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Lawyers and Conveyancers need to co-operate, says LCRO

01 December 2017

It is incumbent on lawyers and conveyancers to carry out their duties to their clients in a “spirit of co-operation”.

This was stated by the Legal Complaints Review Officer (LCRO) in upholding the decision of the New Zealand Society of Conveyancers (NZSoC) Standards Committee to take no further action on a complaint by a lawyer about a conveyancer (LM Law v HR LCRO 212/2016 (22 September 2017).

“This review arises out of the ongoing (and unresolved) issue of the manner in which lawyers and conveyancers are to deal with each other,” the LCRO said.

The lawyer, LM, acted for the buyer of a residential property and the conveyancer, HR, acted for the seller. A disagreement arose about the manner of settlement.

Disagreement over settlement

Paragraph 2.56 of the New Zealand Law Society’s Property Law Section (PLS) Settlement Guidelines states:

“Where the conveyancing practitioner acts for the vendor and the lawyer acts for purchaser, the instruments should be released into the control of the purchaser before the funds are paid. The conveyancing practitioner is protected by the lawyer’s undertaking, which he or she could enforce.”

HR followed the opinion of the NZSoC that “Guideline 2.56 is unlawful” and declined to settle on the basis contemplated by the Guideline. Instead, she asked LM to remit the settlement monies to her against her undertaking to then release the e-dealing in the same manner as the Settlement Guidelines provide for when lawyers are acting for the parties.

LM refused to accept HR’s undertaking and followed the directive in Guideline 2.55, which provides:

“A lawyer should not seek, accept or need to rely on an undertaking from a non-lawyer. The paramount concern for the lawyer must be the protection of the interests of the client concerned. Undertakings given by lawyers can be and are enforced by a Court under its inherent jurisdiction arising from the fact that lawyers are officers of the Court. Conveyancing practitioners are not officers of the Court and their undertakings cannot be enforced by the Court under its inherent jurisdiction. An undertaking given by a non-lawyer may not be enforceable in law.”

HR then suggested that LM settle by appointing an agent near her offices to attend a personal settlement – by handing over a bank cheque and contemporaneous release of the e-dealing. LM considered that HR should bear the costs of appointing the agent.

Extensive communication took place between the parties, with each party referring to the advice and views of their respective professional bodies – the PLS and the NZSoC. The transaction was settled on terms agreed between LM and HR.

Complaint against conveyancer

LM’s complaint to the NZSoC arose in relation to an email HR wrote to her client after settlement. The property seller forwarded the email to the buyer, who forwarded it to LM.

LM raised a series of issues in his complaint, including:

  • HR’s email asserted that his firm had asked HR to breach her obligations to the seller and their bank, and that LM’s firm had made no such request; and
  • HR’s email alleged that LM’s firm had asked HR to do something “unprofessional and probably unlawful” and there was no basis to this allegation.

In making an allegation against LM’s firm, HR had breached rules 6 and 29 of the Lawyers and Conveyancers Act (Conveyancing Practitioners: Conduct and Client Care) Rules 2008, B said.

To suggest a lawyer was acting “unprofessionally” and “probably unlawfully” was a serious allegation, LM said.

Standards committee decision

The standards committee considered the email was a confidential communication between HR and her client, containing a full and frank discussion of aspects of the legal services provided.

“As such,” the committee said, “the email communication complained of needs protection on a similar basis as the legal privilege afforded to communications between a lawyer and their client in similar circumstances.”

In its review decision, the LCRO noted that the definition of a “legal adviser” in the Evidence Act 2006 did not include conveyancing practitioners. “Applying the privilege (ss 53 to 67) provision of the Evidence Act, it was clear [HR’s] email was not a privileged communication.

The communication was intended solely for the benefit of HR’s client and did not “cross the line of impropriety” to such an extent that a disciplinary response was warranted, the standards committee found.

The committee concluded its decision by issuing a warning to conveyancers that they “should always exercise professional restraint in their communications with clients to ensure the good standing of the profession is maintained”.

LCRO’s decision

The LCRO found that HR’s email did not say that LM or his firm was acting “unprofessionally” or “probably unlawfully”. What she said was that LM had asked her to act in a particular way. Whether she complied or not was a decision for her to make.

“In the email, [HR] then refers to the fact that [LM] is adopting a solution recommended by NZLS which, she says, is not accepted by NZSoC,” the LCRO noted.

The difference of opinion between the NZLS PLS and the NZSoC “is of limited relevance to clients of either a conveyancing practitioner or lawyer.

“What is important is that clients are not disadvantaged, and both professionals have a duty to act in the client’s best interests.

“This must necessarily involve acting with some pragmatism and accommodation, and a recognition that the conveyancing profession was established when the Lawyers and Conveyancers Act came into force on 1 August 2008,” the LCRO said.

“It is somewhat disappointing that the parties to this complaint find themselves in this position, largely through the inability of their respective bodies to resolve those issues.

“Each client has been detrimentally affected by events and that is not in the interests of either party or their clients.”

The LCRO also ordered that an anonymised version of the decision be published to members of the NZLS and the NZSoC.

Comment from the Property Law Section of the New Zealand Law Society:

“This is an ongoing issue and of concern to the NZLS Property Law Section. The Property Law Section is actively involved in reaching a constructive resolution of all issues between lawyers and licensed conveyancers.”

Last updated on the 1st December 2017