New Zealand Law Society - Censure and fine for incompetence

Censure and fine for incompetence

Published on 7 June 2020

[All names used in this article are fictitious]

A lawyer who did not provide competent advice has been censured and fined $4,000.

The lawyer, Meagles, acted for Mrs Pawkins and her adult son when they bought a residential property. At the time, Mrs Pawkins and her husband had separated and were living apart.

Just over a year later Mrs Pawkins telephoned Meagles with instructions to prepare a trust deed.

Mrs Pawkins explained that her purpose for making a trust was to prevent her former husband from claiming “any benefit in the house which she bought [with her] money”. She said Meagles advised her that once a trust was established, her former husband could not “claim any share in the property” even if he was living with Mrs Pawkins and her son “after that”.

Mrs Pawkins paid Meagles $2,000 for preparing the trust deed and transferring the property to the trustees.

Some 17 months later, Mrs Pawkins and her son, with another lawyer acting for them, sold the property and bought a replacement property.

The following day they received a Notice of Claim, lodged by her former husband under section 42 of the Property (Relationships) Act 1976 (PRA) against the title to the first property.

Two referrals to barrister

Mrs Pawkins telephoned Meagles for advice, who referred her to a barrister. Mrs Pawkins could not afford barrister’s fees. She turned to her new lawyer, who also referred her to a barrister.

A settlement was subsequently reached where Mrs Pawkins paid her former husband an initial $8,000 and a subsequent payment of about $20,000.

Mrs Pawkins lodged a complaint with the New Zealand Law Society Lawyers Complaints Service.

A lawyers standards committee found unsatisfactory conduct by Meagles, fined him $4,000 and ordered him to pay $1,000 costs to the New Zealand Law Society and $2,000 compensation to Mrs Pawkins.

The committee concluded that it was only when a section 21A PRA agreement had been completed between Mrs Pawkins and her former husband, or Mrs Pawkins obtained a court order, that it would be “appropriate to establish a trust”.

Meagles’ “failure to be alert to the very possibility that there could be a claim” to the property – that is, the property could be relationship property – amounted to incompetence, the committee said.

The committee also found unsatisfactory conduct by Meagles for not providing Mrs Pawkins with written terms of engagement and client care information.

Lawyer applies for review

Meagles applied to the Legal Complaints Review Officer (LCRO) for a review.

In LCRO 220/2016, the LCRO confirmed the committee’s two findings of unsatisfactory conduct, the fine of $4,000 and the $1,000 costs order.

The LCRO also imposed a censure on Meagles.

Mrs Pawkins and Meagles disagreed on the nature of advice Meagles provided, the LCRO said.

Written evidence, such as letters of advice, email exchanges, file notes, narrations of attendance and invoices often assist to resolve disagreement concerning the nature of a lawyer’s advice.

“Unfortunately [Meagles], as he acknowledges, did not provide written advice to Mrs [Pawkins], did not make file notes, does not possess time records and did not issue an invoice (bill of costs) to Mrs [Pawkins],” the LCRO said.

“From my analysis of the information provided to this office, I consider it more probable than not that [Meagles] did not provide competent advice to Mrs [Pawkins].”

The LCRO modified the committee’s decision by adding that it was unsatisfactory conduct that Meagles did not take reasonable steps to ensure Mrs Pawkins understood the nature of the retainer and did not consult with her about the steps to be taken to implement her instructions.

Because there was no clear “causative link” between Meagles' conduct and the loss Mrs Pawkins claimed, Mrs Pawkins was not entitled to compensation.

The LCRO therefore reversed the committee’s order that Meagles pay Mrs Pawkins $2,000 compensation, and substituted that with an order that Meagles cancel his fee of $2,000 and refund the money to Mrs Pawkins.

The LCRO also ordered Meagles to pay $1,200 costs.

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