Kaye v New Zealand Law Society
[2019] NZHC 2135
•29 August 2019
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV 2018-419-259
[2019] NZHC 2135
IN THE MATTER OF The Lawyers and Conveyancers Act 2006 BETWEEN
ANTHONY PRATT KAYE
Applicant
AND
THE NEW ZEALAND LAW SOCIETY
Respondent
Hearing: 10 April 2019 Appearances:
Mr Kaye Applicant in person P Davidson for Respondent
Judgment:
29 August 2019
JUDGMENT OF DUFFY J
This judgment was delivered by me on 29 August 2019 at 12:00pm pursuant to
Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar
Solicitors:
Pamela Davidson, Barrister, Wellington New Zealand Law Society, Wellington
And to:
The Applicant
KAYE v THE NEW ZEALAND LAW SOCIETY [2019] NZHC 2135 [29 August 2019]
[1] Mr Anthony Kaye seeks judicial review of decisions by NZLS Lawyers Complaints Service.
[2] The judicial review is the latest act in a series of actions that Mr Kaye has taken. These actions all arise from his displeasure in response to the legal services he and his wife received. It is helpful to have some understanding of the circumstances which led to the delivery of those services and Mr Kaye’s previous responses thereto.
Background
Circumstances leading to conflict with Norris Ward McKinnon
[3] In 2005, the law firm Tanner Fitzgerald Getty (‘TFG’) acted for Mr Kaye and his wife (the Kayes) in respect of the purchase of a business (consisting of two adjoined properties, Lot 1 and Lot 3, and the business itself). TFG negligently paid the purchase price for Lot 3 to the vendor without obtaining her undertaking to transfer the title on receipt of payment. As a result, the Kayes could not obtain the title. The Kayes had borrowed money from a bank for this purchase, and the bank’s mortgage security could not be registered. The mortgagee bank suggested that the law firm Norris Ward McKinnon (‘NWM’) could help the Kayes and in 2006 they engaged the services of a senior partner Mr Barris. This was two weeks before they were to settle the purchase on Lot 1 and the business. The Kayes had not yet valued Lot 1, which meant they were technically in default of their purchase agreement.
[4] Mr Barris advised the Kayes to take all possible steps to settle their obligations, including registering the mortgage. They negotiated with the vendor over the price of the business. In Mr Barris’ view, they pursued unmeritorious arguments with the vendor, against his advice. The Kayes settled the purchase of the business, the transfer of the title of Lot 3 and the register of the bank’s mortgage in November 2006. They settled the purchase of Lot 1 six months late in March 2007. The Kayes also had to repay the loan they had taken from the vendor for the purchase price for the business, including penalty interest for their late repayment.
[5] In April 2009, the Kayes sold the business and Lot 1 and 3 at a substantial loss in a mortgagee sale. They terminated their instructions to NWM.
High Court and Court of Appeal Decisions
[6]NWM commenced proceedings against the Kayes in the High Court for
$70,000 in legal fees.1 The Kayes counterclaimed for breach of contract and alternatively in negligence alleging that NWM caused them losses of approximately
$2,500,000.2 They were self-represented, and Mr Kaye was their sole witness.3
Peters J dismissed the Kayes’ claim. It was held that NWM negligently delayed commencing proceedings against TFG, but that the delay did not cause the Kayes any loss.4 Also, the scope of the Kayes’ instructions to NWM was to settle the contracts of sale, not to advise them generally.5
[7] At the Court of Appeal, the Kayes argued that NWM had acted in breach of their retainer, especially for failing to take effective steps in the two weeks between accepting the Kayes’ instructions and the settlement date of Lot 1 and the business.6 The Court held that: NWM did not owe a duty to the extent alleged by the Kayes; the Kayes’ losses were attributable solely to their own failures; and even if the Kayes had proven breaches, any damages they would be entitled to would be minimal compared to their $5,581,228 claim.7 The Court found that the Kayes took two weeks to authorise NWM taking their files from TFG, which prevented Mr Barris from gaining an understanding of their financial obligations and properly advising them of their options.8 The delays to the settlement of Lot 1 were found to be the result of the Kayes’ failure to secure financing.9 The Court found that NWM discharged its professional obligations with care and skill in difficult circumstances.10
[8] The Kayes’ application to the Supreme Court for leave to appeal was dismissed.11
1 Norris Ward McKinnon v Kaye [2015] NZHC 1025 at [9].
2 At [8].
3 At [11].
4 At [63].
5 At [33]-[34].
6 Kaye v Norris Ward McKinnon [2016] NZCA 32.
7 At [38] - [41].
8 At [29] - [30].
9 At [31].
10 At [42].
11 Kaye v McKinnon [2016] NZSC 66.
Complaints laid with NZLS
[9] In October 2016, the Kayes filed a complaint with the Lawyers Complaints Service of the Law Society. It was described as a complaint against NWM. Because s 132 of the Lawyers and Conveyancers Act 2006 (LCA) does not allow complaints to be made against partnerships, the complaint was accepted as a complaint against Mr Barris and two separate complaint files were opened in respect of two other practitioners from NWM involved in the matter. The Kayes later had this division of their complaint explained to them by NZLS.
[10] The three complaints were considered by the Standards Committee.12 The judicial review concentrates on the Standard Committee’s decision in relation to Mr Barris (the Barris decision).13
[11] The Barris decision referred to the Kayes’ proceedings in the High Court against NWM, noted that the Court of Appeal had gone so far as to commend Mr Barris, and that the Supreme Court did not grant the Kayes leave to appeal. Mr Barris’ potential conflict of interest had been traversed in the High Court. Accordingly, the Standards Committee decided to take no further action pursuant to s 138(2) LCA because they ‘lacked jurisdiction’ to proceed with a matter that had already been ruled on by the Courts.
[12] In 2017, Mr Kaye applied to the Legal Complaints Review Officer (LCRO) for review. The LCRO issued a minute identifying jurisdictional issues and convened a telephone conference for the parties to address them. He then convened an in-person hearing, attended by Mr Kaye. The LCRO issued a decision on 30 April 2018 confirming the Standards Committee’s decision. His reasons focus on the application of s 132 of the LCA and the fact the LCA makes no provision for complaints against an incorporated law firm. He also relied on the judicial dispositions of the civil proceedings as having effectively cured and disposed of any legal issues the Kayes might raise.14
12 Notice of Decision by the Central Standards Committee 2, No 15119, No 15232, No 15233, 18 November 2016.
13 Decision No 15119.
14 Kaye v Barris LCRO 14/2017, 30 April 2018 at [101] – [102].
[13] In July 2018, Mr Kayes wrote to the Law Society. The Complaints Service replied that it has no power to review decisions made by the Standards Committee and that it could only be reviewed by the LCRO or a court.
The judicial review grounds
[14] Mr Kaye seeks judicial review of the Standards Committee’s determination in relation to Mr Barris. In summary, the claim is based on whether, by declining to take the complaint further, the Standards Committee:
(a)Unlawfully ‘manipulated’ the LCA to decline to consider their complaint;
(b)Breached natural justice;
(c)Acted in a bias manner.
[15] Additionally, Mr Kaye claims that the NZLS decision to split his complaint into three separate complaints under s 132 of the LCA created jurisdictional problems when he applied to the LCRO for review:
I do not accept the LCRO’s view that the NZLS decision was innocuous or “motivated by good intention” for the reason that it was always one complaint, not three – and was how NZLS treated it for all intents and purposes.
Parties’ arguments
[16] When the judicial review was before me for hearing, the parties’ arguments focussed on the merits of the decisions under review. During the hearing I became concerned about the jurisdictional basis underlying the decisions under challenge. My concerns related to whether it was appropriate for the NZLS, the Standards Committee and the LCRO to view the complaints under the LCA. This was because it seemed to me the conduct that had given rise to the complaint about Mr Barris had occurred before the LCA came into force.
[17] At the end of the hearing I directed counsel for the respondent to file further submissions setting out how the LCA might be applied to professional conduct that
had occurred before the legislation came into force. Mr Kaye was given the opportunity to respond to those submissions. Both parties filed further submissions.
Jurisdiction
[18] In its original form the Kayes’ complaint was ultra vires. The complaint was made against NWM rather than the lawyer in that firm who had acted for the Kayes. The LCA does not provide for complaints to be made against an unincorporated law firm, as opposed to the lawyers engaged in that firm. Accordingly, the Standards Committee could have rejected the compliant on that ground. Rather than do that, however, the Standards Committee divided the complaint into three complaints against the three lawyers who had been involved in the legal matter that had generated the Kayes’ complaint.
[19] When the Standards Committee proceeded to deal with the Kayes’ complaint relating to Mr Barris the Committee did so as if the LCA fully applied to the disposition. This was an error. The amended complaint for which judicial review is now sought relates to conduct of Mr Barris, that was performed before the LCA came into force. The LCA came into force on 1 August 2008 by which time Mr Barris had completed the conduct that is now the subject of the Kayes’ complaint. 15 Accordingly, the LCA can only apply to this conduct insofar as there are transitional provisions authorising a Standards Committee to adjudicate on conduct that pre-dated the LCA.
[20] The LCA has transitional provisions to enable complaints to be brought about conduct the pre-dates the LCA.16 However, those provisions recognise that under the former legislation the grounds for complaint against a lawyer were more limited. Understandably, lawyers cannot be held to performance standards that were not in existence at the time they provided their services.
[21] Section 350 of the LCA prohibits complaints and investigations being made under the Law Practitioners Act 1982 (LPA) after the commencement of s 350.
15 Lawyers and Conveyancers Act 2006, s 2.
16 Section 350.
Section 351 relevantly provides when complaints may be made under the LCA about conduct before the commencement of s 351:
(1)If a lawyer or former lawyer or employee or former employee of a lawyer is alleged to have been guilty, before the commencement of this section, of conduct in respect of which proceedings of a disciplinary nature could have been commenced under the Law Practitioners Act 1982, a complaint about that conduct may be made, after the commencement of this section, to the complaints service established under section 121(1) by the New Zealand Law Society.
(2)Despite subsection (1), no person is entitled to make under this Act—
(a)a complaint that has been disposed of under the Law Practitioners Act 1982; or
(b)a complaint in respect of—
(i)conduct that occurred more than 6 years before the commencement of this section; or
(ii)regulated services that were delivered more than 6 years before the commencement of this section; or
(iii)a bill of costs that was rendered more than 6 years before the commencement of this section.
(3)For the purposes of subsection (2), a complaint is treated as having been disposed Of under the Law Practitioners Act 1982—
(a)if a District Law Society, after considering the complaint, decided that the Society would not take any further steps or action on it and the complainant did not, within 3 months after the date on which the complainant was notified of the decision, refer to a Lay Observer, for examination, a written allegation concerning the District Law Society’s treatment of the complaint; or
(b)if a Lay Observer, after examining a written allegation made by the complainant concerning the District Law Society’s treatment of the complaint, has not indicated in his or her report that he or she would be taking further steps or making further inquiries with regard to the allegation; or
(c)if the New Zealand Law Society, after reviewing—
(i)the consideration given by the District Law Society to the report or recommendation of the Lay Observer; and
(ii)the action (if any) taken by the District Law Society in consequence of the report or recommendation of the Lay Observer,—
decided not to refer the report or recommendation back to the District Law Society for further consideration; or
(d)if any charge laid against a barrister and solicitor before either a District Law Practitioners Disciplinary Tribunal or the New Zealand Law Practitioners Disciplinary Tribunal as a result of the complaint has been finally determined.
[22] Accordingly, the Standards Committee and the LCRO needed to assess the Kayes complaint against Mr Barris by first determining whether the conduct complained of could have supported proceedings of a disciplinary nature that could have been commenced under the LPA. If satisfied there was such conduct only then could the Standards Commission and the LCRO proceed to deal with the complaint. Had they found there was a proper basis to determine the complaint in terms of the LPA, it would then have been open to them, if so satisfied, to decide instead, pursuant to s 138 of the LCA, to take no action on the complaint.
[23] Section 138 of the LCA permits a Standards Committee to take no action on a complaint:
(1)A Standards Committee may, in its discretion, decide to take no action or, as the case may require, no further action, on any complaint if, in the opinion of the Standards Committee,—
(a)the length of time that has elapsed between the date when the subject matter of the complaint arose and the date when the complaint was made is such that an investigation of the complaint is no longer practicable or desirable; or
(b)the subject matter of the complaint is trivial; or
(c)the complaint is frivolous or vexatious or is not made in good faith; or
(d)the person alleged to be aggrieved does not desire that action be taken or, as the case may be, continued; or
(e)the complainant does not have sufficient personal interest in the subject matter of the complaint; or
(f)there is in all the circumstances an adequate remedy or right of appeal, other than the right to petition the House of Representatives or to make a complaint to an Ombudsman,
that it would be reasonable for the person aggrieved to exercise.
(2)Despite anything in subsection (1), a Standards Committee may, in its discretion, decide not to take any further action on a complaint if, in the course of the investigation of the complaint, it appears to the Standards Committee that, having regard to all the circumstances of the case, any further action is unnecessary or inappropriate.
Discussion
[24] It is clear to me the decision-making process of the Standards Committee and the LCRO did not proceed as it should have done.
[25] Section 98 of the LPA provided for members of the public to make complaints against practitioners. Under s 112 of the LPA if, after inquiring into a charge against a practitioner, the New Zealand Disciplinary Tribunal was of the opinion the practitioner:
(a)has been guilty of misconduct in his professional capacity;
(b)has been guilty of conduct unbecoming a barrister or solicitor; or
(c)has been guilty of negligence or incompetence in his professional capacity, and the negligence or incompetence has been of such degree or so frequent as to reflect on his fitness to practise as a barrister and solicitor or as to tend to bring the profession into disrepute; or
(d)…
the Tribunal could then make an order under s 112 imposing a disciplinary sanction on the practitioner.
[26] The complaint the Kayes made was unhelpful because it did not identify s 112 of the LPA as providing the grounds for the complaint. Indeed, it referred to current breaches of the Conduct and Client Care Rules under the LCA. Nevertheless, the Standards Committee should have realised it was facing a complaint that engaged s 352 of the LCA, and from there reverted to s 112 of the LPA. The failure to take
this action means that the Kayes’ complaint has never been considered in terms of the bases for upholding a charge under s 112 of the LPA.
[27] The Kayes’ complaint seems to me to go beyond the allegations of breach of contract and negligence that were made in the civil proceedings. The complaint involves allegations of Mr Barris acting in conflict of interest both for them and for the mortgagee and otherwise breaching his ethical duties to them.
[28] Although it dealt with the separate topic of witness immunity in the context of disciplinary proceeding I note that in Dentice v Valuers Registration Board17 Eichelbaum CJ approved of the definition of disciplinary proceedings applied in Mardon v Disciplinary Committee of the Pharmaceutical Society of New Zealand that they are proceedings sui generis rather than civil in nature.18
[29] The judicial findings in the various civil proceedings have created an issue estoppel in relation to the various causes of action raised in those proceedings. What is not clear to me, however, is whether there remains other aspects of Mr Barris’ conduct that requires scrutiny in terms of s 112 of the LPA.
[30] The rule in Henderson v Henderson may not necessarily bar a complaint hearing because it does not always follow that conduct that may support disciplinary enquiry and action under s 112 of the LPA will also support a cause of action for suit in a court. 19 Thus, there may remain some aspect of Mr Barris’ conduct that sits outside the civil proceedings and which would merit enquiry by the Standards Committee in terms of s 112 of the LPA. Accordingly, it would be wrong to assume the findings and obiter comments in the various civil proceedings will bar a disciplinary proceeding.
[31] I had considered whether it might be appropriate to deny relief, given relief in judicial review is discretionary. One basis for refusing to grant discretionary relief is
17 Dentice v Valuers Registration Board [1992] 1 NZLR 720 (HC) at 724.
18 Mardon v Disciplinary Committee of the Pharmaceutical Society of New Zealand HC Wellington CP911/88, 29 March 1989.
19 Henderson v Henderson (1843) 3 Hare 100, 67 ER 313. The rule in Henderson v Henderson permits parties from raising claims and defences in subsequent proceedings when they could and should have been pursued in earlier proceedings but were not so pursued.
that the outcome would be inevitable.20 In general, the issues the Kayes raise against Mr Barris seem to have already been ventilated in the civil proceedings. However, those proceedings were determined in the light of the legal principles applicable to the causes of action raised therein. It cannot be assumed that a view through those lenses would necessarily exclude findings of culpability under s 112 of the LPA. Until assessment under s 112 of the LPA is undertaken this question must remain open. Further, in Chiu v Minister of Immigration the Court of Appeal held that Courts should be slow to deny a remedy on the basis of perceived inevitability of outcome.21
[32] For this sole reason I have decided to allow the judicial review. I do so on the basis the Standards Committee and the LCRO have each failed to ask themselves the correct legal question, also they have acted in excess of jurisdiction by their failure to act in accordance with the transitional provisions provided in the LCA. Those failures have also breached the Kayes’ right to natural justice because their complaint against Mr Barris has not been adequately heard. Indeed, in law there has been no more than a purported hearing in which the decision-makers have failed to address the proper legal question.
[33] I realise the power the Standards Committee has under s 138 of the LCA is broad and that not all complaints will warrant investigation. However, I consider that before the discretion in s 138 can be properly exercised the Standards Committee must first have identified the relevant legislative regime applicable to a complaint and given some thought to whether the complaint warrants engaging that regime. That did not happen here. Nor can the subsequent review by LCRO cure the Standards Committee’s error because that review focussed on whether the Standards Committee was right to treat the complaint as made against Mr Barris and the other practitioners rather than as against the firm, NWM. The Committee’s error regarding the jurisdictional basis of the complaints was never mentioned by the LCRO.
20 See Wislang v Medical Practitioners Disciplinary Committee [1974] 1 NZLR 29 (SC).
21 Chiu v Minister of Immigration [1994] 2 NZLR 541 (CA).
Result
[34] The decisions of the Standards Committee and the LCRO are set aside. The complaints made to the Standards Committee are referred back to it for reconsideration in light of the law as I have found it to be.
[35] Mr Kaye was self-represented. Ordinarily this would lead to no award of costs despite his success in this proceeding. I see no reason to depart from general principle in this respect. Accordingly, I consider costs should lie where they fall. However, Mr Kaye has 10 working days to file submissions on costs should he consider there to be proper grounds to depart from general principle.
Duffy J
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