had no general power of review. The power to conduct a review by the LCRO was constrained by the provisions of the LCA. Sections 194 and 195 (applicants in relation to inquiries) LCA were clear in their wording. They applied only to “any determination, requirement, or order made, or direction given, by a Standards Committee. There was no reason to conflate these terms into the general term “decision”.

The word “decision” used in s209 LCA (power to direct reconsideration of complaints, matters, or decisions) referred to “any determination, requirement, or order made, or directions given, by a Standards Committee” as referred to in s194 and s195 LCA and did not expand those terms at all.

Although the use of the word “decision” in s211(1)(a) (confirm, modify, or reverse any decision of a Standards Committee) suggested that there was a wider category of “decisions” which were subject to review, the actions in respect of which a review could be applied for as set out in s194 and s195 were quite specific. The purpose of s194 and s195 LCA was not to allow all decisions of whatever nature to be the subject of review. Such an interpretation would impede the ability of the Standards Committees to regulate their own procedure and would seriously affect the expeditious resolution of complaints. It would cut across the objectives of LCA.

The resolution of the Committee to issue a replacement notice of hearing was not a determination, a requirement, order or direction. The word “determination” used in s152 LCA (Power of Standards Committee to determine complaint or matter) specifically set out the three “determinations” that could be made by a Standards Committee. The resolution to issue the replacement notice of hearing was not one of these and there was no reason to extend that term to any other decision to be made by the Committee. Consequently, the power of review could not be extended beyond the approach previously followed by the LCRO.

Judicial review of merely administrative steps in the process was not generally available until the conclusion of the process (Whale Watch Kaikoura Ltd v Transport Accident Investigation Commission) unless the effect of the decision within the process affected substantive rights. In the present case, the resolution of the Standards Committee to issue a new notice of hearing did not finally dispose of any matter. It was merely an administrative step in the process of the Committee as it worked towards disposing of the matter. The resolution to issue a new notice of hearing, and the issuing of that notice by the Standards Committee, was not reviewable by the LCRO. The LCRO did not have the jurisdiction to consider the application for review made by the applicant.

The decisions of the committee appeared to have been made in good faith. Although the matters raised in the revised notice of hearing went beyond the issues raised by the Inspectorate report, a Standards Committee was not restricted in the matters which it could inquire into.

Application for review declined for want of jurisdiction.




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...

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