Mr A and Mr B were members of a syndicate formed for property development. They fell into a dispute with the other members of the syndicate, and sought advice from the lawyer, L.

Following L’s advice, A and B instructed him to lodge a caveat against the title to the property in respect of which the disagreement had arisen.

After the caveat was lodged, a lawyer acting for the registered proprietor of the property applied to LINZ for the caveat to lapse.

A Notice for Lapse of Caveat was sent to L’s firm’s address (as the original caveat form had provided for notices to be sent to L’s firm).

Subsequently, A and B became aware that the caveat had lapsed and that title to the property had transferred.

A and B said that when they met L he did not deny that the caveat had lapsed but denied ever receiving any notification from LINZ of the other party’s intention to have the caveat discharged.

They complained to the Lawyers Complaints Service, saying that L had “grossly failed” in his fundamental duties when acting for clients.  Had L informed them of the notice to lapse, they would “definitely instruct him to defend the notice”.

A lawyers standards committee said that L’s actions amounted to “high-end unsatisfactory conduct”.

The committee said it was “particularly concerned that [L] failed to advise the complainants that their security had been lost.”

A and B had also raised concerns about a call they said they received after the date the caveat lapsed, from a junior lawyer for the firm, urging them to settle the dispute and assuring them the caveat was still in place.  The Committee said [of concern] “is the fact that [L] appears to have begun to conceal the truth from his clients by misrepresenting matters".

The committee fined L $5,000 and ordered him to pay the New Zealand Law Society $2,000 costs.

L sought a review by the Legal Complaints Review Officer (LCRO).

In LCRO 46/2016, the LCRO noted that the respondents had “lost the protection for their claim to an interest in the property.

“By including his firm as the address for service of notices [L] assumed a duty to his clients to ensure they were advised of any notices served in relation to the caveat.

“He did not fulfil that obligation,” the LCRO said and “that constitutes unsatisfactory conduct”.

The committee’s determination that L had actively attempted to conceal the truth from the respondents “is based on an acceptance of the assertions made by them,” the LCRO said.

However there was “no evidence to support their statements and consequently no evidence which supports the determination by the committee”.

That determination was therefore modified by reversing the conclusions drawn by the committee that L was actively concealing the truth that the caveat had lapsed from the respondents.

The LCRO reduced the fine imposed from $5,000 to $4,000.

However, the LCRO ordered that L pay the Lawyers Complaints Service $1,000 to be forwarded to A and B.

As a result of L not advising Messrs A and B of the Notice to Lapse, or not having appropriate systems in place to ensure he was aware of the notice, the respondents lost the choice to make a decision.

“I consider the respondents are entitled to have some recognition of this,” the LCRO said.

The LCRO also confirmed the committee’s order that L pay $2,000 in Committee costs and ordered L to pay $2,400 in respect of costs of the review.