New Zealand Law Society - Lawyers Complaints Service: Adverse findings quashed

Lawyers Complaints Service: Adverse findings quashed

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The High Court has quashed an unsatisfactory conduct finding of a lawyers standards committee and a related decision of the New Zealand Lawyers and Conveyancers Disciplinary Tribunal suspending Auckland lawyer Boon Gunn Hong.

The standards committee considered that advice Mr Hong provided to a client incited or could have the potential to incite his client into criminal actions and that this amounted to unsatisfactory conduct.

In [2014] NZLCDT 41, the Tribunal suspended Mr Hong for 10 months for failing to comply with the standards committee order following the unsatisfactory conduct finding requiring him to pay a fine of $1,000, costs of $1,000 and attend a continuing legal education seminar. It made the decision because Mr Hong had failed to attend the seminar and this failure amounted to misconduct.

Mr Hong appealed his suspension and the High Court reduced the length of the suspension to four months ([2014] NZHC 2871).

Mr Hong then sought a judicial review of the standards committee’s unsatisfactory conduct determination, submitting that it was unlawful. The High Court quashed the decisions of both the standards committee and the Tribunal.

The standards committee’s findings against Mr Hong arose around advice Mr Hong gave a restaurant owner client.

For many years the restaurant was successful, but times changed and the rent ended up in arrears. In February 2009 the landlord made the first of four attempts to re-enter the premises and evict the restaurant owner.

The restaurant owner, Mr Chan, told Mr Hong that some customers owed the restaurant substantial sums. Given time to collect outstanding sums, he could clear the arrears and stave off eviction.

Alternative advice

At first Mr Hong advised that Mr Chan could allow the landlord to re-enter and subsequently apply for relief against termination of the lease. Mr Chan was not attracted to this course of action. Any discontinuity would destroy his business. So Mr Hong provided some alternative advice.

He advised Mr Chan that the landlord could not forcibly re-enter the premises if Mr Chan would not peaceably give them up. The landlord would need a possession order from the High Court to re-enter in those circumstances. He told Mr Chan to secure the premises to prevent the landlord entering it.

This would, Mr Hong thought, avoid physical confrontation and any altercation. Mr Hong knew that Mr Chan had a fiery temper. He said he was concerned to avoid a physical confrontation that might lead to an altercation. He also replied to the landlord’s solicitors’ service of notice of termination of the lease that he had advised his clients to post manpower on the premises to repel any attempts to re-enter.

Mr Hong says he met Mr Chan that evening and advised that violence had to be avoided. Such behaviour could lead to criminal charges.

The next day, Mr Hong received a call from Mr Chan informing him that the landlord was again at the premises. Again the landlord sought to evict Mr Chan, but this time with the aid of the police. Mr Hong had Mr Chan hand the phone over to a member of the police in attendance. He warned them off from assisting the landlord.

He then sent a fax to the restaurant, addressed to the New Zealand Police. The fax stated that in order to gain repossession of the premises, the landlord must seek a High Court order. The fax also stated that the Police did not have authority to assist the landlord in the absence of a High Court order.

Some months later, the landlord successfully re-entered the premises. Mr Chan was not present. When he did arrive an altercation took place. The result was that a District Court Judge convicted Mr Chan on two counts of assault.

Serious criticism

The District Court Judge’s judgment contained serious criticism of Mr Hong’s advice.

The judge, for example, stated that: “Serious issues are raised as to Mr Hong’s competence and integrity. Those are not for this Court to determine but may need to be considered by the appropriate body.”

The Judge directed the Registrar to forward the judgment to the Law Society for it to decide what if any action should be taken about the advice.

A standards committee conducted an own-motion investigation and concluded that Mr Hong’s conduct was unsatisfactory. It reprimanded him, fined him $1,000, imposed costs of $1,000 and required him at his own expense to attend a seminar on equitable remedies.

In his application for judicial review, Mr Hong pleaded that the standards committee had failed to adequately take into account his written response.

“Before addressing the relevance of Mr Hong’s response, it is necessary to dwell on the content of Mr Hong’s advice, and associated communications to the landlord’s solicitors and the police,” Justice Stephen Kós said in his judgment.

“The District Court Judge called those communications ‘inaccurate’. With respect to him, it is far from clear that they were.

“Mr Chan’s breach of covenant to pay rent was a breach of the lease of course. But it did not mean Mr Chan’s lease was at an end, or that Mr Chan lost all rights to occupy the premises. Notice of cancellation of the lease had been given and had expired. The landlord was thereupon entitled either to re-enter peaceably (without committing the offence of forcible entry under s 91(1) of the Crimes Act 1961) or to apply to the Court for an order for possession. The tenant, equally, enjoyed the right to apply to the Court for relief against cancellation.

Mexican stand-off

“In the absence of agreement to quit, the more common course adopted by landlords is to seek an order for possession. That is because s 244(1)(b) of the Property Law Act and s 91 of the Crimes Act are rather calculated to create what might be termed a Mexican stand-off,” Justice Kós said.

“Many firm-minded but respectable property practitioners might also have advised peaceable occupation as a response to a threatened re-entry in these circumstances. The objective would be to force the issue into Court, buying time and (in the meantime) gathering funds with which to negotiate resumption of the lease or secure relief against cancellation.

“As to the committee’s task, the first point is that the judge’s observations must be understood as unavoidably limited by the realities ... Those observations were speculative, meriting further investigation. That was the function of the committee.

“The observations of the judge were certainly contestable. And Mr Hong, not being a party to the prosecution, was certainly entitled to contest them. In my view most of the points Mr Hong makes as to the legal character of the rights of a tenant in Mr Chan’s position are sound,” Justice Kós said.

Included in Mr Hong’s response to the standards committee was detail concerning his advice to Mr Chan that he counselled him against confrontation or violence.

“A failure to consider evidence submitted in the process of the investigation and to prefer the content of the complaint without considering that evidence, is a failure to take account of relevant considerations,” Justice Kós said.

Justice Kós quashed both the decision of the standards committee and the decision of the Tribunal.

The Law Society was ordered to pay Mr Hong $24,948.25 costs and disbursements.

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