Zhao v The New Zealand Law Society

JurisdictionNew Zealand
CourtHigh Court
JudgeKÓS,Stephen Kós J
Judgment Date24 Aug 2012
Neutral Citation[2012] NZHC 2169
Docket NumberCIV 2012-404-2777

[2012] NZHC 2169



Stephen Kós J

CIV 2012-404-2777

Under the Judicature Amendment Act 1972

In The Matter Of an application for judicial review

Richard Zhao
The New Zealand Law Society

F C Deliu for Plaintiff

P N Collins for Defendant

F C Deliu, PO Box 68559, Auckland for Plaintiff

P N Collins, Auckland for Defendant

Application for judicial review of a the respondent Law Society's decision to convene a meeting of the Fitness for Practice Committee without first informing the plaintiff practitioner of the interviewers' reasons for recommending his application under s30 Lawyers and Conveyancers Act 2006 (“LCA”) to practise on his own account be declined — whether application for review was premature because a final decision had not been made and because s30(3) LCA (application to HC to practise on own account) provided a parallel process — whether assurance that plaintiff would be provided with reasons for refusing approval created a legitimate expectation.

The issues were: whether the application for review was premature; whether the interviewers' decision not to recommend approval was invalid; whether the decision to refer Z's application to the Practice Committee was invalid; and whether the decision not to progress Z's application after proceedings were issued was invalid.

Held: The exercise by interviewers (and by members of the Practice Committee) of the power devolved to them to recommend (or withhold recommendation) the right to practise on one's own account was a reviewable action. It was clear that the interviewers' investigative and the Committee's recommendatory powers involved the exercise of a statutory power under s30(1) LCA.

The parallel process was problematic. The procedure for direct application to the HC under s30(3) LCA was a secondary rather than primary procedure. An applicant was expected to make an application to the NZLS under s30(1) LCA in the first instance. While the issues for consideration by a Court under s30(3) LCA and by NZLS under s 30(1) LCA were effectively identical, the processes for the determination were not the same. Those in the HC were less satisfactory than those of the NZLS which had far more relevant experience in such matters and a body of comparative cases to consider in exercising that power of decision in a consistent fashion. It was not an answer to a challenge to NZLS's process to say that there was an alternative course of action open. The applicant was reasonably entitled to due process by the primary decision maker. The application for review was not premature.

Natural justice required that prejudicial material be disclosed before an adverse decision was made so the applicant had an opportunity to correct that information. Z was aware of the previous complaints and accepted they would be before the interviewers. The content of the briefing, if adverse and going beyond information which Z would appreciate NZLS would likely possess in connection with his complaints, would need to be disclosed preferably prior to the interview.

Disclosure of any such information could legitimately occur prior to any consideration of the application by the Practice Committee, rather than needing to be disclosed before the interview. That was because reference to the Practice Committee was inevitable, regardless of the significance or otherwise of the complaints, because of Z's lack of understanding of basic trust accounting and fiduciary responsibilities in relation to client funds. Z's lack of understanding of trust accounting procedures and the complaints record were not irrelevant considerations. Taken on its own the complaints record might not be enough to justify an adverse recommendation but it was by no means an irrelevant consideration, just one requiring correct weighting.

Z's argument that the decision not to recommend approval failed to take into account relevant considerations, namely that Z held a practising certificate (meaning that he was of good character) and that he could have practised as a principal without a trust account, misconceived NZLS's role under r12(1)(c) Lawyers and Conveyancers Act (Lawyers: Practice Rules) Regulations 2008 (criteria for eligibility to practise on own account). It was a far larger question than whether the practitioner had good character. The inquiry to be undertaken under s30(1) LCA was not a question simply of character, or of fitness to practise, but of the suitability of a person to take charge of a practice. That was a different inquiry. A person who was suitable to practise under supervision was not necessarily a person suitable to practise on their own account, particularly as a sole practitioner, operating a client trust account and handling client money.

Z could not have had a legitimate objection as to the extent of focus in his interview on trust accounting and the handling of client money. He might not have prepared for such questions, but he could not legitimately blame the NZLS for his approach to preparation. His very recent passage of the Trust Account Supervisor programme meant that he should have easily answered those questions. In light of Z's performance at the interview on those core issues, a decision not to recommend him was inevitable. The preliminary decision of the interviewers not to recommend Z was not invalid.

The assurance given by NZLS that it would provide reasons and an opportunity to be heard had created a legitimate expectation as to process. There was no suggestion by NZLS that the Registry Manager had lacked actual or ostensible authority to make the representation. It is evident that Z had relied on the promise. The decision to proceed with the meeting of the Practice Committee without having given Z either reasons for the adverse recommendation or the opportunity to be heard breached that legitimate expectation and was invalid.

NZLS was ordered to provide Z with an adequate summary of the contents of any briefing given to the interview panel about his complaints record. NZLS was ordered reconvene the Practice Committee and give Z an opportunity, in person or by counsel or both, to address the Practice Committee in support of his application.


A barrister applies to the Law Society to practise as a solicitor, on his own account. He attends an interview arranged by the Society. He answers questions on trust accounting and related matters poorly. The interviewers also take account of a number of complaints against him, although these have been resolved by standards committees on the basis that no further action is required. The interviewers recommend against approval of the application. As is normal, the application is then referred to the Society's Fitness for Practice Committee. The applicant asks to see the interviewers' reasons for recommending against him. And to be able to address the Committee. Someone from the Law Society apparently agrees to those requests. But nothing is done. The Committee is set to convene without prior reasons being given, and without an invitation to attend being extended.


The day the Committee is due to convene, the applicant issues these proceedings. He says the adverse recommendation by the interviewers, and the convening of the Committee without prior reasons or an invitation to appear, are unlawful administrative acts. A wide array of grounds for judicial review are advanced. Natural justice and legitimate expectation are at the vanguard.


The Society says the application is premature. No final decision has been made. And in any case, the statute provides a parallel process. The applicant may, if dissatisfied with the Society's approach, apply direct to the Court for approval to practice on his own account.


The issues arising in this case are listed at [64]. A summary of my conclusions is at [102]. But, first, the facts in more detail.


Mr Zhao was admitted to the bar on 13 February 2009. Prior to admission he had worked for a year as a tax accountant at Deloitte. Then he became a law clerk at Equity Chambers. He was employed then by Mr Frank Deliu, his counsel in the present proceedings. He moved with Mr Deliu to a new set, Amicus Chambers, in March 2009. Mr Zhao's affidavit annexes a printout from the Amicus Chambers website. It states:

Richard is one of the founding members of the firm and leads the firm's Asian department. He previously worked for the litigation department of a top law firm in New Zealand as well as working as a tax specialist in one of the big four accounting firms.

The reference to “the firm” is apparently a reference to Amicus Chambers. It is an incorporated law firm for the purposes of the Lawyers and Conveyancers Act 2006 (Act). As for his work for the litigation department of a “top law firm”, Mr Deliu told me that was not in fact as a lawyer. The website text suggests otherwise. It is misleading.


In preparation for practice on his own account Mr Zhao successfully completed the “Stepping Up” course run by the Society in July 2011. He passed the Trust Account Supervisor training programme in February 2012. At that point he had been admitted for three years.



On 27 February 2012 Mr Zhao sought approval to practise on his own account. That is governed by s 30 of the Act. 1 He filed an application in the form prescribed by the Society. After setting out his background, the application states that his intention is to practice in areas of immigration, family, and taxation, criminal and civil litigation. He also stated his intention to practise as Richard Zhao Lawyers Limited, an incorporated law firm of which he was sole shareholder and director.


The Society's form was somewhat out of date. It required the applicant to declare whether he had completed the “Flying Start” programme....

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