Undertakings and Sole Practitioners considered

Sole practitioners have an obligation to ensure they organise their schedule so that they are able to honour undertakings they have given, according to the Legal Complaints Review Officer (LCRO).

Facts

In FY v UM LCRO 239/2010 (26 October 2011), a sole practitioner acted for the seller of an apartment. On the morning of the settlement day she gave an undertaking to the lawyer for the buyer that she would release the transfer of the title into his Landonline workspace “immediately” after she was notified that the settlement funds had been paid into her trust account.

That notification was given later that morning, at 11:30am. However, despite three faxes and a telephone call to her office, the lawyer for the seller didn’t release the transfer until 4:05pm that day, after the cut-off time for registration.

Nature of complaint

Lawyers are required to honour all undertakings, whether written or oral, that they give to any person in the course of practice (Conduct and Client Care Rules, Rule 10.3).

In this case, the opposing lawyer complained that the undertaking hadn’t been honoured. He said his clients had chosen that date as a propitious one for settlement and the delay had meant the transfer hadn’t been registered until the next day.

Lawyers Standards Committee

The lawyer for the seller told a Lawyers Standards Committee she had been in meetings all that day and that she had released the dealing as soon as possible. The committee accepted her explanation. It found she had not breached her undertaking, which it said “needed to be interpreted in a reasonable manner”. The lawyer for the buyer applied for a review of the decision by the LCRO pursuant to section 139 of Lawyers and Conveyancers Act 2006.

Whether dealing released “immediately”

On review, the LCRO took a more stringent approach, noting that the Oxford English Dictionary defines “immediately” as meaning “without any delay or lapse of time; instantly, directly, straight away; at once”. He found that the lawyer had not released the dealing “immediately”.

Releasing an e-dealing requires only minimal time, the LCRO said, and in all but the most demanding of meetings it should have been possible for the lawyer to have excused herself to complete the release. Even if she had been away from her office, she had a responsibility as a sole practitioner not to schedule meetings that would prevent her fulfilling her obligations to other lawyers.

LCRO decision

The LCRO said that while the Standards Committee had “accepted the need for a somewhat relaxed application of the obligations imposed by an undertaking to attend to some things ‘immediately’”, he would not have been so ready to excuse the lawyer’s conduct. In the circumstances, the LCRO decided not to vary the committee’s decision by making a finding of unsatisfactory conduct. He said it would have been “unduly harsh” for there to be disciplinary consequences for the lawyer in this case.

The LCRO did, however, order her to pay $900 costs to the Law Society, finding that the opposing lawyer’s review application had had some merit. The other lawyer had been “right to express concern that the settlement process could be compromised by lawyers who do not take care to organise matters to enable them to attend to their obligations.” The LCRO said that “[t]he settlement process relies heavily on solicitors’ undertakings” and that if these are not adhered to this would “result in the integrity of the process being diminished.”

The LCRO was also critical of the committee in this case for not requiring the lawyer to support her explanation that she had been in meetings all day. “Part of a Standards Committee’s role in its investigation of complaints should be to ask for evidence to support contentions made by a practitioner, rather than merely accepting statements made without further enquiry,” the LCRO said.

Obligation to inform about new title

The other lawyer had also complained that he hadn’t been notified that a new title had been issued after the sale and purchase agreement had been signed. The original title for the apartment had included two carparks whereas the agreement included only one, hence the need for the new title. However, the other lawyer hadn’t noticed this difference.

The LCRO agreed with the Standards Committee that the lawyer for the seller had been under no obligation to inform the other lawyer about the new title. The LCRO said that, while as a matter of conveyancing practice she should have notified him, this was not a disciplinary issue.

This decision was published in LawTalk 789, 17 February 2012, page 30.