Published on 3 November 2017

[All names used in this article are fictitious.]

It is important for lawyers to deal with the ownership structure in relation to licences to occupy, particularly when they are dealing with clients in second relationships, a lawyers standards committee says. The committee observed that lawyers should have a ‘difficult conversation’ early on with their clients about ownership structures so that the clients’ intentions will be correctly recorded and to avoid any issues or complaints arising in the future.

The committee was dealing with a complaint that a lawyer, Willoughby, had failed to document the intention of a married couple, Mr and Mrs Nestor, to hold a licence as tenants in common in equal shares, and not jointly.

Willoughby had acted for the couple when they sold a residential property and bought the licence to occupy. The lawyer accepted that Mr and Mrs Nestor intended to hold the licence as tenants in common and not jointly. Willoughby had advised them at the time of purchase that they would need to address ownership at some time in the future. Their intentions were never recorded, however, and on Mr Nestor’s death, the licence to occupy passed to Mrs Nestor by survivorship.

Mrs Nestor agreed to honour her original intention so that each of their shares in the licence to occupy would be dealt with under their wills. A Deed of Family Arrangement was subsequently entered into in order to effect this.

The deceased’s daughter from a previous relationship (Ms Jachimo), was co-executor with Mrs Nestor. Ms Jachimo paid the legal costs for the Deed of Family Arrangement.

“There was a failure on [Willoughby]’s part to follow up on the matter with his clients and to provide them with the appropriate advice in relation to the ownership structure of the licence to occupy,” the committee said.

“While at the time of the purchase of the licence to occupy, the clients did not wish to discuss the ownership structure, there was an obligation on [Willoughby] to follow up on the matter with them in order to ensure that they properly understood the effect of the ownership structure … on their respective estates.”

The lawyer’s failure to follow up on the matter was unsatisfactory conduct, the committee found.

The committee noted that Ms Jachimo had suffered financial loss as a result of Willoughby’s failure to deal with the ownership structure, because she had to pay legal costs. The committee ordered Willoughby to pay Ms Jachimo $2,805 compensation and to pay $500 costs.