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Acting contrary to client instructions

07 July 2017

A lawyer, G, has been fined $8,000 for acting contrary to his client’s expressed instructions.

In setting the penalty, a lawyers standards committee said that it considered the conduct to be at the “higher end of the scale of unsatisfactory conduct and deserving of a relatively large fine”.

The client, a company, was involved in litigation in a number of jurisdictions about a business transaction involving a former director and employee, Mr D, and one of the company’s former clients, Mr E, a New Zealand citizen living overseas.

The company considered that certain shares transferred to Mr E were proceeds of Mr D’s breach of his contractual and fiduciary duties owed to the company.

The company engaged G to arrange registration of a caveat against the title to a New Zealand property Mr E owned and to obtain reciprocal recognition of judgments obtained in a Caribbean court.

The caveat was duly registered and the foreign judgments were eventually registered in the New Zealand High Court. Mr E made an application for the caveat to lapse. The company instructed G to take steps to sustain the caveat.

There was to be a hearing of the company’s application to sustain the caveat together with an application by Mr E for a stay of enforcement of the judgments. In the meantime, there was correspondence between G and Mr F regarding a proposed resolution which would involve consent orders for the removal of the caveat and registration of a charging order in its place.

G urged the company in very strong terms to agree to such an arrangement, but the company would not agree. Despite that, a joint memorandum of counsel was subsequently filed, in which G agreed with Mr F that the company would discontinue its application for an order to sustain the caveat and the caveat would be substituted with an interim charging order over the New Zealand property.

G reported what had happened to the company, which immediately terminated his retainer. The company engaged alternative legal representation and its applications were restored.

G gave a number of explanations for his actions to the standards committee. For example, he said he considered there was a real risk with arguing the validity of the caveat. G further explained that he considered the proposal was the most efficient way to ensure that a charging order was obtained over the property and to avoid a costs award against the company.

None of his explanations justified his actions, the committee said. “His advice may well have been sound but that is not the point. His client chose not to follow that advice. That is a client’s prerogative.”

The issue, the committee said, was “clear cut”. G acted “contrary to his client’s express instructions”. He breached rule 13.3 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008.

Rule 13.3 states: “Subject to the lawyer’s overriding duty to the court, a lawyer must obtain and follow a client’s instructions on significant decisions in respect of the conduct of litigation. Those instructions should be taken after the client is informed by the lawyer of the nature of the decisions to be made and the consequences of them.”

As well as the fine, the committee ordered G to pay $2,500 costs.

Last updated on the 4th August 2017