New Zealand Law Society

Navigation menu

Lawyers must adhere to terms of agreement

15 June 2017

A lawyer acting for the seller in a property transaction has been fined $1,000 after refusing to release the e-dealing until additional costs were paid.

A lawyers standards committee found that the lawyer, J, had breached an undertaking J had given to release the e-dealing on receipt of confirmation of deposit of the settlement funds. This was unsatisfactory conduct.

The purchaser had delayed settlement because there was a dispute about removal of rubbish from the property.

The purchaser’s lawyer paid J the balance of the purchase price, plus penalty interest, the day after settlement day. J then refused to release the e-dealing until additional legal costs of $250 were paid.

Although the purchaser’s lawyer did not agree J was entitled to the additional costs, he paid it as J insisted it be paid before she would release the e-dealing.

J’s conduct in failing to release the e-dealing before the additional legal costs were paid “demonstrates that [the lawyer] is not familiar with the terms of agreement for sale and purchase,” the committee said.

Clauses 3.12 and 3.13 of the agreement sets out a specific process to be followed in the event that a dispute arose between the parties about any additional expenses and damages, the committee said.

Clause 3.13 says the purchaser shall pay a reasonable “interim amount” to a stakeholder agreed by the parties or nominated by the NZLS President. The stakeholder shall lodge the interim amount on interest-bearing call deposit with a bank in the joint names of the vendor and purchaser. The amount subsequently determined to be payable shall not be limited to the interim amount.

“Any additional expenses and damages must be dealt with in accordance with the provisions set out in clause 3.13 of the agreement for sale and purchase,” the committee said.

The committee was of the view that clause 3.13 was “specifically designed” so as not to delay settlement of a transaction in the event that a dispute arose about additional expenses and damages.

“It is important for lawyers to be familiar with the terms of agreement for sale and purchase,” the committee said. They must also adhere to them.

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

Last updated on the 4th August 2017