Shand v Legal Complaints Review Officer
[2020] NZHC 2219
•28 August 2020
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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-1852
[2020] NZHC 2219
BETWEEN GRANT DONALD RICHARD SHAND
Applicant
AND
LEGAL COMPLAINTS REVIEW OFFICER
First Respondent
THE NATIONAL STANDARDS COMMITTEE OF THE NEW ZEALAND LAW SOCIETY
Second Respondent
Hearing: 11 May 2020 Counsel:
D P H Jones QC and J L Libbey for applicant
M Hodge on behalf of the New Zealand Law Society
Judgment:
28 August 2020
JUDGMENT OF KATZ J
This judgment was delivered by me on 28 August 2020 at 3:00 pm pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Solicitors: Cook Morris Quinn, Auckland
Meredith Connell, Auckland
Counsel: D P H Jones QC, Lorne Street Chambers, Auckland Copy to: Legal Complaints Review Officer (First respondent)
The National Standards Committee of the New Zealand Law Society (Second respondent)
SHAND v LEGAL COMPLAINTS REVIEW OFFICER & ANOR [2020] NZHC 2219 [28 August 2020]
Introduction
[1] Grant Shand is a litigation lawyer who regularly acts for homeowners in litigation arising out of the Canterbury earthquakes. From time to time, Mr Shand engages expert witnesses on behalf of his clients.
[2] Mr Cowie is a registered professional surveyor practising in Christchurch. In July 2014 Mr Shand’s law firm instructed Mr Cowie to undertake work on behalf of Mr and Mrs Kelly. Rule 12.2 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (“Rules”) provides that where a lawyer instructs a third party on behalf of a client to render services, in the absence of an arrangement to the contrary, the lawyer is personally responsible for payment of the third party’s fees, costs, and expenses. Mr Shand and Mr Cowie did not make any arrangement to the contrary. Mr Shand was therefore personally liable to pay Mr Cowie’s fees.
[3] A dispute subsequently arose between Mr Shand and Mr Cowie regarding the reasonableness of Mr Cowie’s fees. A Standards Committee of the New Zealand Law Society found that Mr Shand’s conduct in relation to the fee dispute was unsatisfactory. It ordered Mr Shand to pay Mr Cowie’s invoice in full, without prejudice to Mr Shand’s right to later challenge the reasonableness of Mr Cowie’s fees in the appropriate forum. The Legal Complaints Review Officer (“LCRO”) upheld that decision. Mr Shand now applies to judicially review the decisions of both the Standards Committee and the LCRO.
[4] Although, as the decision-makers, the LCRO and Standards Committee are named as parties, they abide the decision of the Court. The New Zealand Law Society (“Law Society”) was granted leave to intervene in the proceeding and appeared at the review hearing as contradictor.
Background
[5] On 8 July 2014, one of Mr Shand’s staff solicitors instructed Mr Cowie to prepare an expert brief in relation to a court proceeding that Mr and Mrs Kelly had
brought against the Earthquake Commission and Southern Response Earthquake Services Limited1 (“the Kelly instructions”).
[6] Mr Cowie was instructed that “rather than a Rolls Royce brief, we are looking for more the type done in Lowe”. The reference to “Lowe” was to a brief that Mr Cowie had prepared for another of Mr Shand’s clients, where Mr Cowie had charged $9,257.50 inclusive of GST.
[7] Subsequently, on 11 September 2014, Mr Shand instructed Mr Cowie to prepare a further brief (a reply brief) in relation to the Kelly instructions, which Mr Cowie did.
[8] On 24 September 2014, one of Mr Shand’s staff solicitors requested that Mr Cowie advise his fees on the Kelly instructions. Mr Cowie did not provide the requested information and the staff solicitor did not follow the matter up further.
[9] In October 2014, Mr Cowie attended as a witness for Mr and Mrs Kelly at the initial hearing of their claim (which related to causation issues). He gave evidence for a total of eight and a half hours, spread across three days. Subsequently, on 14 June 2015 Mr Cowie sent an invoice for his services in relation to the Kelly instructions to Mr Shand’s law firm. Although sent to the firm, the invoice was addressed to Mr and Mrs Kelly and was for $48,875.
[10] Mr Shand says that he and Mr Cowie had a longstanding arrangement whereby payment of Mr Cowie’s invoices for the various matters he was engaged on, regardless of when they were rendered, was deferred until the conclusion of the relevant case (“the deferred payment term”). Mr Shand says that this is because the client homeowner will not generally be able to pay expert fees until their claim has been resolved, at which time it is anticipated they will receive judgment and an award. Mr Shand says that following receipt of Mr Cowie’s invoice in relation to the Kelly instructions he spoke to Mr Cowie, who verbally confirmed that payment was not required until the conclusion of the case.
1 Southern Response Earthquake Services Limited is a government owned company that was formed following the Canterbury earthquakes in 2011 to protect the interests of AMI policy holders and ensure that their claims would continue to be met under the terms of their policies.
[11] On 22 July 2015, the first Kelly judgment was delivered. It related solely to issues of causation and found that the damage caused to the foundations of the Kelly’s home was caused by an earthquake. A further High Court hearing took place almost two years later, commencing on 26 June 2017. The final Kelly judgment was delivered on 10 July 2017.
[12] Meanwhile, on 6 December 2016 (18 months after Mr Cowie’s invoice had been issued) Mr Cowie emailed Mr Shand seeking payment. Mr Shand’s view was that payment was not yet due, in accordance with the deferred payment term. Nevertheless, the request for payment appears to have prompted Mr Shand to look more closely at Mr Cowie’s invoice. Mr Shand says that he verbally communicated his concern to Mr Cowie that the fee was unreasonable. Mr Shand was concerned that the fee was well in excess of the fee of $24,940.63 that Mr Cowie had rendered in another matter that Mr Shand believed had involved a similar amount and type of work. In Mr Shand’s view that sum reflected a more reasonable fee for the work undertaken and he accordingly offered to pay $25,000 in full and final settlement of Mr Cowie’s invoice, in December 2016.
[13] Mr Cowie was not willing to accept part payment. On 31 May 2017, he made a complaint to the Lawyers Complaints Service (set up under the Lawyers and Conveyancers Act 2006) about Mr Shand’s failure to pay his invoice.
[14] On 26 June 2017, Mr Shand made a complaint to the Institute of Surveyors (now Survey and Spatial New Zealand) setting out his concerns about Mr Cowie’s fees. In response, the Institute advised Mr Shand that it did not become involved in fee disputes and could only consider Mr Cowie’s professional conduct.
[15] Mr Shand accepts that, following delivery of the final Kelly judgment on 10 July 2017, any fee owing to Mr Cowie became payable in accordance with the deferred payment term. He did not, however, pay the undisputed portion of the invoice at that time. He says that this was because the complaints process was by then on foot and he believed that the issue of the reasonableness of Mr Cowie’s fees would be resolved either as part of the complaints process or as part of the High Court’s costs judgment. That did not eventuate.
The Standards Committee’s decision
[16] Mr Cowie complained to the Standards Committee on the basis that Mr Shand’s failure to pay him on time brought the legal profession into disrepute, and was unethical and unprofessional.
[17] The Standards Committee considered and determined Mr Cowie’s complaint on the papers, in accordance with its usual practice. It found that Mr Shand had contravened rule 12.2 of the Rules. That rule provides as follows:
Rule 12.2
Where a lawyer instructs a third party on behalf of a client to render services in the absence of an arrangement to the contrary, the lawyer is personally responsible for payment of the third party’s fees, costs, and expenses.
[18] The Standards Committee held that “a primary purpose of r 12.2 of the Rules is to ensure certainty in the allocation of liability (e.g. whether the lawyer or rather the lawyer’s client is liable) to pay third parties prior to the engagement of a third party”.2 The Standards Committee further stated that:3
…rule 12.2 also has the purpose of ensuring lawyers engaging third parties on behalf of their clients do so in a careful and prudent manner. It contemplates the parties’ autonomy in negotiating acceptable terms about the provision of the third party’s services, including payment terms.
[19] The Standards Committee held that a lawyer who disputes a third party’s fee has a professional obligation to:4
(a)as soon as practical inform the third party that their fees are considered to be unreasonable and/or improper, and in what respects;
(b)promptly pay to the third party the amount which the lawyer considers proper and reasonable; and
2 Standards Committee Determination, 22 November 2017 at [12].
3 Standards Committee Determination, 22 November 2017 at [13].
4 Standards Committee Determination, 22 November 2017 at [17].
(c)attempt to negotiate prompt settlement of the balance of the third party’s fees or dispute the balance of the fees in an appropriate forum such as the Disputes Tribunal, the courts or by alternative dispute resolution.
[20] Mr Shand, the Standards Committee found, had breached those obligations. The breach was found to be sufficiently serious to amount to unsatisfactory conduct pursuant to s 12(b) and/or (c) of the Act.5 The Standards Committee noted that as at the date of its determination (22 November 2017) Mr Shand had not yet made any payment towards Mr Cowie’s invoice. That invoice had been sent to Mr Shand on 14 June 2015 and had been payable since final judgment was delivered on 10 July 2017, at the latest (the date for payment in accordance with the deferred payment term).6
[21] The Standards Committee ordered Mr Shand to rectify his “omission to pay the invoice” by paying it in full ($48,875), without prejudice to his right to challenge its reasonableness in an appropriate forum such as the Disputes Tribunal or the courts.7 In addition, the Standards Committee censured Mr Shand, fined him $1,500 and ordered him to pay costs of $1,500.
[22] The Standards Committee made it clear that it was not purporting to determine the reasonableness of Mr Cowie’s fees. Rather, that issue would need to be resolved through other channels:8
30. Despite the order… above, the NSC has not purported to resolve the issue of whether or not the quantum of the Invoice is reasonable. As Mr Shand submitted, the NSC is not well placed to purport to make any such assessment and nor is that the NSC’s statutory function; the NSC’s role is to assess Mr Shand’s related professional responsibilities only.
31. The NSC’s order for Mr Shand to pay the Invoice is without prejudice to Mr Shand’s right to challenge the quantum of the Invoice in an appropriate forum, such as the Disputes Tribunal or the courts.
5 Standards Committee Determination, 22 November 2017 at [22].
6 Standards Committee Determination, 22 November 2017 at [24].
7 Standards Committee Determination, 22 November 2017 at [26] and [31]. The Committee relied on its powers in s 156(1)(h)(i) of the Act, which provides that if a Committee makes a determination of unsatisfactory conduct under s 152(2)(b) the Committee may order the practitioner to rectify, at his or her own expense, any error or omission.
8 Standards Committee Determination, 22 November 2017 at [30] and [31].
Legal Complaints Review Officer’s decision
[23] Mr Shand then sought a review of the Standards Committee’s decision by the LCRO.9 The LCRO confirmed the decision of the Standards Committee. In relation to the Standards Committee’s order that Mr Shand pay the disputed invoice in full, the LCRO said:10
The Committee’s view that Mr Shand should pay the fee, however much it was, and then dispute its reasonableness, would be discomfiting as a matter of general principle. Adopting that approach would, however, present a significant inducement to lawyers intending to instruct third parties to ensure they had properly documented arrangements in place, agreed to by the client or, as in this case, the litigation funder.
Issues
[24] Mr Shand then filed a judicial review proceeding in this Court, in which he pleads five causes of action against the Standards Committee or LCRO. The key issues raised by the proceeding are:
(a)whether the Standards Committee (and subsequently the LCRO) erred in finding that Mr Shand had engaged in unsatisfactory conduct; and
(b)if Mr Shand did engage in unsatisfactory conduct, whether the Standards Committee (in a decision later upheld by the LCRO) erred in ordering Mr Shand to pay Mr Cowie’s invoice in full, even though part of it was disputed.
Did the Standards Committee/LCRO err in finding that Mr Shand had engaged in unsatisfactory conduct?
[25] Both the Standards Committee and the LCRO found that Mr Shand had engaged in unsatisfactory conduct falling within s 12(b) and/or (c) of the Act, namely:
(a)conduct that would be regarded by lawyers of good standing as being unacceptable, including conduct unbecoming a lawyer, or unprofessional conduct; and/or
9 Pursuant to s 193 of the Lawyers and Conveyancers Act 2006.
10 Shand v Cowie LCRO 242/2017 at [78].
(b)conduct consisting of a contravention of the Act or Rules falling short of misconduct (which is dealt with separately).
[26] It is enough to support a finding of unsatisfactory conduct if the relevant conduct falls within one of these the categories. As Clark J observed in McGuire v New Zealand Law Society:11
A charge of misconduct or unsatisfactory conduct may be brought and a conviction may be obtained despite the charge not being based on a breach of any specific rule, nor on a breach of some other rule or regulation made under the Act.
Rule 12.2 – relevant case law
[27] The Rules are based on the fundamental obligations of lawyers set out in s 4 of the Act. Rule 12.2 provides:
Third party fees
12.2 Where a lawyer instructs a third party on behalf of a client to render services in the absence of an arrangement to the contrary, the lawyer is personally responsible for payment of the third party’s fees, costs, and expenses.
[28] There is no commentary on r 12.2 and limited case law to assist in its interpretation. The rule was considered in passing in McGuire v New Zealand Law Society,12 in juxtaposition with r 10.7, which provides:
Fees of other lawyers
10.7 A lawyer who, acting in a professional capacity, instructs another lawyer, must pay the other lawyer’s account promptly and in full unless agreement to the contrary is reached, or the fee is promptly disputed through proper professional channels. This rule applies to the accounts of barristers sole and foreign lawyers.
10.7.1 Where the instructing lawyer and the lawyer undertaking the work have agreed that the instructing lawyer’s client is to be solely responsible for paying the lawyer’s account then (unless agreed otherwise) the instructing lawyer must use all reasonable endeavours to ensure the client pays the account. The instructing lawyer must promptly inform the instructed lawyer if it appears that the client will be unable or unwilling to pay the account.
11 McGuire v New Zealand Law Society [2019] NZHC 2748.
12 McGuire v New Zealand Law Society [2019] NZHC 2748.
10.7.2 A lawyer with a practising certificate as a barrister and solicitor may sue for and recover from the party chargeable any fees paid or payable by the lawyer to a barrister sole for work done or to be done on the instructions of the lawyer in relation to a client’s affairs, if those fees are shown as a disbursement in a bill of costs rendered by the lawyer to the party chargeable.
[29] As noted in the footnote to r 10.7 “This rule is necessary because a barrister sole is not entitled to sue for his or her fees: Atkinson v Pengelly.”13 As Clark J observed in McGuire, in instructing a barrister “an instructing solicitor’s obligation is seen as one of honour, not debt”.14 Ultimately, her Honour concluded in that case that r 12.2 did not assist in determining the scope of a lawyer’s obligation under r 10.7, as the two rules are directed to quite different circumstances:15
I make one final observation. In this case the controlling rule is r 10.7. I do not regard r 12.2 as relevant. Rule 12.2 concerns the obligation to pay “a third party”. I think it is clear that third parties are in contradistinction to lawyers whose arrangements are governed by r 10.7.
[30] Rule 12.2 was also considered, briefly, in JH v The Legal Complaints Review Officer.16 In that case the LCRO had upheld a decision of a Standards Committee holding the applicant in breach of r 12.2. The applicant applied to judicially review the LCRO’s decision. As in this case, the Law Society appeared as contradictor, as the respondents abided the decision of the Court. The Law Society did not oppose the judicial review application, instead filing a consent memorandum jointly with the applicant which relevantly stated that:17
2. The parties agree that the proper reading of Rule 12.2 requires to be read as referring to the third parties “reasonable or proper fees costs and expenses”.
3. They agree that the rule is concerned with lawyers’ conduct and their liability to ensure third parties are paid a fair and reasonable fee in the absence of an agreement contrary. The means by which a lawyer should satisfactorily address his or her responsibilities, in circumstances such as those arising on the facts of this case, is for the lawyer to determine in a diligent and professional manner. The failure to do so, amounting to a breach of the rule, could have adverse professional consequences.
13 Atkinson v Pengelly [1995] 3 NZLR 104 (HC).
14 Atkinson v Pengelly [1995] 3 NZLR 104 (HC) at [56].
15 Atkinson v Pengelly [1995] 3 NZLR 104 (HC) at [71].
16 JH v The Legal Complaints Review Officer [2014] NZHC 309.
17 JH v The Legal Complaints Review Officer [2014] NZHC 309 at [6].
[31] By consent, Faire J quashed the LCRO decision, ordered that the matter not be referred back to the LCRO and stayed any further pursuit of the complaint.
[32] Finally, counsel referred to the LCRO’s decision in HR v OW and CT.18 In that case the LCRO found the lawyers involved guilty of unsatisfactory conduct in failing to establish an agreed fee framework with the third party at the time of his engagement and subsequently failing to pay proper attention to the time the third party devoted to carrying out their instructions.
Discussion
[33]It was common ground (and I accept) that r 12.2:
(a)is directed at the allocation of responsibility (liability) for payment of a third party’s fees; and
(b)is subject to an implied term that the lawyer is only responsible for payment of a third party’s “reasonable” or “proper” fees.19
[34] Rule 12.2 does not explain, however, how a lawyer is to discharge his or her obligation to pay a third party’s fees, in the absence of an agreement that someone else will pay them. Where the fees are not disputed the answer would appear to be relatively straightforward – the practitioner is required to pay the fees without deduction or undue delay. What is the position, however, if the fees are disputed?
[35] Mr Jones QC submitted, in effect, that a lawyer is in the same position as a member of the general public when it comes to their obligation to pay third party fees. He noted the generality with which r 12.2 is expressed and the fact that the rule does not include detailed obligations similar to those set out in r 10.7 (which relates to the obligation on lawyers to pay barristers fees). The difference is deliberate, Mr Jones submitted, because (unlike barristers) third parties have other ways in which to enforce payment of their fees, such as suing for them.
18 HR v OW and CT LCRO 79/2014.
19 This was also common ground between the parties in JH v Legal Complaints Review Officer
(2014) NZHC 309.
[36] I accept Mr Hodge’s submission, however, that r 12.2 cannot be considered in isolation. Regard must be had to the wider legislative context when considering how a lawyer should satisfactorily address his or her responsibilities under r 12.2, from a professional standards perspective. The purposes of the Act include the maintenance of public confidence in the provision of legal services.20 Further, lawyers are obliged to conduct their dealings with third parties with integrity.21 A lawyer must act competently and professionally. It is unsatisfactory conduct for a lawyer to breach the Rules,22 to fail to act competently and diligently,23 or to engage in unbecoming conduct or act unprofessionally.24 Finally, the Rules provide for standards of professional conduct and client care which “will be a reference point for discipline”.25
[37] Given this wider legislative context, lawyers are not in the same position as members of the general public when it comes to fee disputes. For example, a member of the public may refuse to pay even an entirely undisputed account until the third party has obtained judgment against them (albeit at the risk of incurring liability for interest and costs). Lawyers, however, are held to a different standard. This is not because r 12.2 contains express provisions specifying how lawyers should discharge their obligation to pay the fees of third parties (whether disputed or not). Rather, a lawyer’s obligations in such circumstances must be assessed with reference to the professional standards and obligations set out in the Rules. Lawyers must act competently, diligently, with integrity, and in a professional manner. They must deal with fee disputes in a manner that is becoming (appropriate) for a legal professional, and in a way that will not undermine public confidence in the provision of legal services.
[38] What, however, does this mean in practice? As set out above, the Standards Committee found that a lawyer who disputes a third party’s fee has the following professional obligations:26
20 Lawyers and Conveyancers Act 2006, s 3(1)(a).
21 Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, r 12.
22 Lawyers and Conveyancers Act 2006, s 12(c).
23 Lawyers and Conveyancers Act 2006, s 12(a).
24 Lawyers and Conveyancers Act 2006, s 12(b).
25 Lawyers and Conveyancers Act 2006, ss 94(e) and s 95.
26 Standards Committee Determination, 22 November 2017 at [17].
(a)as soon as practical to inform the third party that their fees are considered to be unreasonable and/or improper, and in what respects;
(b)to promptly pay to the third party the amount which the lawyer considers proper and reasonable; and
(c)to attempt to negotiate prompt settlement of the balance of the third party’s fees or dispute the balance of the fees in an appropriate forum such as the Disputes Tribunal, the courts or by alternative dispute resolution.
[39] I agree with this summary, albeit in [38](a) I would replace the words “as soon as practical” to “within a reasonable time” to reflect that what is reasonable may depend on the particular circumstances of a case including, for example, the previous history of dealings between the parties. A “reasonable” time, however, would still generally require that any concerns regarding the reasonableness of a third party invoice be raised promptly.
[40] As for the obligation set out in [38](b), if part of a fee is accepted as being proper and reasonable then it is clearly appropriate that that amount should be paid promptly. Failure to do so (absent exceptional circumstances) would be unprofessional and would likely undermine confidence in the provision of legal services.
[41] I also agree with the obligation set out in [38](c) above but emphasise the use of the word “or” in that sub-paragraph. The two steps set out in that paragraph (negotiation or the pursuit of dispute resolution processes) are appropriately presented as alternatives. Attempting to negotiate prompt settlement of the disputed balance will always be an available option. It would be unreasonable, however, to impose an obligation on the lawyer to initiate legal proceedings, however. Indeed, the third party will often be the most appropriate person to choose between different dispute resolution processes that may be available (including in some cases complaints procedures offered by relevant professional bodies). Further, a third party seeking payment of a disputed invoice will generally have a clear cause of action in breach of
contract. The legal remedies available to a lawyer who wishes to challenge the reasonableness of a fee they have not yet paid are less clear-cut.
[42] In summary, I agree with the Standards Committee and the LCRO that when r 12.2 is read purposively and in its full legislative context the three obligations set out at [38] above (subject to the minor amendment I refer to at [39]) will generally provide an appropriate benchmark for assessing whether the lawyer has acted in a professional and responsible manner in relation to a third party fee dispute and that they provide an appropriate benchmark in this case.
[43] I have not overlooked Mr Jones’ submission that the differences between rr 12.2 and 10.7, in terms of the obligations expressly imposed on lawyers by those rules, are significant and should be assumed to be deliberate. I note, however, that, r 10.7 imposes an obligation on a lawyer to pay a barrister’s fees promptly and in full unless agreement to the contrary is reached or the fee is promptly disputed through proper professional channels. This is a particularly onerous obligation and it is therefore not surprising that it is expressly set out in r 10.7. A lawyer’s obligations in relation to third party fees, however, are much less onerous. The comparable obligation is to pay the undisputed portion of an invoice within a reasonable time.
[44] The Committee (and LCRO, on review) were also correct, in my view, to find that the professional obligations set out in [38] above were breached in this case. Mr Cowie’s invoice was rendered on 14 June 2015. Mr Shand did not raise any concerns until Mr Cowie pressed for payment some 18 months later, in December 2016. Accepting for present purposes that the deferred payment term applied, Mr Shand was obliged to pay what he believed to be a reasonable fee for the work undertaken by Mr Cowie following delivery of the final Kelly judgment on 10 July 2017. By the time of the LCRO decision two years later, on 4 July 2019, Mr Shand had still not done so.
[45] Finally, although negotiations did take place regarding the fee dispute, they did not relate to the balance of the fee owing. Rather, Mr Shand only offered to pay what he assessed to be a reasonable fee ($25,000) if Mr Cowie agreed not to pursue his claim for the balance. Using the offer to pay a reasonable fee as negotiating leverage
to attempt to persuade Mr Cowie to withdraw his claim for the balance of his invoice ran contrary to Mr Shand’s professional obligations.
[46] The Committee noted that a breach of the Rules does not automatically equate to a finding of unsatisfactory conduct but considered that in the circumstances Mr Shand’s contravention was sufficiently serious to amount to unsatisfactory conduct. In my view it was open to the Standards Committee to find that Mr Shand’s conduct was unsatisfactory and for the LCRO to uphold that finding on review. I agree with their assessment.
Did the Standards Committee and LCRO err in ordering Mr Shand to pay Mr Cowie’s invoice in full, even though part of it was disputed?
[47] Having determined that Mr Shand had engaged in unsatisfactory conduct, the Standards Committee went on to consider the appropriate orders. It stated that:
Having determined in all the circumstances that Mr Shand’s omission to pay the Invoice amounts to unsatisfactory conduct….the [Standards Committee] orders Mr Shand to rectify his omission to pay the Invoice, by paying the Invoice in full pursuant to s 156(1)(h)(i) of the Act.
[48] This order was made without prejudice to Mr Shand’s right to subsequently challenge the quantum of the invoice in an appropriate forum such as the Disputes Tribunal or the courts. Mr Shand was also censured, fined $1,500 and ordered to pay costs of $1,500.
[49]Section 156(1)(h)(i) of the Act relevantly provides:
156 Power of Standards Committee to make orders
(1) If a Standards Committee makes [an unsatisfactory conduct determination], that Standards Committee may-
(h)order the practitioner…-
(i) to rectify, at his or her…own expense, any error or omission; or
(ii) where it is not practicable to rectify the error or omission, to take steps to provide, at his or her…own expense, relief, in whole or in part, from the consequences of the error or omission:
[50] Mr Jones submitted that this provision does not confer jurisdiction on the Standards Committee to order a lawyer to make full payment of a third party’s disputed fee. A lawyer, he submitted, should not be compelled to pay a disputed and potentially unreasonable invoice and then have to file proceedings to recover any overpayment. The appropriate course, he submitted, is for the third party to bring proceedings to recover their fee (or the disputed part of it), in the usual manner.
[51] Section 156(1)(h)(i) confers jurisdiction to order a practitioner to rectify their error or omission. The necessary starting point, therefore, is to identify the relevant “error or omission.” The Standards Committee identified the relevant omission as being Mr Shand’s “omission to pay the Invoice”. I assume that this is a shorthand way of referring to Mr Shand’s failure to pay the undisputed portion of the invoice, as that was the act that was found to constitute unsatisfactory conduct. Mr Shand was not obliged to pay the full invoice and his failure to do so did not therefore constitute unsatisfactory conduct.
[52] To “rectify” means to “to set right; to correct, amend (a particular mistake, error, omission, defect, etc).”27 Ordering that Mr Shand pay the full invoice, including the disputed portion (almost half of the invoice) went beyond what was required for Mr Shand to rectify his omission to pay the undisputed portion of the invoice.
[53] Mr Hodge submitted that the order that Mr Shand pay the disputed invoice in full was “an appropriate disciplinary response” in the circumstances. In my view this submission conflates the Tribunal’s jurisdiction under s 156(1)(h)(i) (which relates solely to rectification) with its disciplinary powers under s 156, which includes the power to impose fines of up to $15,000 and make costs awards. An appropriate overall response to unsatisfactory conduct may well involve a combination of rectification and disciplinary orders (as it did in this case). Rectification orders, however, must be limited to what is required to rectify the relevant error or omission.
[54] Following the LCRO hearing, Mr Shand paid Mr Cowie the undisputed portion of his invoice ($25,000). Mr Shand has therefore now, belatedly, rectified his previous
27 Oxford University Press "rectify, v.". OED Online. June 2020.
(accessed August 26, 2020).
failure to pay that sum. No purpose would therefore be served by now making an order to that effect. If Mr Cowie wishes to pursue payment of the balance of his invoice he will need to do so through an appropriate channel, such as the Disputes Tribunal. As both the Standards Committee and the LCRO observed, the reasonableness of Mr Cowie’s fees cannot be determined in the context of a disciplinary process under the Rules. Likewise, that issue cannot be determined in the context of this judicial review proceeding.
Result
[55] The Standards Committee’s order (upheld by the LCRO) requiring Mr Shand to pay Mr Cowie the full amount of his invoice is set aside.
[56] The decisions of the Standards Committee and LCRO are otherwise upheld, including the finding that Mr Shand’s conduct in relation to Mr Cowie’s invoice was unsatisfactory.
[57] If there are any costs issues that cannot be resolved between counsel, then leave is reserved to file memoranda. Any memorandum on behalf of Mr Shand is to be filed by 15 September 2020. Any memorandum on behalf of the Law Society is to be filed by 22 September 2020.
Katz J
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