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Censured for lengthy delay in issuing arbitral award

05 March 2018

Note: All names used in this article are fictitious.

A barrister who took five years to issue an arbitral award has been censured and fined $500.

The barrister, Fabian, was appointed as an arbitrator by two companies to determine a dispute between them. The arbitration agreement provided for the award to be issued within 40 days of the arbitration hearing, or otherwise as he might advise.

One of the parties complained to both the New Zealand Law Society and to the Arbitrators’ and Mediators’ Institute of New Zealand (AMINZ) about the delay. The AMINZ Tribunal censured Fabian, and fined him $7,000. Because he resigned from AMINZ, he could not be suspended or expelled.

A complaint was also made to the Lawyers Complaints Service. A lawyers standards committee found unsatisfactory conduct on Fabian’s part. It censured and fined him $7,500. It also ordered the barrister to pay $5,000 compensation for the expense incurred in pursuing the award and that he pay $1,000 costs.

Fabian sought a review by the Legal Complaints Review Officer (LCRO), arguing two points in LCRO 194/2015 and 56/2016

The first was that the Law Society does not exercise jurisdiction over the quasi-judicial aspect of arbitrators’ conduct.

The second was that if the Law Society did have jurisdiction, the principle of double jeopardy precluded the Law Society exercising its statutory functions to regulate Fabian’s conduct, because AMINZ had exercised its disciplinary functions.

Arbitration services “include the decision-making aspect of the service a lawyer provides, and the lawyer’s conduct in the course of providing arbitration services falls within the scope of the [Lawyers and Conveyancers] Act’s disciplinary mechanisms,” the LCRO said.

The standards committee and the LCRO therefore had jurisdiction to exercise their functions in considering and determining the complaint.

The LCRO confirmed that a delay of five years in providing arbitration services was unsatisfactory conduct.

“The purposes of the Act include maintaining public confidence in the provision of legal services, protecting consumers and recognising the status of the legal profession. A lawyer has an obligation to act in a timely manner consistent with the terms of the retainer. The terms of the arbitration agreement promised delivery of the decision … within 40 days. Promises of revised delivery dates were not met.

“Independently of any censure AMINZ imposed, it is appropriate to impose a censure which reflects opprobrium on the part of the legal profession and public for delay and unmet promises.”

However, the LCRO reduced the fine from $7,500 to $500. That was because AMINZ had fined Fabian $7,000; the maximum fine a standards committee could impose was $15,000 and a fine of $7,500 would have meant the barrister was paying only $500 short of the maximum that could be imposed.

“Although Mr [Fabian]’s conduct was thoroughly unacceptable, it is a long way short of the type of conduct that might attract the maximum fine. Overall, a fine of $14,500 does not fairly reflect the nature and seriousness of the conduct,” the LCRO said.

The committee’s direction to cancel and refund fees in relation to the arbitration were reversed. Fabian had not charged for work undertaken after the hearing. The LCRO said that work done before the delay occurred was not the subject of proceedings and there was nothing wrong with that work. Accordingly, the fees could not be cancelled under s 156(1) (f) of the Act.

The LCRO noted that there was no suggestion of any conduct outside of arbitration from which the public should be protected, and that Fabian had said he would not provide arbitration services for a fixed period. “His undertaking in that regard is relied upon.”

The LCRO also confirmed the standards committee’s compensation order and the costs order, and ordered he pay $1,200 LCRO costs.

Last updated on the 5th March 2018