L AW YERS COMPL AINTS SERVICE
Breach of undertaking: jurisdiction of standards committees The Legal Complaints Review Officer (LCRO) has clarified that a breach of an undertaking by a lawyer does not automatically lead to misconduct charges being laid with the Lawyers and Conveyancers Disciplinary Tribunal. When an undertaking has been breached, a Lawyers Standards Committee may make a finding of “unsatisfactory conduct”. The LCRO was reviewing a standards committee’s decision to lay misconduct charges for a breach of an undertaking, a decision the committee had made under a misapprehension that it had no jurisdiction to make a lesser finding of unsatisfactory conduct. The LCRO ruled that the committee did have that jurisdiction, and referred the case back to it for reconsideration.
The facts and the complaint The complainant couple had water rights under an easement over their neighbours’ property. In 2002, when the neighbours subdivided their property and entered into agreements to sell the lots, the two couples agreed that the complainants would surrender their existing easement in return for the neighbour granting them a new water supply easement over land that they were retaining. However, work had to be completed on the neighbours’ property before the new easement plan could be prepared. The lawyer acting for the neighbours (A) therefore wrote to the complainants’ lawyer (B) in August 2002 asking for the easement to be surrendered in return for his undertaking that the new easement would be registered as soon as the plan was available. In February 2003, A again wrote to B, enclosing an easement instrument for them to execute. He also wrote to a third lawyer who had lodged a caveat against the property, asking him to remove it so the easement could be registered. Neither B nor the caveator’s lawyer responded. After that, the matter was overlooked by the lawyers for the two couples.
It wasn’t until 2010, when the complainants wanted to carry out a subdivision themselves, that anyone realised the easement hadn’t been registered. The two couples and their lawyers all cooperated to execute the necessary documents. However, a dispute over the complainants’ legal costs led to their decision to lodge a complaint against A.
The committee’s decision The standards committee directed the parties to mediate and the disputed amount was eventually paid. However, the committee considered itself bound to lay misconduct charges with the Lawyers and Conveyancers Disciplinary Tribunal because A had breached his undertaking to register the easement. The standards committee would have preferred to make a finding of unsatisfactory conduct, but it considered itself bound to prosecute by recent decisions of the High Court and LCRO emphasising the seriousness of any breach of an undertaking. (Only the disciplinary tribunal may make a finding of misconduct against a lawyer.) A applied to the LCRO, challenging the committee’s view that it had no jurisdiction to find that a breach of an undertaking fell short of misconduct.
The LCRO’s decision The LCRO found that there was nothing in the Lawyers and Conveyancers Act 2006 (LCA) or the Conduct and Client Care Rules to prevent the committee finding unsatisfactory conduct in a breach of undertaking case. He also said that while the leading High Court decision had reiterated the importance of undertakings, the judge had not stated that a breach of one must automatically result in misconduct charges (see Auckland Standards Committee 3 of New Zealand Law Society v W, HC Auckland CIV-2101-404005509,11 July 2011). “It would even be incorrect to postulate that there is a presumption that a breach of
an undertaking will lead to a charge before the tribunal,” the LCRO added. The LCRO noted that in earlier decisions of his own he had said only that a standards committee faced with a breach must consider whether or not to lay charges. This did not mean that every breach must result in charges being laid. He also noted several LCRO decisions that had confirmed findings of unsatisfactory conduct by standards committees where undertakings had been breached. The LCRO reversed the present decision to lay charges and referred the matter back to the committee. He noted that his office has taken a cautious approach to interfering with a standards committee’s discretion to prosecute, but he said this current case was unusual because of the committee’s misapprehension about its jurisdiction. In any event, he said, he was not interfering in a final way with its decision to prosecute, but was instead directing the committee to reconsider the matter in the light of his comments. The LCRO said the committee had a significant range of powers and penalties that may be appropriate in the case of a breach of an undertaking. It must exercise its discretion as to the seriousness of the breach and whether it could be considered to be misconduct as defined in s7 of the LCA. If it concluded that the breach could be misconduct, it must refer the case to the tribunal, being careful not to conclude that the conduct does, in fact, constitute misconduct, for that is a finding only the tribunal can make. LT
Second complaint of delay results in fine A lawyer, Z, administering an estate has been fined by a Lawyers Standards Committee after it upheld a complaint of delay against her. The committee had earlier decided to take no action on a similar complaint from the same complainant about the same matter, after Z had given a written assurance that she would deal promptly
LAWTALK 802 / 17 AUGUST 2012
29