Published on 9 November 2018

[Names used in this article are fictitious]

When preparing a will it is incumbent on a lawyer to establish whether the will-maker’s wishes can be put into effect, the Legal Complaints Review Officer (LCRO) says. To that end, a lawyer owes his or her client a duty to check the ownership of the client’s property.

In LCRO 201/2017, the LCRO considered a complaint that a lawyer, Bagstock, had not acted competently when she prepared a will for Mrs Carder.

Under that will, Mrs Carder left a life interest in a property to one of her two sons, Mr Defarge. That life interest was to end on the earlier of, first, his failure to meet the stipulated terms and conditions of that tenancy, or secondly, ceasing to occupy the property, or thirdly, his death.

On the expiry of Mr Defarge’s occupancy, the property was to become part of Mrs Carder’s residuary estate to be divided in equal shares for her three children, Mr Defarge, Ms E and Mr F, as survived Mrs Carder.

There was a gift over to Mrs Carder’s grandchildren, who both survived Mrs Carder and attained the age of 25 years, in equal shares.

However, although Mrs Carder had informed Bagstock she was the sole owner of the property, it was in fact owned by Mrs Carder and Mr Defarge as joint tenants. An important feature of a joint tenancy is that “on the death of one joint tenant his or her interest is extinguished and accrues to the surviving joint tenant[s] by virtue of the right of survivorship”.

When Mrs Carder died, ownership of the property therefore passed to Mr Defarge by survivorship and Mrs Carder’s instructions, as stated in the will Bagstock prepared could not be put into effect.

Ms E subsequently lodged a complaint with the Lawyers Complaints Service.

Lawyers standards committee decision

A lawyers standards committee decided that no further action on the complaint was necessary or appropriate. In doing so, the committee noted that Bagstock had not acted in the conveyance of the property, ownership issues arose before Bagstock was instructed to prepare the will, and ownership issues would have occurred regardless of whether Bagstock had prepared the will.

The extent of a lawyer’s duty when acting on the preparation of a client’s will, where the type of ownership of the client’s property is critical to the instructions and intentions has been considered both by the LCRO and the courts, the LCRO said.

In LCRO 159/2010, a lawyer’s conduct in failing to check the title to a property “to enable full advice” to the client was found to constitute unsatisfactory conduct.

In that case the lawyer concerned drafted a will on the assumption that the client’s property was owned by a husband and wife as joint tenants, when it was held as tenants in common. This meant that on the client’s death the husband did not receive ownership of the property by survivorship. Instead, the property passed to the client’s son under the will.

In upholding that decision on review, the High Court in Woods v Legal Complaints Review Officer [2013] NZHC 674:

1. reaffirmed that “a lawyer instructed to prepare a will owes a duty of care beyond merely the testatrix herself”;
2. disagreed that “it [was] not open to a lawyer to take a stance opposite to a client’s views and instructions”; and
3. held that it was the lawyer’s “responsibility … to advise [the client] in relation to entry into the will”, and the lawyer “should not have relied on the understanding of the client on that matter”.

Practical guidance

In addition, the LCRO noted that practical guidance available to lawyers (LexisNexis Practical Guidance – Wills – Issues to Consider when Taking Instructions) also recommends that where, as occurred in the facts on this review, “the property is owned as joint tenants then [the property] falls outside the will-maker’s estate and passes automatically by survivorship to the other owner”. The author warns that “[t]here is therefore no point drafting a clause to deal with a life interest in the will-maker’s home to a spouse, if the property will pass automatically to the survivor through joint tenancy”.

In order to protect and promote Mrs Carder’s interests when preparing her will, “it was incumbent on [Bagstock] to establish whether or not Mrs [Carder’s] wishes could be put into effect” (rule 6 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (RCCC)), the LCRO said.

“To that end, [Bagstock] owed Mrs [Carder] a duty to check the ownership of the property, to consult and give advice to Mrs [Carder] about that and provide her the opportunity to re-consider her instructions” (RCCC rules 7 and 7.1).

Bagstock argued that the cited authorities could be distinguished because those lawyers had been informed the property in question was jointly owned and should have been aware of ownership issues; whereas Mrs Carder had informed Bagstock she was sole owner of the property. However, the LCRO rejected this argument, noting the authorities “emphasise the importance for a lawyer instructed to prepare a client’s will intended to dispose of property to first check the ownership of the property concerned.”

The LCRO reversed the lawyers standards committee decision to take no further action on the allegation Bagstock had breached her professional obligations when preparing Mrs Carder’s will. It substituted that with a finding that Bagstock had breached rules 3, 6, 7 and 7.1 of the RCCC and that this constituted unsatisfactory conduct.

In the particular circumstances, the LCRO considered that a finding of unsatisfactory conduct was sufficient in itself without additional penalty. However, the LCRO ordered Bagstock to pay $1200 costs.