Zhao v Legal Complaints Review Officer

[2021] NZHC 666

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2020-404-001268

[2021] NZHC 666

UNDER

The Judicial Review Procedure Act 2016

IN THE MATTER

of a decision made by Legal Complaints Review Officer

BETWEEN

HUAN ZHAO

Applicant

AND

LEGAL COMPLAINTS REVIEW OFFICER

First Respondent

AND

JAMES RICHARD DUCKWORTH

Second Respondent

Hearing:

9 December 2020

Appearances:

Applicant in person

Appearance excused for the First Respondent S R Carey for the Second Respondent

Judgment:

30 March 2021

JUDGMENT OF CAMPBELL J

This judgment was delivered by me on 30 March 2021 at 1:00pm Pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors/Counsel:

Crown Law Office, Wellington S R Carey, Barrister, Auckland Copy to:

Applicant

ZHAO v LEGAL COMPLAINTS REVIEW OFFICER [2021] NZHC 666 [30 March 2021]

Introduction

[1]    Ms Zhao applies for judicial review of a decision of the Legal Complaints Review Officer (LCRO). The LCRO abides the decision of the Court. Ms Zhao’s underlying complaint concerns the second respondent, Mr Duckworth, who is a lawyer. Mr Duckworth resists Ms Zhao’s application.

[2]    Ms Zhao represented herself at the hearing of her application. She had been urged by this Court to seek legal advice.1 Mr Carey appeared for Mr Duckworth.

Background

[3]    Ms Zhao owns an apartment in a unit title development. Body Corporate 362260 is the body corporate of that apartment building.

[4]    Body Corporate 362260 obtained an order against Ms Zhao from the Tenancy Tribunal for payment of unpaid levies and associated costs. Ms Zhao did not immediately pay the amount ordered by the Tenancy Tribunal or appeal its decision. She did make two unsuccessful attempts to obtain a rehearing.

[5]    The Body Corporate instructed Mr Duckworth to take steps to obtain payment of the amount owing to it. Mr Duckworth prepared a bankruptcy notice dated 21 February 2019. This notice was served on Ms Zhao. The notice required payment by Ms Zhao of the sum of $3,385.82, together with costs of $796.

[6]    Ms Zhao applied to the High Court to set the bankruptcy notice aside. In advance of the hearing of that application, Mr Duckworth filed a memorandum dated 2 April 2019. In that memorandum, Mr Duckworth said that the sum remaining due by Ms Zhao was $3,385.52. On 3 April 2019, Mr Duckworth filed a second memorandum. This included, at paragraph 7:

On checking the ledger records from the Body Corporate there is a record of payments being made by the Judgment Debtor. On 14 September 2018,

1      Zhao v Legal Complaints Review Officer HC Auckland CIV-2020-404-1268, 10 September 2020 (Minute of Fitzgerald J) and Zhao v Legal Complaints Review Officer HC Auckland CIV-2020- 404-1268, 16 October 2020 (Minute of Palmer J).

payments of $850 and $486.98 were made. It would appear that those represent the filing fee and the interest awarded.

[7]    The application was heard on 4 April 2019 before Associate Judge Smith. The Judge delivered an oral judgment. The Judge recorded that:

[5]   … [I]n the course of the hearing today Mr Duckworth advised that he has located a further interest payment made by Ms Zhao (approximately

$486.00) which had not previously been taken into account. He advised that, for the purposes of the application to set aside the bankruptcy notice, the Court may work on the basis that the bankruptcy notice is to be amended to claim only the sum of $2,859.50, together with the costs of $796.00 claimed in the bankruptcy notice.

[8]    Associate Judge Smith made an order correcting the bankruptcy notice by substituting the figure of $2,859.50 for the figure of $3,385.82. The Judge noted that this could not prejudice Ms Zhao, as the correction was in her favour. Subject to that correction, the Judge dismissed Ms Zhao’s application to set aside the notice. He ordered costs in favour of the Body Corporate against Ms Zhao on a 1A basis.

Ms Zhao’s initial complaint to the NZLS

[9]    On 2 March 2020, Ms Zhao laid a complaint with the New Zealand Law Society about the conduct of Mr Duckworth. Ms Zhao’s complaint is difficult to follow, but in essence she alleged:

(a)Mr Duckworth had lied and misled the Court in his memorandum of  2 April 2019 by stating that the amount remaining due by Ms Zhao was

$3,385.52.

(b)Mr Duckworth lied to and misled Associate Judge Smith on 4 April 2019, by saying that the Body Corporate had forgotten to account for Ms Zhao’s payment of interest of about $486. Ms Zhao alleged that Mr Duckworth had known since September 2018 that Ms Zhao had made that payment.

(c)That in an email dated 29 October 2019, from the Body Corporate asking Ms Zhao to pay an invoice dated 25 October 2019, Mr Duckworth had “told lies twice at their statement”.

[10]   The Central Standards Committee 1 gave its decision on Ms Zhao’s complaint on 15 May 2020. The Standards Committee said that the issue that it had to consider was whether Mr Duckworth had misled the High Court. It said that allegations that a lawyer has misled a court are serious and require cogent evidence to support them.

[11]   The Committee noted that Mr Duckworth had advised the High Court that the Body Corporate had discovered that it had missed recording a payment made by    Ms Zhao. The Committee said:

[13] … Rather than misleading the Court, as Ms Zhao alleges, Mr Duckworth has openly acknowledged the mistake made by his client. The Judge has reviewed the circumstances and accepted that a mistake was made and rectified this by amending the amount in the bankruptcy notice without making any criticism of Mr Duckworth or his client.

[12]   The Committee therefore found that there was no evidence that Mr Duckworth had misled the Court. The Committee decided to take no further action on Ms Zhao’s complaint, as the evidence did not support her complaint.

Ms Zhao’s application to the LCRO for review of the Committee’s decision

[13]   On 15 May 2020, just a few hours after the Committee’s decision was delivered, Ms Zhao applied to the LCRO for a review of the decision. In her application, Ms Zhao said that she thought that the Committee had misunderstood the background. She said that she had made two complaints:

(a)Her first complaint was that Mr Duckworth had known about her payment of interest of $486 since September 2018, and had lied to the High Court by saying that the Body Corporate had forgotten to account for that interest payment. Ms Zhao said that her evidence “clearly” showed this lie.

(b)Ms Zhao’s second complaint, which she said the Committee had ignored, was that Mr Duckworth still asked Ms Zhao to pay the over- charged amount of $3,335.81, even after Associate Judge Smith had corrected the amount, and also asked her to pay “unreasonable huge lawyers fees $6681.51 [sic]”.

[14] On 11 June 2020, the LCRO delivered its decision on Ms Zhao’s application for review. The LCRO recorded that Ms Zhao said that the Committee had misunderstood her complaint, and that there were two elements to it. The LCRO struck out Ms Zhao’s application, under s 205(1)(a) of the Lawyers and Conveyancers Act 2006, on the basis that it did not disclose a reasonable cause of action. The LCRO’s reasons were:

[17]      The evidence does not demonstrate that Mr Duckworth was anything but absolutely honest with the Court. It also does not demonstrate that the costs sought on behalf of the Body Corporate were in any way improper. It is not dishonest to discover a mistake in court documents and attempt to correct it.

[18]      None of the comments Ms Zhao makes about Mr Duckworth’s conduct constitute evidence that his professional conduct towards her fell below a proper standard. Mr Duckworth was obliged to treat Ms Zhao with integrity, respect and courtesy. It is clear from his exchanges of emails with her that he did. There is no other evidence that demonstrates any professional failing towards Ms Zhao on the part of Mr Duckworth.

[19]      Having carefully considered the materials, I agree with the Committee that further action is not necessary or appropriate. I would go further, and say that Ms Zhao’s application for review discloses no reasonable cause of action against Mr Duckworth because any reasonable cause of action should have some evidential basis. Ms Zhao’s application for review, much like her complaint, lacks that essential element.

[20]      Ms Zhao’s application for review is struck out pursuant to s 205(1)(a) of the Act, which leaves the Committee’s decision unaffected.

Ms Zhao’s application for judicial review

[15]   The LCRO is appointed by statute and exercises statutory powers when reviewing decisions made by Standards Committees. There is no right to appeal the LCRO’s decisions. The only recourse available is judicial review. The scope of judicial review is narrower than the scope of an appeal. On a judicial review a court will intervene if the LCRO misconstrues statutory powers, acts unreasonably or with bad faith, commits a procedural error, or unreasonably encroaches on fundamental rights or values.

[16]   Ms Zhao’s statement of claim does not reflect the limited scope of a judicial review. Her statement of claim is very difficult to follow, but it invites this Court to review the merits of the LCRO’s decision.

[17]   The content of Ms Zhao’s statement of claim was clearly of concern to Fitzgerald J, who conducted a case management conference for this proceeding on 10 September 2020. Her Honour’s minute from that conference records that she sought to explain to Ms Zhao that the Court’s focus in an application for judicial review was not on the merits of the LCRO’s decision, but rather on the process or procedure by which the LCRO reached its decision. The minute also records that her Honour reviewed Ms Zhao’s statement of claim, and confirmed with Ms Zhao that the essence of her claim was that:

(a)The LCRO had failed to consider the real substance of her complaint, wrongly focussing on the amount in the bankruptcy notice, rather than her complaint that Mr Duckworth had misled the Court at the hearing before Associate Judge Smith;

(b)The LCRO failed to take into account relevant evidence she had put before the LCRO;

(c)The LCRO failed to determine a second complaint made by her, namely that despite the High Court amending the bankruptcy notice, Mr Duckworth continued to seek payment from her of the sum of

$3,385.82; and

(d)Mr Duckworth continues to seek payment from Ms Zhao of what she considers to be unreasonable and “absurd” legal fees.

[18]   The proceeding had a second call before Palmer J in the judicial review list on 15 October 2020. Mr Duckworth asked that Ms Zhao be directed to prepare an amended statement of claim that was more specific about the legal errors she alleged occurred in the LCRO’s decision-making. Palmer J declined to do so. But His Honour said that the proceeding would progress on the basis of the understanding of the essence of Ms Zhao’s claim set out in Fitzgerald J’s minute.

The evidence before me

[19]   The LCRO prepared and filed, on 30 September 2020, a record of the documents that were before her.

[20]   Ms Zhao affirmed an affidavit in support of her claim on 21 October 2020. The affidavit annexes some documents, but the body of the affidavit consists largely of allegations and submission, rather than evidence.

[21]   Mr Duckworth swore an affidavit in opposition on 13 November 2020. This addresses each of the complaints that Ms Zhao appears to make. Mr Duckworth references a large number of the documents in the LCRO’s bundle.

[22]   Ms Zhao swore an affidavit in response on 18 November 2020. It runs to 13 pages. It consists almost entirely of allegations and submission. A typical example is:

… now duckworth keep telling lies in his affidavit to mislead/make a fool of the Judge. All his action is breach of the NZ Law, commits the offence of perjury and are liable to sentence of imprisonment.

[23]   While this affidavit contains little or no actual evidence, it is helpful in one respect. Ms Zhao repeatedly describes the LCRO’s decision as an “absurdity and absolutely wrong”. It appeared from this that the basis of her judicial review claim was that the LCRO’s decision was unreasonable (in a judicial review sense).

Ms Zhao’s submissions

[24] Ms Zhao filed submissions in advance of the hearing. She began by alleging that Mr Duckworth had breached various rules in the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008. She repeated her allegation that Mr Duckworth had committed perjury.

[25]   Ms Zhao then submitted that it was “clearly enough to see” that the LCRO was mistaken about the facts and the law, took into account irrelevant factors and ignored some relevant factors, acted for an improper purpose and did not follow the rules of natural justice. Ms Zhao did not identify the alleged mistakes, the irrelevant factors that had been taken into account, the relevant factors that had been ignored, or the

improper purpose. Ms Zhao did explain how the LCRO had allegedly failed to follow the rules of natural justice: she claimed the LCRO “was biased against me”.

[26]   Ms Zhao filed a second set submissions (without leave) the day before the hearing. These were apparently in response to Mr Duckworth’s written submissions. This second set of submissions was difficult to follow, and repetitive.

Decision

Introduction

[27]   At the hearing I sought clarification from Ms Zhao as to her underlying complaints about Mr Duckworth’s conduct. From the material that she had filed, my understanding was that she had two complaints. I explained my understanding to Ms Zhao. She confirmed it was correct. The two complaints were:

(a)Ms Zhao alleged that Mr Duckworth had always known about the interest payment of $486 that Ms Zhao had made, and which had not been taken into account in calculating the amount in the bankruptcy notice. Ms Zhao alleged, therefore, that Mr Duckworth had lied to the High Court when he told that Court that he had forgotten or overlooked that payment.

(b)That, even after the High Court amended the amount of the bankruptcy notice, Mr Duckworth continued to ask Ms Zhao to pay the unamended amount, and then asked Ms Zhao to pay unreasonable lawyer’s fees.

[28] These reflect the two complaints that Ms Zhao made to the LCRO, set out above at [13].

[29]   At the hearing I reminded Ms Zhao that her proceeding was for a judicial review of the LCRO’s decision, rather than an appeal. Ms Zhao appeared to understand this point.

[30]   I then asked Ms Zhao to confirm that the essential basis of her claim for judicial review was that the decision by the LCRO was “absurd and absolutely wrong” (that is, unreasonableness). Ms Zhao did not provide a clear answer to my question. She said that Mr Duckworth had a duty to advise his Body Corporate client. The relevance of that did not become clear. In any event, at no point in her oral submissions did Ms Zhao advance any ground for judicial review, other than unreasonableness. She did not suggest that the LCRO had misconstrued any statutory power, that there were relevant considerations that were overlooked, or irrelevant considerations taken into account. Ms Zhao did not touch upon, let alone provide any substance to, her allegation that the LCRO was biased against her.

[31]   Because Ms Zhao’s challenge to the LCRO’s decision was based on unreasonableness, her submissions addressed the merits of the decision, and of her underlying complaints about Mr Duckworth. In response, Mr Duckworth submitted that Ms Zhao’s grievance was with the merits of the LCRO’s decision, rather than with any reviewable errors. Nonetheless, out of an abundance of caution, his written and oral submissions addressed the merits of the LCRO’s decision and of the underlying complaints.

[32]   In these circumstances I have decided to approach this review by beginning with the merits of the underlying complaints. This will provide a basis for assessing whether, as Ms Zhao contends, the LCRO’s decision was unreasonable.

First complaint: that Mr Duckworth lied

[33]   Ms Zhao’s first complaint was that Mr Duckworth lied to this Court when he said that he had “forgotten” about Ms Zhao’s interest payment of about $486.

[34]   Ms Zhao’s case is based on the following matters. In September 2018 she made an interest payment of $486.98 to the Body Corporate. The Body Corporate acknowledged her payment in an email dated 17 September 2018. Mr Duckworth was copied in on that email. Ms Zhao says that Mr Duckworth therefore cannot possibly have “forgotten” about that payment when preparing the bankruptcy notice in February 2019.

[35]   To claim that a person, lawyer or otherwise, has lied to a court is a serious allegation. Any decision-maker addressing such an allegation will require cogent evidence to support it. The only evidence that Ms Zhao provided was that which I have set out in the previous paragraph. She asked the Standards Committee, and then the LCRO, to draw from that evidence an inference that Mr Duckworth had not forgotten her earlier payment, and was lying when he said that he had.

[36]   I am not surprised that the Standards Committee and the LCRO were not prepared to draw that inference. There are four reasons. First, in preparing the bankruptcy notice, Mr Duckworth was relying on information provided by his client Body Corporate as to the state of the account between Ms Zhao and the Body Corporate. There were many transactions on that account. Second, in those circumstances a lawyer in Mr Duckworth’s position is likely to rely on the information provided by his or her client, rather than review every email in which he or she has been copied in order to confirm the correctness of the client’s instructions. Third, the much more likely inference, given the first two points, was that Mr Duckworth had overlooked the September 2018 email when preparing the bankruptcy notice. Fourth, Associate Judge Smith had heard Mr Duckworth’s explanation, and had not made any criticism of him.

[37]   Ms Zhao has, therefore, not persuaded me that the LCRO’s decision was unreasonable, nor that it should in any other way be reviewed. Indeed, I will go further and record my view that both the Standards Committee and the LCRO were correct to dismiss Ms Zhao’s first complaint.

Second complaint: Mr Duckworth continued to ask Ms Zhao to pay the unamended amount, and then asked Ms Zhao to pay unreasonable lawyer’s fees

[38]   The second matter raised by Ms Zhao was that Mr Duckworth continued to demand she pay the original, unamended, amount, and then asked her to pay unreasonable lawyer’s fees.

[39]   Ms Zhao did not raise this when making her complaint to the New Zealand Law Society. It was therefore not addressed by the Standards Committee in its

decision. Ms Zhao first raised the matter when applying to the LCRO for a review of the Committee’s decision.

[40]   This complaint reflects a misunderstanding by Ms Zhao of Mr Duckworth’s role. It is correct that Mr Duckworth has at various times asked Ms Zhao to make payments to the Body Corporate. But he has done so as a lawyer for, and on behalf of, the Body Corporate. In making those requests, Mr Duckworth is following his client’s instructions as to the amount outstanding by Ms Zhao.

[41]   Ms Zhao believes that the amounts that she has been asked to pay are incorrect. That is a dispute that has to be resolved between her and the Body Corporate. It is not a dispute between her and Mr Duckworth. The fact that the Body Corporate has told Ms Zhao to communicate with Mr Duckworth about the dispute does not alter the parties to the dispute.

[42]   Ms Zhao’s complaint about “unreasonable lawyer’s fees” reflects further misunderstandings by her. She says that the amount of lawyer’s fees that she has been asked to pay ($6,681.51) is absurd and unreasonable, given that Associate Judge Smith ordered she pay costs on a 1A basis. It is the Body Corporate, not Mr Duckworth, that is asking Ms Zhao to pay these fees. The costs order made by Associate Judge Smith was an order based on the Court’s jurisdiction to order one party to pay costs to another. The order was made solely in respect of Ms Zhao’s unsuccessful application to set aside the bankruptcy notice. By contrast, the $6,681.51 that the Body Corporate has asked Ms Zhao to pay is based on the fees that Mr Duckworth has invoiced to the Body Corporate. Those fees are not solely for the work relating to Ms Zhao’s application to set aside the bankruptcy notice.

[43]   Ms Zhao is free to dispute those fees if she wishes. But that is a matter between her and the Body Corporate.

[44]   It follows that the mere fact of Ms Zhao disagreeing with the amounts that Mr Duckworth, on behalf of the Body Corporate, asked her to pay (whether lawyer’s fees or otherwise) does not provide a basis for a complaint against Mr Duckworth. The

only possible basis on which Ms Zhao could complain about Mr Duckworth’s requests would be if he had failed to treat her with integrity, respect and courtesy.

[45]   That was the basis upon which the LCRO addressed this complaint. The LCRO concluded that it was clear from Mr Duckworth’s email exchanges with Ms Zhao that he did treat her with integrity, courtesy and respect. Having reviewed those emails, I agree with that conclusion. Ms Zhao has fallen well short of persuading me that the LCRO’s decision was unreasonable, or that it is in any other way subject to review.

Result

[46]I dismiss Ms Zhao’s claim for judicial review of the decision of the LCRO.

[47]   Mr Duckworth is entitled to costs. If the parties cannot reach agreement on costs, I direct Mr Duckworth to file and serve a memorandum on costs by 12 April 2021, and Ms Zhao to file and serve a memorandum by 19 April 2021. I further direct that each memorandum is to be no longer than two pages.

Campbell J