Woods v Legal Complaints Review Officer

[2013] NZHC 674

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV 2011-454-257 [2013] NZHC 674

UNDER  the Judicature Amendment Act 1972

IN THE MATTER OF     an application for a review of a decision of the Legal Complaints Review Officer

BETWEEN  DALLAS WOODS Plaintiff

ANDLEGAL COMPLAINTS REVIEW OFFICER

First Respondent

ANDJAMES PEARCE Second Respondent

Hearing:         11 March 2013

Counsel:         G A Paine for Plaintiff

G Mason as Amicus

Judgment:      11 March 2013

Reasons:        8 April 2013

REASONS FOR JUDGMENT OF THE HON JUSTICE KÓS

[1]      A terminally ill woman attends a solicitor to make a will.  The major asset owned by the woman is her interest in a house she owns together with her husband. The woman believes they own the house “jointly”, or else that it is registered in the husband’s name.  If, as expected, she predeceases her husband, he will receive her share.  She does not want the title checked.  So no one checks it.  The will simply provides for disposition of the house in the unlikely event her husband predeceases

her. All the rest of her estate is to go to her son from an earlier relationship.

WOODS v LEGAL COMPLAINTS REVIEW OFFICER HC PMN CIV 2011-454-257 [11 March 2013]

[2]      After she dies it is discovered the house was owned by the couple as tenants in common.  Her half share in the house therefore falls into residue and goes to the son. The husband now has to make arrangements to buy out the son’s entitlement.

[3]      The husband complains that the solicitor had failed to check the ownership position before the will was executed, or to counsel his wife on the consequences of the assumed ownership position being incorrect.   He does not believe that what ended up happening is what his wife intended.

[4]      A Law Society Standards Committee dismisses the complaint.  It is however upheld by the Legal Complaints Review Officer (LCRO).  The solicitor applies for judicial review of the LCRO decision.  After hearing the application I dismissed it, upholding the LCRO decision, with reasons to follow. These are the reasons.

Facts

[5]      On 22 October 2008 Mrs Pearce went to the Terrace End Law Centre, a firm of solicitors in Palmerston North.  Mrs Pearce was terminally ill.  She had cancer, and she died less than a year after the attendance.   Her reason for going to the solicitors was to have a will prepared.

[6]      There  she  met  the  plaintiff,  Ms  Dallas  Woods.    She  was  the  principal practitioner at the Terrace End Law Centre.  She had not met or acted for Mrs Pearce before.

[7]      Ms Woods got Mrs Pearce to fill in a form.   It identified her major assets. These were modest: an interest in a house at Feilding (in which she lived with her husband), three bank accounts and a motor car.  She told Ms Woods that the house was in the name of her husband.  On the form, Ms Woods noted, “Joint?”

[8]      When the matter went before the Legal Complaints Review Officer (LCRO) Ms Woods gave the following evidence:

LCRO:            I would just like to ask you, in what way are these notes reflecting  this  lady’s  understanding  that  the  house  was owned as tenants in common?

Ms Woods:      She didn’t know they were tenants in common.

LCRO:           She thought it was jointly owned? Ms Woods:      Hmm or in his name, one of the two.

[9]      Ms Woods had not acted on the purchase of the house by Mr and Mrs Pearce six years earlier. This followed:

LCRO:            I have never yet known a lay person, or hardly ever, who knew the difference legally between joint and owned property.

MsWoods:      Well they do when they leave my office I assure you.  They do because I explain it very carefully.  The main difference is what happens on death, that’s all that has to be explained. The difference is if you die, the other person gets it.   The other way is it goes into your will.

[10]     Ms Woods prepared the will on the basis that the house was “jointly owned”. That appeared to be Mrs Pearce’s understanding of things.   Either that or that the house was solely in her husband’s name.   Ms Woods gave evidence that she had explained carefully the difference between joint ownership and co-ownership as tenants in common.  It does not appear that she gave advice on entitlement under the Property  (Relationships)  Act  1976  in  the  event  that  the  property  was  in  fact registered in Mr Pearce’s name alone.  As to checking Mrs Pearce’s understanding, Ms Woods said the following in a letter to the Standards Committee:

Mrs Pearce refused to have the title of the house checked.  She was told it was only $10.00.  She refused.  She was adamant that the house was to be mentioned in the will.  I believe that was because she was told to make a will to deal with it.  The point she made was that if the house became hers solely, it was to be shared equally between the children.  That is, she expected to become the sole owner if her husband passed away.   The concept of ownership was clearly explained to her.

[11]     Ms Woods has sworn an affidavit in support of the present application for judicial review.  In that affidavit she says:

9.    I had  discussions  with  Mrs  Pearce  with  respect  to  the Will.    With respect to the house there is a comment that it was presently owned with her husband – jointly. This was what Mrs Pearce told me.

10.  I discussed with her at some length the question of ownership because I spent 10 years in the Public Trust drafting Wills and administering Estates and this was an explanation we were trained to make very clear to a married/partnered person.  I explained to her the difference between tenancy in common and joint ownership on death and I have little doubt that she completely understood that.   Notwithstanding the wording of the Will, I advised that we search the Title to check as they had separate families, but Mrs Pearce wasn’t concerned and wasn’t prepared to and said no.

Paragraph 9 is slightly different to the evidence Ms Woods gave before the LCRO, where she allowed Mrs Pearce may also have said that it was registered in her husband’s name.

[12]     Over the course of the next week Ms Woods prepared a will.   Mrs Pearce executed it before two witnesses on 30 October 2008.

[13]     The operative gifting clause, clause 4 is as follows:

4.    If my husband dies before me, I give the house and land at 10 Sandon Road, Feilding (which is presently jointly owned with my husband) or my principal place of residence at my death and the contents thereof (excluding my personal effects, jewellery and watches) to be divided equally per capita among  my  son   NICHOLAS  DAVID  PEARCE  and  my  step-children ALAN RUSSELL PEARCE and  KAYE FRANCES PEARCE living at my death.   If my son, or one, or both, of my step-children die before me, leaving a child or children living at my death, then that child shall take, or those children shall take equally, the share which the parent would have otherwise taken under this clause.

[14]     Clause 5, which follows, is a residue clause.  After payment of debtors and expenses, the residue all goes to her son Nicholas.

[15]     On the assumptions that the property was jointly owned and that Mrs Pearce predeceased her husband (which given her state of health was expected), her interest would have been transmitted by operation of law to him.  If, on the other hand, it was a tenancy in common, then a distinct devisable interest arose.  The way the will was drafted, it would fall into residue.

[16]     It is plain from the evidence of Ms Woods, and the way in which the will is expressed  that  the  common  assumption  of  the  testatrix  Mrs  Pearce  and  the

draftsperson, Ms Woods, was that the house was owned in joint tenancy.   Indeed

clause 4 says so expressly:  “which is presently jointly owned with my husband”.

[17]     The will reflects that assumption in two distinct ways.   First, it expressly assumes Mrs Pearce’s inherent survivorship right in the (unlikely) event that Mr Pearce predeceased her.  The “house and land” is then hers, and she gifts it to her son and her two step-children equally.  Secondly and implicitly, it assumes Mr Pearce’s survivorship right to Mrs Pearce’s interest in the (more likely) event that she predeceased him.   It does so by making no express provision for gifting of that interest to him.  Because there was no need to do so.

[18]     Mrs Pearce died on 9 September 2009.

[19]     Following probate, the assumption on which the will was prepared – that the house was owned by Mr and Mrs Pearce as join tenants – proved unfounded.  The house was owned by them as tenants in common.  As a result, Mrs Pearce’s half share in the house fell into residue and passed to her son Nicholas, under clause 5.

[20]     The consequence was that Mr Pearce unexpectedly found himself facing sale of the house in order to meet Nicholas’ entitlement.  In the end a dispute between them was resolved by the grant to Mr Pearce of a life interest in the house.

A complaint

[21]     On 16 June 2010 Mr Pearce wrote to the New Zealand Law Society to lay a complaint about the conduct of Ms Woods.   The complaint is summarised by the Standards Committee Manawatu No 1 in these terms:

The complaint in essence alleges that Ms Woods failed to prepare the will for the complainant’s deceased wife in a form that met the wishes of the deceased’s wife.  In addition, Ms Woods failed to confirm the ownership of the family home and if she had done so, then she would have discovered that the title was as tenants in common and counselled her to change that.

The last word, “that”, in context means the will.

Standards Committee decision

[22]     The Standards Committee reached a determination on the papers.   Section

153(1) provides for that.  Those papers, primarily, were Mr Pearce’s complaint (to which there were a number of attachments) and a detailed response from Ms Woods from which I have quoted earlier.

[23]     The Standards Committee decision is certainly brief.  It reads:

The Standards Committee has considered the complaint in respect to the matters excluding the failure to provide client care information, has decided to take no action on it, for the following reasons:

(1)       Mrs  Woods   prepared   the   will   in   accordance   with   the   [sic] Mrs Pearce’s wishes.

(2)       Mrs Pearce must have understood the “tenants in common” concept otherwise the provisions of her will would not have provided for her one half share to go to her son.

I make two comments about that decision.   In doing so I am conscious that the

Committee is not in any sense represented before me.

[24]     First, I think it is unfortunate that the decision was quite as abbreviated as it was.  It makes all the more likely the continuance of dissatisfaction, and pursuit on to review by the LCRO.  Indeed Mr Pearce’s application to the LCRO began:

I feel that I haven’t been “heard” by the Manawatu Complaints Committee.

It may also cause the LCRO to have to complete a more detailed enquiry and decision by way of compensation.

[25]     Secondly, part (2) of the reasoning is a non sequitur.   The will provided expressly that the property was jointly owned.   In fact it was not.   That error or misprovision alone should have alerted the Committee that the default disposition might not have reflected the testatrix’s intent.  The fact that the will had a particular effect does not mean ipso facto that the testatrix intended that effect.  The will did not provide, expressly, for half the property to go to her son.   That was just the

combined consequence of the patent misconception as to ownership and the default clause coming into play in relation to the house.

LCRO decision

[26]     On 18 August 2010 Mr Pearce exercised his right to seek review of the

Standards Committee decision.

[27] The LCRO is an independent statutory officer established under s 190 of the Lawyers and Conveyancers Act 2006 (the Act). The LCRO has broad general powers under s 202 of the Act, and wide powers to obtain information under ss 204 and 207 of the Act. Unsurprisingly the procedures of the LCRO tend to be relatively informal and proceed in an inquisitorial rather than adversarial manner. That said, the LCRO must comply with the rules of natural justice (s 206(3)).

[28]     Ms Woods and her counsel, Mr Paine, appeared at the hearing before the

LCRO.  So did Mr Pearce and his daughter, Ms Walford.  The hearing took place on

25 January 2011.   The nub of the contest appears at paragraph 13 of the LCRO’s

decision, delivered on 18 February 2011:

The Practitioner was further questioned on the issue of [Mrs Pearce’s] understanding of the ownership of the house and a lawyer’s responsibility in preparing a will for a client.   The Practitioner asserted that [Mrs Pearce] understood the difference between joint ownership and that of tenants in common.  The Practitioner asserted that [Mrs Pearce] adamantly refused to pay out the $10 required for a search of a title of the property.   The Practitioner submitted that she was required to follow the instructions of the client.   The Practitioner stated that [Mrs Pearce] had been determined to leave nothing to the applicant.

[29]     In  reaching a  decision  upholding the  application  for  review,  and  finding Ms Woods  guilty  of  unsatisfactory  conduct,  the  LCRO  reached  the  following conclusions:

(a)     There was no dispute that Mrs Pearce was mistaken as to her understanding of the nature of the ownership of the property.  Her will reflected her belief that it needed only to dispose of the main asset, the

house, if she survived her husband.   Clause 4 of the will provided

expressly that the property was “jointly” owned (i.e. as joint tenants).

(b)Ms Woods was aware (as she had to be) of the different consequences of ownership of Mrs Pearce’s interest in the property as between joint tenancy on the one hand and tenancy in common on the other.

(c)      There was no evidence to support the contention that Mrs Pearce had intended to leave nothing to the applicant.   The LCRO noted that Ms Woods had not previously acted for Mrs Pearce and had no prior knowledge of her affairs  or property matters.   (Mr Paine did  not contest that finding in the judicial review application).

(d)What Mrs Pearce’s intentions would have been regarding the house had  she  been  aware  of  the  correct  position  was  a  matter  of speculation, rather than evidence.

(e)      Mrs Pearce’s unwillingness to pay for a title search did not absolve Ms Woods from obtaining “sufficient information to enable proper and thorough advice to have been given to her client”.  It was not an answer for a lawyer to say he or she was following the client’s instructions when those instructions prevented a full consideration of the factors relevant to the retainer.  The failure to undertake a “basic inquiry, to form the basis of sound legal advice, meant that Ms Woods was  unable  to  act  in  Mrs  Pearce’s  best  interests  concerning  her

testamentary wishes”.1

(f)      If Mrs Pearce had insisted that Ms Woods take shortcuts “in terms of basic research”, and she nevertheless proceeded to act in such circumstances (which the LCRO said must be considered risky), then Ms  Woods  should  have  made  a  clear  record  of  her  instructions,

informed Mrs Pearce of the risks, and included a disclaimer making it

1      The LCRO noted the cost of a title search to Ms Woods’ law firm would at that time have been

$3.20.

“abundantly clear that the risks of incomplete or incorrect advice lay

with the client”.

[30]     Against that background the LCRO concluded that the practitioner’s conduct fell short of “best practice”.  In this case she concluded that the failure to obtain a title search to enable full advice to Mrs Pearce met two limbs of the s 12 definition of “unsatisfactory conduct”.  That is, it was conduct falling short of a standard of competence and diligence that a member of a public would be entitled to expect of a

reasonably competent  lawyer.2     And it  was  conduct  that  would  be  regarded  by

lawyers of good standing as being unacceptable.3

[31]     As to formal orders, the LCRO noted that a fine of $1,000 would have been an  appropriate  starting  place  in  the  absence  of  other  factors.     But  in  the circumstances  of  this  case  it  was  “appropriate  to  give  some  consideration  to  a remedy which, instead, addresses in a practical way some issues arising from the practitioner’s wrongdoing”.   She noted that Mr Pearce had incurred legal costs in relation to the effect of the will, and that it was proper for the practitioner to be required to contribute the sum of $1,000 towards Mr Pearce’s legal costs.  That order was made pursuant to s 156(1)(d).   In addition an order was made pursuant to s

156(1)(b) censuring Ms Woods.  Finally, an order was made under s 210 of the Act requiring payment of $900 in respect of the costs of conducting the review.

[32]     I record that the LCRO decision is thorough and fully reasoned.

Application for judicial review

[33]     On 20 April 2011 Ms Woods filed an application for judicial review against

the LCRO’s decision.  The statement of claim did not comply with the rules.  On

13 December 2011, part way through the substantive hearing of the application for review, Simon France J noted that the gravamen of the complaint had not been properly pleaded.  As a result the fixture was vacated.  Simon France J required the

applicant to file a new statement of claim properly identifying the heads of review.

2 Lawyers and Conveyancers Act 2006, s 12(a).

3 Lawyers and Conveyancers Act 2006, s 12(b).

[34]     Mr Mason was  appointed  by the Court  as  amicus  curiae in  the absence otherwise of a contradictor.   I am grateful to him in particular for his very clear submissions.

[35]     An amended statement of claim was filed.  The essence of the application for judicial review is two-fold.

[36]     First, that the decision of the LCRO was manifestly wrong in fact and law.  In particular:

(a)      There was no evidence from which a reasonable inference could be drawn that Mrs Pearce was mistaken in her view as to ownership of the property.

(b)If such evidence existed then Mrs Pearce was clear that no title search was to be undertaken.

(c)      In such circumstances not obtaining a title search could not amount to unsatisfactory conduct by Ms Woods.

[37]     Secondly, that the LCRO erred in law as to the extent of her jurisdiction.  In particular, she undertook a hearing de novo, took into account evidence not available to the Standards Committee (which of course had proceeded on the papers) and reached a decision contrary to the findings of the Standards Committee.  It was not suggested, however, that the LCRO breached natural justice in taking into account any of this information, because it was all before the parties at the hearing on

25 January 2011.

Ground 1: Error of fact and law?

[38]     I turn now to the first ground advanced in the application for review.

Error of fact?

[39]     Error of fact is a problematic concept in the spectrum of judicial review grounds.   Factual challenge is more normally the subject of appellate rather than review jurisdiction.  Where review is concerned, the courts take a circumspect view of factual error.   But the courts will intervene where factual error undermines jurisdiction,  where  the  factual  inquiry  was  clearly  inadequate  or  otherwise  the product of an unfair process or where a finding of fact is utterly unsupportable on the

evidence.4

[40]     The authorities have been helpfully drawn together by Woolford J in Zhao v Legal Complaints Review Officer.5   That decision tends to follow the four criteria for a stand-alone head of reviewable error of fact identified in the English Court of Appeal decision of E v Secretary of State for Home Department.6    There Carnwath LJ said:

[66]     In our view, the time has now come to accept that a mistake of fact giving rise to unfairness is a separate head of challenge in an appeal on a point of law, at least in those statutory contexts where the parties share an interest in co-operating to achieve the correct result. Asylum law is undoubtedly such an area. Without seeking to lay down a precise code, the ordinary requirements  for a  finding of  unfairness  are  apparent from the above analysis of the Criminal Injuries Compensation Board case. First, there must have been a mistake as to an existing fact, including a mistake as to the availability of evidence on a particular matter. Secondly, the fact or evidence   must   have   been   "established",   in   the   sense   that   it   was uncontentious and objectively verifiable. Thirdly, the appellant (or his advisers) must not been have been responsible for the mistake. Fourthly, the mistake must have played a material (not necessarily decisive) part in the tribunal's reasoning.

Woolford J noted, also, the reservation expressed by Whata J in Queenstown Lakes District Licensing Agency Inspector v Turnbull Group Limited7  as to whether the third element identified in E is necessarily right in New Zealand.  Whata J suggested that  error  caused  or  contributed  to  by  the  applicant  should  be  a  discretionary

consideration.

4      Smith New Zealand Judicial Review Handbook (Thomson Reuters, Wellington, 2011) at 719.

5      Zhao v Legal Complaints Review Officer [2012] NZHC 3247.

6      E v Secretary of State for Home Department [2004] 1 QB 1044 (CA).

7      Queenstown Lakes District Licensing Agency Inspector v Turnbull Group Limited [2011] NZAR

554 (HC) at n 13.

[41]     Mr Paine’s first argument for Ms Woods was that there was no evidence from which a reasonable inference could be drawn that Mrs Pearce was mistaken in her view as to ownership of the property.   I disagree.  Although that was the position advanced at least initially by Mr Paine, it is fair to say that during the course of argument he came to abandon it.   On the contrary, it is entirely clear that joint tenancy was the premise on which both Mrs Pearce and (more relevantly Ms Woods) proceeded in the preparation of the will.

[42]     What Mr Paine seemed to be attempting to develop (although he did not put it this way) was an argument along these lines:  Mrs Pearce knew the title position was not absolutely clear; Ms Woods had explained to her what would happen if the house was held in common; in that case Mrs Pearce knew her share would go to her son; she was content to proceed on that basis.  Accordingly, the residue clause was deliberately intended to deal with the house in the event that the common assumption as to joint ownership was incorrect and the property was held in some other way.

[43]     There are I think a number of difficulties with that proposition.

[44]     First, it was not formally advanced as a matter of pleading or in the written submissions proffered.

[45]     Secondly,  the  express  words  of  the  will  provide  unequivocally  that  the property was held in joint tenancy.  If that was only one of a number of alternatives being addressed, the alternatives should and would also have been set out expressly. If the will was intended to deal also with the position if the assumption as to joint ownership  was  wrong,  conventional  drafting  would  also  have  made  express provision.   Typically by the inclusion of an  express proviso (e.g.  “PROVIDED HOWEVER that if the house and land should be held instead in tenancy in common, then …”).

[46]     Thirdly, given this was the major asset for disposition, and given the careful provision made in clause 4 for its division in the event Mrs Pearce comes to own the whole of it, it is counter-intuitive that it be dealt with by default, via clause 5.  And, further, it is not at all apparent why Mrs Pearce’s son Nicholas was to receive a one-

half interest in the property in event that his mother predeceased her husband, but only one-third if it was the other way round.  That inconsistency of treatment rather suggests that clause 5 was not actually intended to deal with the house.

[47]     Fourthly, such arrangement – effectively dispossessing her husband of 30 years of the house, or compelling him to buy her son’s share out - was bound to cause controversy.  Particularly when no life interest was reserved to the husband in the meantime.  If intended, it screamed out to be dealt with expressly.  In that case there would be no doubt that it was the testatrix’s intention, rather than an oversight (as is now alleged).

[48]     Fifthly, against these points it is notable that Ms Woods did not make any record of such instructions.  If, having been advised on the matter, Mrs Pearce was indifferent to the distinct effect of the property instead being held in common, that is the very thing a capable solicitor would provide expressly for, or at the very least record.

[49]     Sixthly, the accounts given by Ms Woods are not entirely satisfactory.  I have already noted the different accounts as to what Mrs Pearce’s understanding was. Elsewhere in the LCRO’s hearing Ms Woods said, “Well, I don’t know what she understood the house ownership to be at the end of the day.”  When pressed as to the inherent illogic of the will, Ms Woods suggested that the marriage might have been unhappy – although saying it was not for her to say.   Her acquaintance with the Pearces at that point was only slight.  She also said that Mrs Pearce was determined not to leave anything to her husband.   However Mr Paine, in his submissions before me on Ms Woods’ behalf, did not attempt to support that contention.   The LCRO found it to have been quite unsubstantiated.  It is in any case hardly consistent with the appointment of Mr Pearce as sole executor of the will.  I have read with some care  the  transcript  of  the  hearing.    It  is  fair  to  say,  I  think,  that  Ms  Woods’ explanation of the drafting is not immediately compelling.  Rather it seems to me, as it must also have seemed to the LCRO, that some of the explanation given is ex post facto rationalisation on Ms Woods’ part alone.

[50]     Seventhly, the LCRO found that the will was drafted on an incorrect premise. The evidence as to the advice that was given regarding the consequences if the property was held in different forms did not establish intent on Mrs Pearce’s part to transfer any separate interest to the son via the residue clause.   In context, it was more  consistent  with  Mrs  Pearce  simply proceeding  in  the  firm  belief  that  the property was  and always  had been jointly owned, so that there was  nothing to transfer to Nicholas unless clause 4 applied.  The advice as to what would happen if it was a tenancy in common was irrelevant to her.   What Mrs Pearce would have instructed occur if  the true position  were explicitly before her was  a  matter of speculation, rather than clear inference from proven facts.

[51]     Finally, these findings by the LCRO all have a firm footing in the evidence. They cannot be said to be unsupported by the evidence.  Rather they are reasonable judgments of fact based on the evidence.  Sitting in review, I have to acknowledge the advantage the LCRO had in seeing and hearing the witnesses, in particular Mrs Woods, at the hearing.

[52]     There is no reviewable error of fact here.

Client’s instructions not to obtain a title search

[53]     I turn now to the mixed errors of law and fact alleged.   Namely, that Mrs Pearce was clear in instructing that no title search was to be undertaken and that it followed from that that the omission to obtain a title search could not amount to unsatisfactory conduct by Ms Woods.

[54]     A solicitor instructed to prepare a will owes a duty of care beyond merely the testatrix herself.   The general public importance of solicitors preparing effective wills was emphasised by Cooke J in Gartside v Sheffield Young & Ellis.8    There Cooke J said:

To deny an effective remedy in a plain case would seem to imply a refusal to acknowledge the solicitors professional role in the community.  In practice the public relies on solicitors ... to prepare effective wills.  It will be a failure of the legal system not to insist on some practical responsibility.  After the

8      Gartside v Sheffield Young & Ellis [1983] NZLR 37 (CA) at 43.

client’s death specific performance is out of the question as a remedy.  The intended testamentary disposition can no longer be made.  The client’s estate must be distributed in accordance with the will (if any) that he has made or on intestacy, subject to claims under the Family Protection or Testamentary Promises legislation.  To adapt Lord Reid’s words then, to recognise that this is  to  owe  a  duty  of  reasonable  care  to  the  intended  beneficiary  would produce a just result.  It offers a remedy that should be made available unless there is some technical objection.   For the reasons already given I do not think there is any technical objection.

[55]     Gartside was applied by the House of Lords in White v Jones.9   In that case the testator’s instructions were clear, inasmuch as he sent a letter to the solicitors advising the intended bequests in his new will.   They failed to progress the preparation and execution of that will before the intending testator died.10

[56]     A similar situation arose in the case Carr-Glynn v Frearsons.11    The facts bear an interesting resemblance to those in the present case.   The testatrix  had executed a will, prepared by the defendant solicitor’s firm, leaving her plaintiff niece her share in a property owned together with her nephew on a joint tenancy basis.  On her death her share in that property vested automatically in her nephew as survivor. The gift in the will to the plaintiff niece was therefore ineffective. The English Court of Appeal held that the solicitor had a duty to take care to ensure that effect was given to testamentary intentions.   A competent solicitor would have advised the testatrix of the need to first sever the joint tenancy in order to give effect to the gift to the plaintiff.  The solicitor’s failure to do so was a breach of duty.  The plaintiff was entitled to such damages as would have put her in the position she would have been in had effect been given to the testatrix’s intention.

[57]     Interestingly, in that case the solicitor was conscious the property was jointly owned by the testatrix and her nephew.   In a letter of advice to the testatrix the solicitor wrote:

From the records which we still have I can confirm that the property is in the joint names of yourself and your nephew but there are two forms of joint ownership. One of these would leave you free to dispose of your own half share of the property in your Will but the other would have the effect that, on

9      White v Jones [1995] 2 AC 207 (HL).

10     See, similarly, Hill v van Erp (1997) 188 CLR 159 (HCA) and Maestrale v Aspite [2012] NSWSC 1420 (where the intending testator died ten minutes before the solicitor reached the hospital).

11     Carr-Glynn v Frearsons [1999] Ch 326 (CA).

your death, your share would automatically pass to your nephew. If you wish me to obtain the deeds and check the position then please let me know and I will prepare the appropriate authority for you and your nephew to sign...

Having received that advice, the testatrix made the decision to look up the deeds herself, without the solicitor’s assistance.   But the will was still prepared.  On the testatrix’s death it was discovered that the property was owned in a joint tenancy, with the result that the intended gift to the niece failed.  Although it is the other way round from the present case, the facts bear an uncanny resemblance.

[58]     Similarly in a Canadian case, Earl v Wilhelm,12  a solicitor failed to make adequate enquiries about ownership of a property left in the will to the plaintiff. Subsequently it transpired the property was not owned by the testator, but by his company.

[59]     In those cases the testator or testatrix’s instructions were clearly conveyed to the solicitor.   In contrast, in Walker v Geo H Medlicott & Son13     the testatrix’s intentions were not sufficiently clear for the Court to find breach of duty by the solicitor.  More likely, the testatrix had not been clear in her instructions, and there was a non-negligent misunderstanding of her intent by the solicitor.

[60]     In England, Australia and Canada at least the duty of care of the solicitor appears to have been limited to those identified by the client testator or testatrix as intended to benefit under the will.14   This is also the position taken in New Zealand in Gartside where Richardson J said that “the duty is owed only to persons identified in terms of the testamentary instructions accepted by the solicitors.”15   In part that is because the solicitor’s primary duty must be to his or her client, and a broader duty to unidentified potential beneficiaries has the potential to conflict with that.     I record, however, that Mr Paine conceded that Ms Woods here did owe a duty of care

to Mr Pearce.

12     Earl v Wilhelm (2000) 183 DLR (4th) 45 (CA Sask)

13     Walker v Geo H Medlicott & Son [1999] 1 WLR 727 (CA).

14     White v Jones [1995] 2 AC 207 (HL); Hill v van Erp (1997) 188 CLR 159 (HCA); Henricks v

McGeoch [2008] NSWCA 53; Graham v Bonnycastle 243 DLR (4th) 617 (CA Alta).

15     Gartside v Sheffield, Young & Ellis [1983] NZLR 37 at 51. See also at 56, per McMullin J.

[61]     In these circumstances I do not accept the plaintiff’s submission that it is not open to a lawyer to take a stance opposite to a client’s views and instructions.  In Gilbert v Shanahan16 Tipping J said:

[While] solicitors’ duties are governed by the scope of their retainer, but it would be unreasonable and artificial to define that scope by reference only to the client’s express instructions.  Matters which fairly and reasonably arise in the course of carrying out those instructions must be regarded as coming under the scope of the retainer.

In that case a solicitor was negligent in not obtaining a copy of the prior agreement to lease when the client (instructing her to act on the formal lease) had not supplied her with a copy.17    In my view that approach applies with particular force where a will is being drafted, and where the solicitor-draftsperson’s duties necessarily are not confined to the testator/testatrix-client.

[62]     Ms Woods’ responsibility was to advise Mrs Pearce in relation to entry into the will.  She appreciated the importance of understanding the underlying proprietary position.   She should not have relied on the understanding of the client on that matter.   Mrs Pearce was elderly, unwell and had no training in the law of real property.  In this case it was impossible for Ms Woods to advise adequately without knowing how the house was held.  The house was the major asset, and providing for it was the reason for the will being made in the first place.

[63]     I  do  not  think  the  LCRO’s  analysis  at  [23]  and  [24]  of  her  decision (summarised at [29](e) and (f) above) can be faulted.  The failure to insist on the ascertainment of the exact proprietary position (at a cost of all of $3.20) has meant that we are left to speculate on whether Mrs Pearce actually intended that if the property was not held jointly, her share was to go to her son (with no intermediate life interest in favour of her elderly husband of 30 years) or not.   Given that the duties owed by Ms Woods ran beyond her immediate client, I am satisfied that her omission to ascertain the titular position was conduct falling short of the standard of competence and diligence that a member of the public was entitled to expect of

a reasonably competent lawyer. Mr Paine could point to no authority otherwise.

16     Gilbert v Shanahan [1998] 3 NZLR 528 at 537.

17     Had she done so she would have found that the agreement did not require a shareholder guarantee.

[64]     I dismiss the first ground for review.

Ground 2: Error of law – jurisdiction?

[65]     Mr Paine made two submissions under this head.

[66]     First, he submitted that it is unusual for the LCRO to differ from a standards committee on a matter of professional propriety.  I agree however with Mr Mason when he submitted that, rather than being unusual, it is in fact part of the LCRO’s function.   The LCRO is a former legal practitioner.   She cannot hold a current

practicing certificate.18   The powers of the LCRO, in conducting the review, include

to confirm, modify or reverse any decision of a Standards Committee.  Necessarily, therefore, the LCRO is required to make a judgment about matters of professional practice.   That includes whether a practitioner  has been  guilty of unsatisfactory conduct.19

[67]     Secondly, Mr Paine submitted that the LCRO erred in conducting what he described as a “hearing de novo”, rather than a review of the Committee decision.  I am bound to say that the paucity of the Committee decision gave the LCRO little option in that respect.   There is no suggestion that the LCRO acted in breach of natural justice.   A hearing was held, and evidence was received at it.   No one objected to that course.  Nor could they have, given ss 200, 206(2) and 207(1) of the Act.  No one sought or agreed to the matter being dealt with on the papers alone, as s 206(2) provides for.  Of course the LCRO relied on the information she obtained at the hearing. What else should she have done?

[68]     In Deliu v Hong20 Winkelmann J said this:

The Review Officer has broad powers to conduct his or her own investigations including the power to exercise for that purpose or the powers of a Standards Committee for an investigator and seek and receive evidence. These powers extend to “any review”.   He or she may also postpone the review while attempting to negotiate, conciliate or mediate a resolution.

18 Lawyers and Conveyancers Act 2006, s 190(1).

19 Lawyers and Conveyancers Act 2006, s 152(2).

20     Deliu v Hong [2012] NZHC 158 at [40]–[41].

In my view the power of review is much broader than an appeal.  It gives the Review Officer discretion as to the approach to be taken on any particular review as to the extent of the investigations necessary to conduct that review, and therefore clearly contemplates the Review Officer reaching his or her own view of the evidence before her ....”

[69]     That approach was followed by Woolford J in Zhao v Legal Complaints

Review Officer.21  And I follow it here.

[70]     At the end of the day this ground was pressed with less vigour by Mr Paine than the first ground.

[71]     I dismiss the second ground for review also.

Result

[72]     Application dismissed.

Stephen Kós J

Solicitors:

Dallas Woods, Solicitor, Palmerston North for Plaintiff

Crown Law, Wellington for First Respondent

21     Zhao v Legal Complaints Review Officer [2012] NZHC 3247.