RAGG v LEGAL COMPLAINTS REVIEW OFFICER [2021] NZCA 579

RAGG v LEGAL COMPLAINTS REVIEW OFFICER [2021] NZCA 579 [3 November 2021]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA508/2020[2021] NZCA 579BETWEEN HUGH PETER PETRIE RAGGAppellantAND LEGAL COMPLAINTS REVIEWOFFICERRespondentTHE NEW ZEALAND LAW SOCIETYIntervenerHearing: 30 September 2021Court: Collins, Goddard and Woolford JJCounsel: Appellant in personNo appearance for RespondentC R Johnstone for IntervenerJudgment: 3 November 2021 at 11.00 amJUDGMENT OF THE COURTA The appeal is allowed.B The Review Officer's decision is set aside.C There is no order for costs.____________________________________________________________________REASONS OF THE COURT(Given by Collins J)Introduction[1] Mr Ragg, who practises law on his own account in Ashburton, was found by aStandards Committee of the New Zealand Law Society (the Committee) to haveconducted himself unsatisfactorily in relation to a conveyancing transaction. Afterconsidering an application for review by Mr Ragg, the findings of the Committee weremodified by a Legal Complaints Review Officer (the Review Officer). Mr Ragg'sapplication to judicially review the decision of the Review Officer was dismissed byOsborne J.1 Mr Ragg now appeals the High Court judgment.[2] Mr Ragg's grounds of appeal focused upon two points:(a) His conduct did not constitute a breach of professional standards andthat at all times he was doing his best to fulfil his clients' instructions.(b) Even if there was a breach of professional standards, it was unnecessaryfor disciplinary action to be taken against him.Background[3] Mr Ragg acted for Mr and Mrs A (the vendors) who on 20 April 2018 weresettling the sale of their home and purchasing another property. Anderson Lloyd inDunedin were acting for Mr and Mrs B (the purchasers), who were purchasing theproperty. The conveyancing was to be completed through e-dealing using theLandonline system.[4] In preparation for the settlement, Mr Ragg sent Anderson Lloyd two emails on16 March 2018, which included a link to the name and number of his trust account.Mr Ragg was, at this stage, dealing with Ms Thomas, a legal executive at AndersonLloyd. She did not ask him to verify the details of his trust account.1 Ragg v Legal Complaints Review Officer [2020] NZHC 2057 [High Court judgment].[5] At 10.26 am on 20 April 2018, Mr Ragg received an assurance fromMs Thomas that the purchasers were ready to settle. Mr Ragg contacted the vendors,who were packed and ready to move to their new property. He told them that thepurchasers were ready to settle and that they could make their way to their newproperty. The vendors were reassured by this news. They were very keen to settlebecause they had previously encountered difficulties when trying to sell their property.[6] An issue arose when, later in the morning, Ms Thomas sought verification ofMr Ragg's trust account details.[7] Mr Ragg was very concerned by this development. Because his clients wereparticularly anxious that the settlement not fall through, Mr Ragg resolved to take twocourses of action:(a) He decided to go to his bank to obtain a deposit slip, preferably oneencoded with his trust account details.(b) Even though he had not received the settlement moneys fromAnderson Lloyd, he decided to release his part of the e-dealinginstruments, including the transfer that had been signed by his clientsand the discharge of the mortgage security that had been executed byhis clients' bank.[8] Mr Ragg took the second of these measures, believing that it was in his clients'interests to do everything to facilitate the sale of their property and because he believedthere was no risk Anderson Lloyd would seek to register the mortgage discharge andtransfer without first making payment to his trust account.[9] Mr Ragg went to his bank and learnt that it would take some time for the bankto issue an encoded deposit slip.[10] At 12.06 pm, Ms Thomas sent an email to Mr Ragg seeking further informationabout the details of his trust account.[11] At 12.17 pm Mr Ragg replied to Ms Thomas, saying:There will be no settlement until I have spoken to your Senior Partner - I alsowant proof that your requirement[s] are not just your dreamt up Office Rules.Get you[r] Senior Partner to ring[12] At 12.27 pm, Mr Ragg emailed Ms Thomas a copy of a bank statement he hadreceived, but not an encoded deposit slip.[13] At 12.31 pm Mr Ragg emailed Ms Thomas, saying:I probably will report your Firm to the Law Society and as part of my casewill be to find out the requirement you made to the Agent before the depositof 36,000 was paid by your Firm or your client.[14] Anderson Lloyd paid settlement funds to Mr Ragg's trust account at 1.19 pm,and asked him to release his part of the e-dealing instruments into Anderson Lloyd'sworkspace. It would seem Anderson Lloyd did not appreciate at that time Mr Ragghad already released his e-dealing instruments.[15] At 1.27 pm, Mr Ragg sent an email to Ms Thomas, saying:RegrettablyI have found your firm to be more than disrespectful - Impertinent evenI am still almost certain to report you all to the Law Society unless I get apersonal apology from your sen[i]or Partner.[16] Mr Ragg settled his clients' purchase at 1.43 pm.[17] At 1.44 pm Ms Simmers, a partner at Anderson Lloyd, emailed Mr Ragg,saying:I have been forwarded the email below.We do not have a record of having previous[ly] made a payment to your firmor to the agent, which was why a deposit slip was requested.NZLS's Trust Account Guidelines call for evidence of bank account details tobe provided before making an electronic payment from our Trust Account I would be happy to discuss this further with your firm's Trust AccountPartner.I have been advised that your e-dealing for the transfer to our client wasreleased before we paid the amount required to settle into your firm's trustaccount. Can you please explain why.[18] At 1.50 pm Anderson Lloyd submitted documents to Land Information NewZealand (LINZ) for registration.[19] Mr Ragg replied to Ms Simmers' email at 1.50 pm, saying:Your explanation is not accepted.The ANZ Bank here in Ashburton do not issue deposit slip[s] unless speciallyordered.I view your conduct as impertinent and I am not impressed by yourexplanation.[20] Three weeks' later, Ms Simmers forwarded a report to the New Zealand LawSociety. This led to the Committee investigating Mr Ragg's conduct on "its ownmotion" pursuant to s 130(c) of the Lawyers and Conveyancers Act 2006 (the Act).[21] The Committee concluded Mr Ragg had engaged in unsatisfactory conduct intwo respects:(a) By releasing the e-dealing instruments for the discharge and transferbefore Anderson Lloyd had paid the balance of the purchase moneysinto Mr Ragg's trust account. The Committee determined that in sodoing Mr Ragg breached r 3 of the Lawyers and Conveyancers Act(Lawyers: Conduct and Client Care) Rules 2008 (the Rules). Inparticular, it found he had breached his obligation to act competentlyand in a timely manner consistent with the terms of his retainer and hisduty to take reasonable care.(b) By failing to treat lawyers at Anderson Lloyd with respect and courtesy,contrary to the requirements of r 10.1 of the Rules.[22] Mr Ragg was required to send written apologies to Ms Simmers andMs Thomas, pay a fine of $750 for each breach and $500 by way of costs. TheCommittee also resolved to notify the Registrar-General of Land of its decisionpursuant to s 159 of the Act.[23] Mr Ragg's application for review resulted in the Review Officer consolidatingMr Ragg's conduct into one finding of unsatisfactory conduct. The Review Officerquashed the fine and the requirement Mr Ragg write letters of apology to Ms Simmersand Ms Thomas. The balance of the findings and orders of the Committee were upheldby the Review Officer.High Court judgment[24] In his application for judicial review, Mr Ragg maintained that the decision ofthe Review Officer was invalid by reason of error of law and/or was unreasonable. Hesought:(a) a declaration that the Review Officer's decision was invalid;(b) an order setting aside the finding of unsatisfactory conduct;(c) an order quashing the requirement he pay $500 by way of costs; and(d) an order setting aside the decision to notify the Registrar-General ofLand about the findings.[25] Pivotal to Mr Ragg's application for judicial review were theProperty Transactions and E-Dealing Practice Guidelines (the Guidelines) issued bythe Property Law Section of the New Zealand Law Society.[26] The introduction to the Guidelines records that they are designed to reflectrecommended practices for e-dealings. The Guidelines are endorsed by the Registrar-General of Land for lawyers using Landonline.[27] Guideline 2.56 provides:Remote settlement2.56 Where a conveyancing practitioner acts for the purchaser, thevendor's lawyer should not release the instruments until settlementmoneys are received in cleared funds.[28] Guideline 8.72 provides for release to occur after settlement. It states:Release should occur immediately after settlement in accordance with theundertaking given. At the same time, the purchaser's lawyer should beadvised by telephone, email or facsimile that release has occurred.[29] The commentary to these Rules explains that "Release gives effectivepossession and control to the purchaser" and that if the vendor's solicitor releases thevendor's e-dealing instruments without achieving settlement through payment of thebalance of the purchase price, it is the purchaser's solicitor who gains control of thetransaction and may vest the title in the purchaser without the vendor having receivedthe settlement moneys or the vendor's mortgagee having been repaid its debt.[30] Osborne J concluded Mr Ragg had not demonstrated any error in the way theReview Officer had considered and determined Mr Ragg's application for review. Thekey findings made by the Judge were:(a) The Review Officer appropriately recognised the Guidelines reflectedorthodox conveyancing practices that were designed to protect theinterests of vendors.2(b) By releasing his e-dealing instruments before receiving the settlementmoney, Mr Ragg placed the vendors at risk.3(c) The Review Officer's comment that Mr Ragg was "flustered" when hereleased his e-dealing instruments was supported by the evidence.42 At [119]–[125].3 At [128]–[132].4 At [133]–[140].(d) The fact Mr Ragg had honestly believed he was justified in taking thecourse of action he followed did not excuse his departure from normalconveyancing standards.5(e) The Review Officer's decision was reasonable.6The appeal[31] It is not necessary to set out all of the grounds of appeal contained in Mr Ragg'snotice of appeal and in his written submissions. Suffice to record:(a) Mr Ragg challenges the finding that he was guilty of unsatisfactoryconduct.(b) Even if his conduct was a departure from usual professional standards,Mr Ragg contends the Committee and the Review Officer should haveconsidered taking no further action, but failed to turn their minds to thispossible disposition.[32] In his oral submissions before us, Mr Ragg said that his communications withMs Thomas and Ms Simmers were not appropriate and that he was not proud of theemails he sent them.[33] Mr Johnstone, who appeared for the New Zealand Law Society as anintervener, submitted that the High Court judgment was unimpeachable and thatMr Ragg's appeal was simply a re-litigation of the arguments he had unsuccessfullypursued before the Committee, the Review Officer and the High Court.[34] Mr Johnstone informed us, however, that the decision by the Committee andthe Review Officer to refer their findings to the Registrar-General of Land wasunusual. Such a referral might be justified where, for example, a practitioner'sconduct risked the integrity of the Landonline system. Mr Johnstone observed there5 At [142]–[143].6 At [144].was nothing in Mr Ragg's conduct that clearly justified referral to the Registrar-General of Land.[35] The parties agree that Mr Ragg's appeal is a general appeal under s 20 of theJudicial Review Procedure Act 2016 and s 56 of the Senior Courts Act 2016. As such,we may grant any of the forms of relief prescribed in s 16 of the Judicial ReviewProcedure Act, including issuing a declaration or setting aside the Review Officer'sdecision if we are satisfied that the Review Officer's decision was invalid. Bothparties submitted that, if we found errors in the Review Officer's decision thatinvalidated her decision, we should, if possible, avoid remitting the case back to theReview Officer for further consideration.Analysis[36] Mr Ragg's actions when he released his e-dealing instruments before hereceived the settlement moneys from Anderson Lloyd were a departure from normalconveyancing practices and contrary to the advice set out in the Guidelines.[37] Mr Ragg's actions needed, however, to be viewed in context. In particular:(a) Mr Ragg was acting in what he genuinely believed were the bestinterests of his clients.(b) Mr Ragg was entitled to believe that Anderson Lloyd would actethically and responsibly, and would not register the instrumentswithout making payment from the cleared funds held by them. So noharm would be caused to his clients or their bank.(c) No harm occurred in this case and it would appear no one evenappreciated Mr Ragg had released his e-dealing instruments beforeAnderson Lloyd released the settlement funds.(d) Settlement occurred without Anderson Lloyd receiving an encodeddeposit slip from Mr Ragg. The requirement they had asserted earlierthat day was not in fact necessary, and settlement proceeded without it.(e) No complaint was made by Mr Ragg's clients or by the bank. Nor wasthere any evidence before the Review Officer of any unresolvedconcerns about his conduct on the part of either his clients or the bank.[38] While we can understand the Committee and Review Officer being concernedMr Ragg had departed from normal conveyancing practices, his conduct was at thelow end of the spectrum of conduct that warranted referral to a Committee and wastherefore a case that required the Committee and the Review Officer to reflect on thenecessity to take disciplinary action against Mr Ragg.[39] Section 152(2)(c) of the Act authorised the Committee to "take no furtheraction with regard to the matter". The same power was conferred upon theReview Officer by s 211(1)(b) of the Act.[40] When assessing the case against Mr Ragg it was necessary for theReview Officer to consider whether protection of the interests of the community andthe profession justified taking the formal step of making a finding that Mr Ragg wasguilty of unsatisfactory conduct. The possibility of deciding to take no further actionunder s 152(2)(c) of the Act needed to be considered. The Review Officer failed totake this step.[41] The Review Officer's failure to address s 152(2)(c) was compounded when shedecided to refer the findings against Mr Ragg to the Registrar-General of Land unders 159 of the Act. That was an unusual and potentially punitive step to take, whichcould have resulted in the Registrar-General taking steps that would adversely affectMr Ragg's ability to engage in e-dealing using the Landonline system. That wouldeffectively prevent him from continuing to operate his conveyancing practice. Therewas nothing in the nature of Mr Ragg's conduct that could justify the Review Officerexercising her discretion to refer Mr Ragg to the Registrar-General of Land: thepurpose of this provision, which is to protect the integrity of the registration process,was not engaged.[42] In our assessment, the Review Officer erred when she:(a) failed to consider exercising the powers in s 152(2)(c) of the Act; and(b) exercised the powers conferred by s 159 of the Act.These errors were, in the context of this case, material.[43] Normally, errors that invalidate a Review Officer's decision would beaddressed by way of declarations and a direction the Review Officer reassess herdecision. This case, however, relates to events that occurred three and a half years agoand, as noted above, involved conduct at the low end of the spectrum of what couldbe considered unsatisfactory conduct. It is time this matter ended. We will do so bysetting aside the Review Officer's decision and make no further orders.Result[44] The appeal is allowed.[45] The Review Officer's decision is set aside.[46] There is no order for costs.Solicitors:Crown Law Office, Wellington for RespondentNew Zealand Law Society, Wellington for Intervener