A lawyer, B, has been fined $750 by a lawyers standards committee following five findings of unsatisfactory conduct relating to a residential property transaction.
B acted for the vendor, and the principal of a firm, Mr C, acted for the purchaser, assisted by an employee, Ms D.
B provided an undertaking to Mr C’s firm, which included: “To release the following instruments from the Landonline Workspace into your control” [naming the transfer number].
Because a Statutory Land Charge was registered against the title, Ms D informed B by email that “you did not undertake to remove the Statutory Land Charge”. Ms D requested B to “forward us your amended undertaking in this regard”.
B telephoned Ms D in response and asked “what is a statutory land charge?” Having received an explanation, B requested a search of the title from Ms D and assistance in adding a release of the statutory land charge to the e-dealing.
Ten minutes later, Ms D emailed B, forwarding a copy of the statutory land charge and informing him that “we have added Discharge of the above interest onto our e-dealing”.
Fifteen minutes later, B telephoned Ms D to inform her that his clients were overseas and sought assistance. Ms D suggested that B contact the territorial council for instructions and repeated the request for B’s undertaking to remove the statutory land charge to enable settlement.
B then forwarded a second, followed by a third undertaking and this third undertaking stated that B had also “signed … discharge of Statutory Land Charge in e-dealing number …”
Ms D then emailed B requesting that he certify and sign the instruments in the first paragraph of his undertaking.
At that time, by viewing the e-dealing, Ms D discovered that B had already released the e-dealing before B had received the settlement funds from Mr C’s firm.
B then telephoned Ms D to confirm if he had to state the words “certify and sign” on his undertaking, which Ms D confirmed.
B then sent a fourth undertaking, which stated that he had certified and signed the Transfer and Discharge of Statutory Land Charge, following which settlement took place.
Mr C provided the Lawyers Complaints Service with a confidential report about the situation and the standards committee resolved to investigate the matter of its own motion.
Among other things, Mr C said that B may not have had in his possession the necessary authority and instruction of either the council that held the statutory land charge, or his vendor clients to release the statutory land charge.
Mr C said the council had informed him that the request for the discharge of the statutory land charge was made one day after settlement, and one day after B discharged the statutory charge.
The committee found unsatisfactory conduct by B on each of the following five breaches:
- B breached rule 3 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (RCCC) by being negligent and/or incompetent in the manner in which he dealt with a Statutory Land Charge.
- B breached rule 3 of the RCCC by releasing a transfer and Statutory Land Charge before receiving the settlement funds.
- B’s practice in relation to undertakings breached parts 6.6(d)(ii) of the Property Transaction and E-dealing Practice Guidelines. (B submitted that contrary to the undertaking he had provided, that by releasing the e-dealing before he had received the settlement funds that he had “no intention” of breaching Guideline 6.6(d)(ii).
- B breached rule 2.5 of the RCCC by his digital certification while not having the appropriate authority and instruction from the relevant territorial authority to discharge the Statutory Land Charge. Rule 2.5 states that: “A lawyer must not certify the truth of any matter to any person unless he or she believes on reasonable grounds that the matter certified is true after having taken appropriate steps to ensure the accuracy of the certification”.
- B breached rule 10.3 of the RCCC by providing an undertaking that he had no ability to control and that this was unsatisfactory conduct.
B said that having been informed of the existence of the statutory land charge and having telephoned the council to request a release that he “became flustered that time was running out for the settlement and pressed the e-dealing button by mistake believing, on reasonable grounds, that the settlement funds had already been received …” whereas they were received 10 minutes later.
In his submissions, B apologised for his mistake and stated that it was the first time that he had ever made an e-dealing mistake and that no loss had been caused to Mr C’s firm, Mr C’s client or to his client.
“The committee observes that the proper functioning and accuracy of Landonline system maintained by Land Information New Zealand (LINZ) for e-dealings depends on lawyers who are approved as conveyancing professionals to ‘certify and sign an instrument prior to its being submitted for registration’,” the committee’s decision states.
As well as the fine, the committee ordered that written notice of its determination be provided to the Register-General of Land. It also ordered B, as part of his continuing professional development, to attend and complete two property law and e-dealing related practical training courses within 12 months and report back to the Lawyers Complaints Service confirming that he had attended and completed the courses. B was ordered to pay $500 costs.