M v Hawke's Bay Standards Committee

[2013] NZHC 2219

PENDING FURTHER ORDER OF THE COURT PUBLICATION IS PROHIBITED OF THE INFORMATION CONTAINED [24] - [28], [38], [42]- [44] OF THIS JUDGMENT.

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-481 [2013] NZHC 2219

IN THE MATTER OF

the Lawyers and Conveyancers Act 2006

BETWEEN

M

Appellant

AND

HAWKE'S BAY STANDARDS COMMITTEE

Respondent

Hearing:

23 May 2013

Appearances:

Appellant in person

P N Collins for Respondent

Judgment:

30 August 2013

JUDGMENT OF PETERS J

This judgment was delivered by Justice Peters on 30 August 2013 at 2 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date: ...................................

Counsel:               P N Collins, Auckland

Copy for:           Appellant

New Zealand Law Society, Hawke’s Bay Branch, Napier

M v HAWKE'S BAY STANDARDS COMMITTEE [2013] NZHC 2219 [30 August 2013]

[1] The Appellant appeals against a decision of the New Zealand Lawyers and Conveyancers Disciplinary Tribunal (“Tribunal”) made on 24 January 2013.1

[2] The Appellant faces a charge of misconduct laid by  the  Hawke’s  Bay Standards Committee (“charge” and “Committee”). The Committee alleges that the Appellant acted for a client on a transaction when he knew he had a conflict of interest, without obtaining the client’s prior informed consent and without disclosing to her all information available to him relating to her affairs.

[3] The Appellant filed four interlocutory applications in the proceedings, being applications for dismissal of the charge; alternatively a stay of proceedings; for discovery; and seeking name suppression.

[4] The Tribunal heard these applications in November 2012. In its decision, the Tribunal dismissed each application and reserved all matters as to costs. The Appellant appeals against each dismissal. The Committee opposes the appeal.

[5] In [65] of its decision, the Tribunal made orders suppressing some information referred to in its decision and those orders continue pending the Tribunal’s further order. Given that, the published copy of this decision excludes the information suppressed by the Tribunal.

Approach to appeal

[6] The appeal is brought pursuant to s 253 of the Lawyers and Conveyancers Act 2006 (“Act”) and proceeds by way of rehearing.2 The Appellant did not address me on the test to be applied in respect of each decision in issue. For the Committee, counsel submitted that the Tribunal had made each decision in the exercise of discretion, so that on appeal the test to be applied is that in May v May.3 That would mean the Appellant could succeed only if he were able to establish that the Tribunal

1 Hawkes Bay Standards Committee v M [2013] NZLCDT 1.

2 Lawyers and Conveyancers Act 2006, s 253(3)(a).

3 May v May (1982) 1 NZFLR 165 (CA).

made an error of law, took into account irrelevant considerations, failed to take account of relevant considerations or was plainly wrong.4

[7]   I accept that submission in respect of each of the Tribunal’s decisions, with the exception of the decision to refuse to dismiss the charge. For myself I would have thought an appeal against such a refusal would proceed as a general appeal. Regardless, I am satisfied that the outcome of the appeal against the refusal to dismiss is the same, whichever test is applied. For that reason it is unnecessary for me to determine the point.

Summary of the Committee’s allegations against the Appellant

[8]   The facts that the Committee alleges against the Appellant and on which it has brought the charge appear in the decision. The Appellant emphasised to me, and I accept, that he denies many of these allegations.

[9]   In 2007 Ms H, a client of the Appellant’s, entered into an agreement to sell her house to JCR Developments Limited (“ASP” and “JCR”). The ASP provided that JCR would purchase the house for $172,500 with settlement to take place on

18 January 2008. The terms of the ASP did not require JCR to pay a deposit prior to settlement. The decision records that:5

Ms H had the right to buy back the property two years later for $182,500, with a “first right of purchase” operating in her favour should JCR wish to sell the property within the two year period.

[10]    The decision also records that:6

There was a subsequent variation to the [ASP], on 3 April 2008, when a third party (Mr K Foote), said to be representing Ms H in her arrangements regarding the sale, agreed that the settlement of the sale ... would be completed by payment of a lesser amount than the agreed purchase price ... The matter was to be settled by payment of an amount equivalent to Ms H’s mortgages on the property and some other debt she owed.

[11]     The decision records that the “buy back” arrangement was varied also and that:7

Mr T Ellis, a director of JCR, confirmed at the time [of the variation] that the buy back could proceed at any point during the remainder of that year for a sum equivalent to the mortgages and other debt repaid from the funds he provided to purchase the property from Ms H.

[12] It appears that JCR or its lender paid $50,000 to the Appellant's firm as the purchase price, some $2,000 of which was applied to costs with the balance applied to repay advances to Ms H that were secured against the property. No other debts owed by Ms H were satisfied by the $50,000 payment.

[13] JCR then became the registered proprietor of the property, itself granted security against the property to a third party mortgagee, and the mortgagee subsequently exercised its power of sale. The Tribunal stated that, as a result, “Ms H was left in a position where she had sold her home, effectively, for $50,000, and her buy back right was incapable of being exercised”.8

[14] The Committee alleges that the Appellant had a solicitor and client relationship with each of Ms H, JCR, Mr Foote and Mr Ellis; and that the Appellant did not disclose to Ms H matters of which he was aware including matters affecting the “financial standing and creditworthiness of JCR, Mr Ellis, and Mr Foote” and the existence of “a commercial relationship between Mr Ellis and Mr Foote”.9

[15] As I have said, the Appellant disputes many of the matters alleged against him and denies that he is guilty of misconduct. He also contends that he has a complete answer to  any  case  against  him  based  on  a  written  consent  dated 17 December 2007, said to have been given by Ms H. The Appellant relies on this document as evidencing Ms H’s consent to his acting for her, despite any potential conflict. That consent has, however, been signed by Mr Foote as Ms H’s representative, and not by Ms H herself.

Application to dismiss charge

[16] The Tribunal was required to consider two points on the  application  to dismiss.

[17] The first was whether the Tribunal had power to dismiss a charge prior to a substantive hearing, the Committee having submitted that the Tribunal lacked power to do so. The Tribunal held that it had the power to dismiss. Counsel for the Committee did not pursue that submission on appeal.

[18] The second was the test to be applied to determine the application. The Appellant's submission to the Tribunal was there was no credible or sufficient evidence to support the allegations of an ongoing association between him and either Mr Foote or Mr Ellis, or that he possessed, or had failed to disclose to Ms H, information relevant to her position. The Appellant submitted that in such circumstances it would be unfair and a breach of the rules of natural justice to allow the charge to proceed and it was for the Tribunal to assess whether an adverse finding against the Appellant was likely.

[19] The Tribunal accepted the Committee's submission that the question was whether the evidence disclosed a prima facie case against the Appellant. That test has since been confirmed by Woodhouse J in Hall v Wellington Standards Committee (No 2).10 In that case, Woodhouse J heard an appeal from the Tribunal’s refusal to dismiss a charge after the Committee had presented its case but before the practitioner  had  made  any  election  as  to  whether  she  would  call  evidence.

Woodhouse J held that the issue on such an application is whether the evidence relied upon by (in that case) the Committee was sufficient to establish the charge.11

[20] In the present case, the Tribunal was satisfied that the evidence did disclose a prima facie case. The Tribunal recorded that the matters that the Appellant asserted were critical areas of factual dispute, including the weight (if any) to be given to the

10 Hall v Wellington Standards Committee (No 2) [2013] NZHC 798.

written consent referred to above, particularly as Mr Foote purported to sign that document on Ms H’s behalf.12

[21]    The most that the Tribunal can do on an application to dismiss made prior to a hearing is to review the affidavit evidence and determine whether it discloses a prima facie case. I agree with the Tribunal that the matters on which the Appellant relies, including the effect of the written consent, are critical areas of dispute. It is impossible to determine them or to form a view on who is more likely to prevail in the absence of a hearing.

[22] There can be no argument that the Tribunal may decline to dismiss a charge if the evidence discloses a prima face case, as it does in this instance. I am satisfied that the Tribunal’s decision was correct on this point and I dismiss this part of the appeal accordingly.

Application for stay

[23] In the alternative to his application for an order dismissing the charge, the Appellant sought a stay of the proceedings. The Tribunal dismissed that application.

[24]     [Suppressed].

[25]     [Suppressed].

[26]     [Suppressed].

[27]     [Suppressed].

[28]     [Suppressed].

12 Hawkes Bay Standards Committee v M, above n 1, at [25] – [26].

Application for discovery

[29] The further discovery that the Appellant sought was an order requiring the “committee and all associated with it including [Ms H] to produce all their files and records for the [Appellant]”.13

[30] It is apparent from his application that the Appellant anticipated that this discovery would encompass:14

... all the records relating to the enquiry from the outset including [Ms H’s] records, the records of the people who assisted her in making her original declaration and composing the correspondence which was forwarded to the Society and the Society’s encouragement and support of that correspondence. The records of the Society’s meetings and minutes and all correspondence which would indicate why there is such a delay in the formulation of the charge to which the [the Appellant] has now been asked to answer.

[31] The grounds on which the Appellant made his application were that the Committee had been “selective” in the documents it had put in evidence, thereby creating an unfair impression; that there had been delay in bringing the charge; that it was possible Ms H had “lost all interest” in the matter; and that the Committee was simply seeking to “gain an advantage”.15

[32]    The Tribunal refused the application. Its view was that:16

(a)the Committee had made full disclosure of its case in the material that it had filed in the Tribunal with the charge and it had served such material on the Appellant;17

(b)the Committee had gone further than necessary and, in an endeavour to address the Appellant’s concerns, had provided the Appellant with its correspondence file;

13 Application for an Order for Disclosure and Discovery, 8 December 2011 at [1].

14 Ibid, at [2.3].
15 Ibid, at [2.1] – [2.4].
16 Hawkes Bay Standards Committee v M, above n 1, at [38] – [46].

17 Lawyers and Conveyancers Act (Disciplinary Tribunal) Regulations 2008, reg 5.

(c)the discovery provided by the Committee fully and fairly informed the Appellant of the charge and evidence against him; and

(d)the further discovery sought was irrelevant to the charge against the Appellant.

[33] It is clear that the Tribunal has power to order discovery of all “relevant” documents. For instance, regulation 32 of Lawyers and Conveyancers Act (Disciplinary Tribunal) Regulations 2008 permits the Chairperson of the Tribunal to convene a conference and, amongst other things, direct a party to:18

file, within a time that the chairperson thinks fit, any affidavits, documents, or lists of documents relating to any of the matters at issue; and ...

[34] In addition, the Tribunal has issued a Practice Note dated 10 September 2010 (“Practice Note”). Amongst other things, the Practice Note sets out the Tribunal’s requirements as to discovery in disciplinary proceedings before the Tribunal.19 Clauses 5.3 and 5.4 of the Practice Note read as follows:

5.3In general, the Tribunal does not require the formal “discovery” of documents. However, parties are required to provide documents in accordance with clause 5.1 above [being documents relied upon at hearing], and have access to documents held by other parties,  that are relevant to the proceeding.

5.4Parties are required to provide these documents, or make them available for inspection, to all other parties. Parties may prefer to carry out this process informally, with each advising the others of the documents held or able to be accessed and then arranging for inspection or provision of requested documents.

[35] The Tribunal was satisfied that the Committee had served  all  relevant material on the Appellant and complied with the requirements of clauses 5.3 and 5.4 of the Practice Note.

[36] On the hearing of the charge, the Tribunal will be required to determine whether the Committee has proved that the Appellant has been guilty of misconduct as defined in s 7 of the Act. With respect to the Appellant, and as the Tribunal held,

18 Ibid, reg 32(3)(a)(i).

19 Practice Note issued by the Chairperson of the Lawyers and Conveyancers Disciplinary Tribunal, 20 September 2010.

the documents of which he seeks discovery are irrelevant to that question. I am not satisfied that the Appellant has made out any error in the Tribunal's determination of his application for further discovery and I dismiss his appeal on this point also.

Application for name suppression

[37] The Appellant sought an order suppressing publication of his name and any particulars which might identify him as the practitioner against whom the charge was brought.

[38]     [Suppressed].

[39] The  Committee opposed the application for suppression, challenging the various grounds on which the Appellant relied and submitting that different considerations arose on an application to the District Court for suppression.

[40]  The Tribunal is required to undertake a balancing exercise when determining an application for name suppression. It is required to weigh the various public interest factors that favour publication against those considerations which might render it just to favour the personal interests of the applicant for suppression.  The

need for this exercise, and the manner in which it is to be undertaken, was addressed by Toogood J in X v Standards Committee (No 1) of the New Zealand Law Society20 and subsequently confirmed by the Court of Appeal in that case.21 The test to be applied on any appeal is that in May v May.22

[41] The Tribunal’s reasons for declining the application for suppression may be summarised as follows.23

[42]     [Suppressed].

[43]     [Suppressed].

20  X v Standards Committee (No 1) of the New Zealand Law Society HC Auckland CIV-2011-404- 7750, 13 December 2011.

21 X v Standards Committee (No 1) of the New Zealand Law Society [2011] NZCA 676.

22 Ibid, at [16].

23 Hawkes Bay Standards Committee v M, above n 1, at [55] – [63].

[44]     [Suppressed].

[45] Thirdly, the Tribunal considered that those “dealing  with”  the Appellant should have the opportunity of “making an informed choice” as to whether they wished to do so.24

[46] It is apparent from the Tribunal’s decision that it gave full consideration to the grounds and evidence on which the Appellant relied. It reached the view that the evidence was insufficiently compelling to establish any of the grounds. I am not persuaded that the Tribunal erred in any way in its consideration of the application or evidence and I dismiss this aspect of the appeal accordingly.

Costs

[47] In a memorandum filed shortly after the hearing the Committee confirmed that it did not seek costs on the appeal. Costs are to lie where they fall.

..................................................................

M Peters J

24 Ibid, at [61].