New Zealand Law Society - Certified without confirming authority

Certified without confirming authority

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[The name used in this article is fictitious]

A lawyer certified and submitted a land transfer instrument in Landonline without confirming that he had authority from both joint owners to do so, a lawyers standards committee has found.

The committee censured the lawyer, Higden, for unsatisfactory conduct and ordered him to pay $1,000 costs. It also ordered that the Lawyers Complaints Service provide a copy of its determination to the Registrar-General of Land.

The committee noted that Higden no longer held a practising certificate in New Zealand. Had he done so, the committee would have ordered him to undergo practical training or education. The committee recommended to the Law Society that if Higden applies for a practising certificate in future, his application should be referred to the Practice Approval Committee.

Higden certified and submitted the land transfer instrument after being requested to do so by a senior member of the firm where he worked, Ms C.

The instrument transferred ownership from two joint owners of a property to one of those joint owners.

Forgery alleged

Following the transfer, one of the two original joint owners asserted that he did not authorise the transfer and that his purported signature on the related Authority and Instruction (A&I) form was a forgery. At the time the committee considered the case, those allegations were the subject of criminal proceedings.

Rule 2.5 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 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.”

It is well established that rule 2.5 applies to certificates given in e-dealing transactions, the committee said.

During or after receiving the request from Ms C, Higden located and reviewed the client file. He observed that the A&I form was undated and did not record a base document, an underlying legal document recording the transaction to which the A&I dealing is intended to give effect.

Higden said he took steps to satisfy himself that the two transferors had provided authority for the firm to carry out the transfer, by noting that they were existing clients of the firm.

The committee considered that Higden failed to discharge his duties under rule 2.5, because he failed to take the following steps to ensure the accuracy of the certification.

The A&I form was undated and did not record an underlying base document. Higden therefore “did not have reasonable grounds to believe that a base document existed and there is no evidence that it did exist,” the committee said.

“The [committee] considered it professionally irresponsible for [Higden] to have facilitated the transfer of property in these circumstances.

“In the absence of such reasonable grounds, [Higden] ought not to have made a certification to LINZ and ought not to have registered the transfer.”

Given Higden’s understanding that the transfer was a gift from one of the original joint property owners to the other, he should have:

  • sighted an underlying document evidencing the gift; and
  • ascertained from this document that the seller had received independent legal advice or had declined the opportunity to take independent legal advice and had given his informed consent to the transfer.

There was no material before the committee and no evidence offered to indicate that any such advice had been received or recommended and declined, the committee noted.

LCRO review

On review, the Legal Complaints Review Officer (in LCRO 126/2017) upheld the committee’s decision.

“Such is the potential seriousness of providing another person with an inaccurate certificate, particularly concerning the registration of electronic land instruments, that I gave consideration to imposing a fine.

“Were it not for the fact that [Higden] was at the time being trained and supervised by [Ms C] I would have done so,” the LCRO said.

“I make the general observation that, in view of the responsibility a conveyancing professional carries when providing e-dealing certification, that this role is intended for the more experienced property lawyers in a firm, namely, partners, principals and associates appointed by the firm for that purpose pursuant to the firm’s internal protocols – not inexperienced lawyers like [Higden] who had received his digital certificate as a conveyancing professional only two months earlier, and was under training and supervision from [Ms C].

“In this regard, in my view, the firm must also carry responsibility for the outcome of this matter,” the LCRO said.

The LCRO also ordered Higden to pay the Law Society $900 costs, and that a copy of its decision be provided to the Registrar-General of Land.

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