Zhao V New Zealand Law Society

894 High Court [2012]
Zhao v New Zealand Law Society
High Court Auckland CIV-2012-404-2777; [2012] NZHC 2169

25 July; 24 August 2012
Kós J
Judicial review — Law practitioners — Application to practise on own
account — Application for review of process prior to a committee
convening to consider application — Whether review application
premature — Lawyers and Conveyancers Act 2006, ss 3, 30, 39, 40, 65,
67, 138 and 317; Judicature Amendment Act 1972; Lawyers and
Conveyancers Act (Lawyers: Practice Rules) Regulations 2008, regs 12,
13 and 14
The plaintiff applied to the Law Society to practise as a solicitor, on his
own account. He attended an interview and answered questions on trust
accounting and related matters poorly. There were internal Society emails
sent in relation to the application prior to the interviews. The interviewers
took account of a number of complaints against the plaintiff, although they
had been resolved by Standards Committees on the basis that no further
action was required. The interviewers recommended against approval of
the application. As was normal, the application was referred to the
Society’s Fitness for Practice Committee. The plaintiff asked to see the
interviewers’ reasons for recommending against him and to be able to
address the Committee. The Committee was set to convene without prior
reasons being given, and without an invitation to attend being extended.
On the day the Committee was due to convene, the plaintiff issued
judicial review proceedings. He argued that the adverse recommendations
by the interviewers, and the convening of the Committee without prior
reasons or an invitation to appear, were unlawful administrative acts. The
Law Society argued that there was no reviewable error, because “nothing
that occurred up to the time of commencement of these proceedings
constituted an actual or proposed exercise of a statutory power of
decision”. Further, the Society argued that the application for review was
premature because the plaintiff had an alternative to judicial review
because he was entitled to apply directly to the High Court for approval to
practice on his own account.
Held (allowing the application in part)
1 The application for review was not premature. The exercise by the
interviewers of the power devolved to them to recommend (or withhold
NZAR Zhao v New Zealand Law Society 895
recommendation) the right to practice on one’s own account was a

reviewable action. Their recommendatory powers formed part of the
whole statutory power vested in the Society. Their recommendation would
be given considerable weight by the Society, and would be influential in
any determination by the Committee. Further, even at a preliminary stage,
a power to investigate and recommend may “go off the rails”, such that it
is necessary that a court quash the decision.
Marlborough Aquaculture Ltd v Chief Executive, Ministry of
Fisheries [2003] NZAR 362 (HC) followed.
2 Where processes leading to a final decision are not completed,
review remains discretionary and will be exceptional.
Board of Airline Representatives NZ Inc v Attorney-General HC
Wellington CP391/98, 8 December 1998 followed.
3 The “parallel process” for judicial approval of applications to
practice on one’s own account is a secondary rather than primary
procedure. Issues for consideration by a Court under this process are
effectively identical to consideration by the Society. However, the
processes for determination are not the same. The processes in the Court
are less satisfactory than those of the Society. It may be appropriate to
make the application to the High Court direct in exceptional
circumstances, such as where there are reasonable grounds for believing
the Society would not now exercise its power in accordance with law. It
was not an answer to the Society’s process to say that there was an
alternative course of action open.
4 There was no breach of natural justice by the Society undertaking a
briefing of the interviewers. The Society may talk to itself.
A decision-maker is free to undertake such inquiries as it thinks fit, and to
obtain the views of relevant persons.
Daganayasi v Minister of Immigration [1980] 2 NZLR 130 (CA)
applied.
Harris v Department of Employment and Work Place Relations
(2007) 158 FCR 252 applied.
Cases referred to in judgment
Ali v Deportation Review Tribunal [1997] NZAR 208 (HC).
Attorney General v Zaoui [2005] 1 NZLR 690 (CA).
Board of Airline Representatives NZ Inc v Attorney-General HC
Wellington CP391/98, 8 December 1998.
Borick v Otago District Law Society [1991] 2 NZLR 169 (CA).
Daganayasi v Minister of Immigration [1980] 2 NZLR 130 (CA).
Harris v Department of Employment and Work Place Relations (2007)
158 FCR 252.
Hot Holdings Pty Ltd v Creasy (1996) 185 CLR 149.
Kioa v Minister for Immigration and Ethnic Affairs (1985) 159 CLR 550.
Marlborough Aquaculture Ltd v Chief Executive, Ministry of Fisheries
[2003] NZAR 362 (HC).
Mohu v Attorney General (1983) 4 NZAR 168 (HC).
Polynesian Spa Ltd v Osborne [2005] NZAR 408 (HC).
R (On the application of O’Leary) v Chief Constable of Merseyside [2001]
EWHC Admin 57.
South Bucks District Council v Flanagan [2002] EWCA Civ 690, [2002]
1 WLR 2601.
Talley’s Fisheries Ltd v Cullen HC Wellington CP287/00,
31 January 2002.
Talukder v Removal Review Authority [2000] NZAR 194 (CA).
Television New Zealand Ltd v W HC Auckland CIV-2007-485-1609,
18 December 2008.
Text referred to in judgment
Matthew Smith New Zealand Judicial Review Handbook (Brookers,
Wellington, 2011) at [57.5.5].
GDS Taylor Judicial Review: The New Zealand Perspective (2nd ed,
LexisNexis, Wellington, 2010) at 522.
Woolf, Jowell & Le Sueur De Smith’s Judicial Review (6th ed,
Sweet & Maxwell, London, 2007) at 389–391.
Application
This was an application for judicial review of the process of the Law
Society in considering an application to practice on a solicitor’s own
account.
FC Deliu for the plaintiff.
PN Collins for the defendant.
KÓS J.
Introduction
[1] A barrister applies to the Law Society to practise as a solicitor,
on his own account. He attends an interview arranged by the Society. He
answers questions on trust accounting and related matters poorly. The
interviewers also take account of a number of complaints against him,
although these have been resolved by standards committees on the basis
that no further action is required. The interviewers recommend against
approval of the application. As is normal, the application is then referred
to the Society’s Fitness for Practice Committee. The applicant asks to see
the interviewers’ reasons for recommending against him. And to be able to
address the Committee. Someone from the Law Society apparently agrees
to those requests. But nothing is done. The Committee is set to convene
without prior reasons being given, and without an invitation to attend
being extended.
[2] The day the Committee is due to convene, the applicant issues
these proceedings. He says the adverse recommendation by the
interviewers, and the convening of the Committee without prior reasons or
an invitation to appear, are unlawful administrative acts. A wide array of
grounds for judicial review are advanced. Natural justice and legitimate
expectation are at the vanguard.
[3] The Society says the application is premature. No final decision
has been made. And in any case, the statute provides a parallel process.
The applicant may, if dissatisfied with the Society’s approach, apply direct
to the Court for approval to practice on his own account.
[4] The issues arising in this case are listed at [64]. A summary of
my conclusions is at [102]. But, first, the facts in more detail.
Facts
[5] Mr Zhao was admitted to the bar on 13 February 2009. Prior to
admission he had worked for a year as a tax accountant at Deloitte. Then
he became a law clerk at Equity Chambers. He was employed then by
Mr Frank Deliu, his counsel in the present proceedings. He moved with
Mr Deliu to a new set, Amicus Chambers, in March 2009. Mr Zhao’s
affidavit annexes a printout from the Amicus Chambers website. It states:
Richard is one of the founding members of the firm and leads the firm’s Asian
department. He previously worked for the litigation department of a top law
firm in New Zealand as well as working as a tax specialist in one of the big
four accounting firms.
The reference to “the firm” is apparently a reference to Amicus Chambers.
It is an incorporated law firm for the purposes of the Lawyers and
Conveyancers Act 2006 (the Act). As for his work for the litigation
department of a “top law firm”, Mr Deliu told me that was not in fact as
a lawyer. The website text suggests otherwise. It is misleading.
[6] In preparation for practice on his own account Mr Zhao
successfully completed the “Stepping Up” course run by the Society in
July 2011. He passed the Trust Account Supervisor training programme in
February 2012. At that point he had been admitted for three years.
Application
[7] On 27 February 2012 Mr Zhao sought approval to practise on
his own account. That is governed by s 30 of the Act.1 He filed an
application in the form prescribed by the Society. After setting out his
background, the application states that his intention is to practice in areas
of immigration, family, and taxation, criminal and civil litigation. He also
stated his intention to practise as Richard Zhao Lawyers Ltd, an
incorporated law firm of which he was sole shareholder and director.
[8] The Society’s form was somewhat out of date. It required the
applicant to declare whether he had completed the “Flying Start”
programme. That was the predecessor to the “Stepping Up” programme
which Mr Zhao had passed in July 2011. There being no reference to the
“Stepping Up” programme, Mr Zhao ticked that he had completed the
“Flying Start” programme. He also ticked that he had completed the Trust
Account Supervisor training programme.
[9] The form also contained a series of questions relating to whether
the applicant was a fit and proper person. Some of the questions were
equally applicable to New Zealand and overseas. Others, were strictly
confined to overseas jurisdictions. So, for instance, one question asked:
Are you the subject of current disciplinary action in another profession or
occupation in New Zealand or a foreign country ...
Exactly what “disciplinary action” means is unclear. But the question
applies both to New Zealand and foreign jurisdictions. Then another
question asked:
1 See [44] below.

Have you been or are you the subject to an unresolved complaint under a
corresponding foreign law or a current investigation charge or order by a
regulatory or disciplinary body for persons engaged in a legal practice under
a corresponding foreign law?
So that question appears confined to foreign jurisdictions. The form, it
may be noted, does not actually address complaints in the New Zealand
legal profession at all. Presumably the Society would look to its own
records for that information.
[10] There were 13 such questions in all. The form says that if the
applicant has answered “Yes” to any question, he or she has to provide
detailed information on a separate sheet. Mr Zhao ticked all 13 questions
“No”.
[11] On 2 March 2012 the Society acknowledged receipt of
Mr Zhao’s application. The acknowledgment noted that he had ticked the
“Flying Start” box as having been attended and asked for a copy of his
certificate. It went on to say:
The “Flying Start” course has now been replaced by the “Stepping Up”
course which includes an exam. The “Flying Start” course unfortunately did
not. Therefore, please find attached the exam paper you are required to
answer. The exam is compulsory even if, as in your case, the “Trust Account
Supervisor” course was attended.
Mr Zhao was required to return the exam by 30 March 2012. The Society
also advised Mr Zhao that he was scheduled for an “interview” on
13 April 2012.
[12] The interview process is not referred to in the Society’s website
page that discusses such applications. Rather, that website says:
Applications to practise on your own account are initially processed by
branch offices. Send the completed application form, the original referee
form/s, and the payment to your nearest branch office. After processing your
application, the branch will make a recommendation to the national office in
each case. Applications will be dealt with administratively by the Society. If
any issues arise, they will be referred to the Fitness for Practice Committee.
The website also states:
If your application is declined, you may apply to the High Court for leave to
practise on your own account.
[13] Three days later, on Monday 5 March 2012 Mr Zhao replied
to the Society. As he had in fact completed the “Stepping Up” course, he
did not think he needed to complete the exam. He attached an email sent
to him advising of his enrolment in the “Stepping Up” course. But he did
not send the certificate of completion. He had lost it. He asked if the
Society could obtain a copy itself. It should be noted that the guidance
notes annexed to the application form state clearly that an incomplete
application will not be considered until all the required information and
documentation has been received.
[14] Mr Zhao took no issue with the proposed interview. He simply
asked if it might be arranged earlier than 13 April. Otherwise he would
attend that day. He had some further questions. First, when he could
expect to receive approval? Secondly, what was the quickest time in

which he could set up his own practice? Thirdly, he asked some questions
about practical procedures in relation to setting up his trust account, and
who he needed to contact from the Law Society about that. It follows from
that that it appeared he intended to operate such an account.2 The
application form was unclear on this. Mr Zhao had left the “sole practice”
section blank.
[15] On 12 March 2012 the Society responded. It confirmed that
Mr Zhao did not need to undertake an exam because he had attended the
“Stepping Up” course. It explained who he should contact at the Society
to obtain a replacement “Stepping Up” certificate. It was for him to obtain
it. The Society said it required it as proof that the exam had been passed.
It answered as best it could the questions that Mr Zhao had about starting
his practice. It explained that the practical procedures for opening a trust
account could be discussed with any standard trading bank. But the
Society’s representative went on to say, “I have spoken with our
inspectors and it is possible to provide you with a practice check-list at the
time of your interview”.
[16] A month later the Society still had not received Mr Zhao’s
“Stepping Up” certificate. On Tuesday 10 April 2012, just three days
before the intended interview, the Society emailed Mr Zhao. It said:
Without proof that you have attended the course and passed the exam, your
application is incomplete and without a completed application, your
interview cannot go ahead.
The following day, Wednesday 11 April 2012, still not having heard from
Mr Zhao, the Society emailed again saying it urgently needed a reply. It
also said that he had now been allocated a new interview date,
27 April 2012. That was to enable him to obtain proof of attendance at
the “Stepping Up” course. The Society was also seeking a reference from
his former employer, Equity Chambers.
[17] Overnight Mr Zhao responded to the Society’s email. He
finally attached a scanned copy of the “Stepping Up” course certificate.
He said that he “did not agree” to his interview date being pushed back,
and asked if it could proceed on Friday 13 April as planned. It might be
thought that that was a somewhat ill-considered demand. The long delay
in completing the application form was entirely due to Mr Zhao’s failure
to provide the certificate.
[18] All of the foregoing was known to Mr Zhao. But the next event
was not.
[19] On 12 April 2012 an internal email was sent within the
Society. The role of some of the recipients is not known to me. One of
them, however, was one of the people assigned to interview Mr Zhao a
little over a week later. It came from the Society representative handling
Mr Zhao’s application:
I had several lengthy discussions with Wellington [the Registry Manager]
regarding Mr Zhao’s application to practice on his own account (in early
March and again this week).
2 The application form was unclear on this. Mr Zhao had left the “sole practice” section
blank.
It appears to me that Mr Zhao’s considerable complaints file is a serious

concern and so are other aspects regarding his practice.
[The Registry Manager] has now left me a message asking that we speak to
her before (!) Mr Zhao is being interviewed. There are quite a number of
questions that were identified as necessary to be asked at the interview and
she would like to fully brief the inspector before the interview takes place.
She is however only back in the office on Monday, 16th April. She also
informed me that his application will go to the FFP committee.
Early this week it was agreed to defer Mr Zhao’s interview to give him time
to provide us with proof that he has passed the Stepping Up course exam (his
course certificate was received by us this morning) and to provide us with a
further reference (from Equity Barrister’s Chambers). His interview space
(tomorrow 10.00am) has now been passed on to another candidate.
Mr Zhao is now insisting on being interviewed tomorrow. Mr Zhao
explained this morning that his first referee, Mr Frank Deliu, was also his
supervisor at Equity Barrister’s Chambers and that Mr Deliu’s reference
supposedly covers both his time spend at Amicus Chambers and Equity
Chambers.
This does however not satisfy the grounds on which the request for a further
reference was made, ie. the fact that Mr Zhao proposes to practice amongst
other areas in taxation law and none of this referees confirms his experience
in this area. Mr Zhao worked for Deloitte NZ from 7/2007 to 7/2008 as a tax
consultant (before he was admitted in Feb 2009), so a reference from them
would not be acceptable (outside the 3-year period of NZ legal experience).
[The Registry Manager] is adamant that he be interviewed next week (20th
April, we have space for him) to give him time to provide us with updated
references and give her time to brief the inspector. Mr Deliu has now sent me
an e-mail requesting that I ring him at his office (supposedly to also insist on
Mr Zhao being interview tomorrow) but I have not done so, yet.
I propose to write back to Mr Zhao – copy to Mr Deliu – to explain further:
(1) why the request for a further reference was made, (2) why we now need
at least updated references as to his tax background and that (3) we will
interview him on the 20th April, next week Friday (not 27th as envisaged
earlier).
Do you agree? Please let me know urgently (also any advice as to how to
proceed is much appreciated).
[20] The Society’s affidavit evidence does not clarify whether there
actually was a pre-interview “briefing” of the interviewers. Nor, if so,
what was said to them. It may be assumed however that if something was
said, it went beyond the written terms of the standards committees’
complaints decisions. These the interviewers could read for themselves.
[21] The 12 April email was not known to Mr Zhao. Obviously, he
was aware complaints had been made against him. There had been seven
such complaints. The first six (between May and September 2011) had all
been resolved on the basis that no further action was required.3 The
seventh had only been made on 8 February 2012 and had not yet been
3 See s 138(2) of the Act.

resolved.4 In the course of argument Mr Deliu accepted that in

considering suitability for practice on one’s own account, the Society will
of course consider complaints. The fact that it did so without prior
notification would not be a breach of natural justice. But, he said, where
the complaint had been resolved on the basis that no further action was
required, it was effectively a relevant consideration of little weight. And
certainly, he said, no adverse weight.
[22] Next on 12 April 2012, and as anticipated in the email just
canvassed, Mr Zhao’s employer, Mr Deliu, spoke to the Society
representative acting in the matter. She emailed Mr Deliu later in the day,
noting that she now had Mr Zhao’s certificate. So his application was at
last complete. Although not essential to the application, she asked for a
brief email from Mr Deliu setting out some aspects of the tax work
carried out by Mr Zhao. Mr Deliu provided that the same day.
[23] The Society agreed to conduct an interview on 20 April 2012.
In my view Mr Zhao cannot reasonably complain about the timeliness of
the Society’s response to his own untimely actions in completing the
application form. Mr Zhao was minded to attribute improper motives to
the Society for the delay. These complaints were nonsense. Sensibly
Mr Deliu withdrew them at the hearing.
Interview
[24] On 20 April 2012 Mr Zhao presented himself for interview.
There were two interview panel members appointed by the Society. The
first was Mr Anthony Segedin. He is a very experienced practitioner, a
consultant with the firm Minter Ellison Rudd Watts in Auckland. The
other was Mr Mark Anderson. He is an accountant and trust accountant
audit inspector for the Society. He had in fact been one of Mr Zhao’s
tutors at the Trust Account Supervisor programme he had passed in
February 2012.
[25] Mr Zhao says in his affidavit that the interview lasted about 30
to 40 minutes. He says Mr Anderson asked most the questions. He
recalled about 10 to 15 questions on trust account management. He said he
had not expected to be asked about these matters, or in that detailed
manner. Mr Zhao says, revealingly:
As I was mostly working as a barrister in my legal career I do not encounter
these questions on a daily basis, if at all.
He says that he believed he got a few questions wrong “but Mr Anderson
assured me that was okay”. Mr Zhao complains that neither
Mr Anderson or Mr Segedin put him on notice that he was “failing the
interview” or otherwise in peril of having his application not
recommended by the panel.
[26] Neither Mr Segedin nor Mr Anderson provided an affidavit.
[27] However each panel member provided detailed notes of their
assessment of Mr Zhao’s suitability to practise on his own account. These
4 A supplementary memorandum filed by Mr Zhao’s counsel informed me that on

27 July 2012 the Auckland Standards Committee resolved that complaint also on the
basis that no further action was required.
have been disclosed by the Society. It is apparent that Mr Segedin was not
satisfied with Mr Zhao’s interview. The form he completed was marked
“not approved”. Mr Segedin provided the following notes for guidance to
the Society in the exercise of its discretion under s 30:
1. Richard has seven complaints against him. One not yet resolved. When
asked, he blamed his employer ie he had no say in fee setting and was
delayed on the delay complaints. I don’t accept this: eg does not explain
rudeness complaint. If he cannot practise without complaint under
supervision the chances of his practising satisfactorily unsupervised are
remote.
2. Richard does not adequately understand the trust account regs. He talked
a lot to questions and usually got to the answer by intuition but not by
understanding ie. could not directly answer with confidence. Fair to say
that some questions concern areas where he doesn’t practice but he did not
exclude extending his practice in the future.
In particular he was vague on:
(1) Borrowing from client question – real concern.
(2) Confused over engagement letter and esp nature of fidelity fund
purpose.
(3) Confusion over need to write receipt with funds back I.B.D.
(4) Not certain about cancelling trust cheque.
I have the sense that Richard is not ready yet for unsupervised
practice as a sole practitioner. I would suggest that he reapply after a
period (at least 1 year of no-complaint) and better familiarity with
regs (before another panel of fresh minds).
[28] Mr Anderson certified that he had examined Mr Zhao on the
duties of a solicitor under the Act and relevant subordinate legislation
relating to solicitors’ trust accounts and the receipt of money. He also
certified that Mr Zhao had not satisfied him that he had sufficient
knowledge of these matters to commence practice on his own account. His
guidance notes state that he concurred with Mr Segedin’s
recommendation not to approve Mr Zhao. They go on to say:
3. Although having passed the Stepping-Up Course and the Trust Account
Supervisor Course Mr Zhao (Richard) was not able to answer the
questions put to him at interview directly and with confidence. I had to
give him a lot of prompting to get him to the answers. For example: ...
4. Richard did not bring any reference materials with him to the interview
even though he would have received written notification about the content
of the interview and that he was allowed to bring reference materials with
him.
5. As regards Question 6, to help him I introduced the question by saying
that it was not about money laundering so he was not required to discuss
Verification of Identity and Financial Transactions Reporting Act matters.
After having been given this help he proceeded to start talking about
Identity Verification and subsequently required a lot of prompting in order
to get him on the right track. He literally had to be led to the answers.
6. In response to Question 11 about Residual Client Balances Richard said
that large balances (not defined) would be paid to the client but he thought
that small balances (undefined) could be dealt with differently. I told him
that if he were to ask the lawyer for the Fidelity Fund he would be told
that the taking of client balances no matter how small is theft.
7. In response to Question 13 – Can a Lawyer borrow money from a client

– Richard was not able to give a direct and confident answer discussing
the matters set out in Clause 7, Lawyers and Conveyances Act (Trust
Account) Regulations 2008.
8. Towards the end of the interview I asked Richard how did he intend to
handle engagement and client care matters when in sole practice, ie the
information required by Clause 3.4(a)–(d), Lawyers and Conveyancers
Act (Lawyers : Conduct and Client Care) Rule 2008 to be given to clients
at the outset of an engagement. Richard talked a lot about fees but was at
sea when asked for three more matters Clause 3.4 requires. He said that
others handled engagement letters, etc for him so he was not familiar with
the Rules. He promised to study the Rules diligently in order to know the
requirements. During this conversation I asked Richard what is the
minimum level of PI cover recommended by NZLS for a sole practitioner.
He correctly answered $1,000,000.00 but then went on to say that he tells
clients that the fidelity Fund is also there to cover any shortfall in a payout
for negligence under a PI Policy. I told Richard that this is not the purpose
of the fidelity Fund and that he should not be saying this to clients.
9. Three other people all of whom like Richard passed the Stepping-Up
Course were interviewed on the same day. One is going out as a sole
practitioner, the other two are going into existing firms. By comparison
with Richard the other three were all well prepared and answered the
interview questions confidently and correctly.
[29] I note that Mr Anderson’s fourth point – that Mr Zhao would
have had prior written confirmation as to the intended content of the
interview – does not seem to be borne out by the evidence. Mr Zhao by
implication denies receiving such material. The Society’s affidavit does
not suggest he had. But of course he could have asked when he asked the
other practical questions discussed in [14].
[30] Some days after the interview Mr Anderson made a further file
note of a conversation he had with Mr Segedin. This was on
27 April 2012. The file note by Mr Anderson says:
Re: Richard Zhao s 30 application
Spoke to Anthony Segedin (phone call) about the complaints and advised him
of the reasons why they had been closed with NFA. He said he had not
changed his mind but in light of what I had said had softened his stance. He
said it was not only the complaints but there was also the lack of knowledge
as regards the rules and regulations and that Richard should be invited to
reapply in say six months time.
Post-interview events
[31] After the interview Mr Zhao did not hear from the Society for
a while. In early May he spoke to the Society staff member he had been
dealing with. She told him the file had been referred to Wellington, but
gave him no further information.
[32] On 11 May 2012 the Registry Manager at the Society sent a
memorandum to the Society’s Senior Solicitor Regulatory. The
memorandum noted that the Auckland Branch had recommended that
Mr Zhao’s application not be approved. It also noted that Mr Zhao met
the requirements of reg 12(1)(a) and (b) of the Lawyers and
Conveyancers Act (Lawyers: Practice Rules) Regulations 2008.5 Without

further analysis it recommended that the application be assessed. The
Senior Solicitor Regulatory disagreed and referred the application to the
Fitness for Practice Committee (Committee), noting:
Inspectors have not approved this application.
[33] By 15 May 2012 Mr Zhao had not heard anything. That day
he and Mr Deliu called the Registry Manager. She then told them that the
application was to be placed before the Committee on 22 May 2012. That
was, of course, just one week away. Mr Zhao deposes:
When asked if I would have an opportunity to be heard before any further
steps were taken she very clearly promised that before then I would receive
a letter explaining what the problem(s) was/were and that I would have a
chance to address the Committee.
So Mr Zhao waited.
[34] On 18 May 2012 Mr Deliu emailed the Registry Manager,
noting that Mr Zhao and he “still have not received the letter you
indicated would arrive”. Mr Deliu said that Mr Zhao’s due process rights
were being affected. He concluded:
If the Board makes its decision in these circumstances, and it is adverse, then
I am instructed that judicial review will be sought.
I will take it that such a letter had been promised by the Society. Were that
not the case I would have expected the Society to refute the claim – either
in the correspondence immediately following or in its affidavit evidence.
This it does not do.
[35] Later on 18 May 2012, yet another Society representative
emailed Mr Deliu. The email noted the application had been referred to
the Committee. It continued:
The Committee meets next Tuesday 22 May 2012. The Committee makes its
own inquiries. At the end of that process makes a recommendation to the
NZLS Board. The Board makes the final decision.
[36] On Sunday afternoon, 20 May 2012, Mr Deliu rejoined:
That is not what [the Registry Manager] promised me and with due respect
no natural justice has been afforded Mr Zhao thus far. Accordingly, can
proceedings be served upon you and would you prefer we deal with Glaistor
(sic) Ennor directly?
[37] On Tuesday 22 May 2012 these proceedings were filed and
served. The initial statement of claim is a compact document, but pleads
a variety of bases for review. First, it alleges the decision not to
recommend the application for approval (at the Auckland branch level)
breached natural justice because: (1) Mr Zhao was not given proper
notice of concerns the defendant had with his application prior to the
interview; (2) no reasoned decision for the adverse recommendation was
given; and (3) the decision to refer the matter to the Committee breached
5 See [46] below.

natural justice “in that the plaintiff was not given an opportunity to
comment, no reasons for this decision was provided and the whole process
was unpublished (generally) and undocumented (specifically)”. Secondly,
it alleges there was a breach of legitimate expectation in not providing
Mr Zhao the letter explaining the Branch reasons for the intervewers’
recommendation and the opportunity to address such concerns before the
Committee. Thirdly, it was alleged that the taking into account at the
interview of previous complaints to the Society involved the consideration
of irrelevant factors because none of the complaints had resulted in a
finding of unsatisfactory conduct or misconduct. Finally, it alleged that the
Branch decision to refuse to recommend the application for approval was
unreasonable.
[38] Of course the question then arose as to what to do with
Mr Zhao’s application. On 29 May 2012 the Society’s General Manager
Regulatory wrote to Mr Zhao acknowledging his application for review.
I set out her letter in full:
Your application for judicial review is acknowledged. The Society does not
accept that the processes associated with your s 30 application disclose any
reviewable error or that judicial review is appropriate in any event, since you
are entitled to apply directly to the High Court for approval under s 30(3).
The Society will respond to the judicial review proceeding in due course, if
it is necessary to do so in light of the matters raised in this letter.
Apart from anything else, your judicial review proceeding is premature. No
decision had been made about your application at the time it was filed. The
status of the application at that time was (and presently is) as follows:
(a) Your application was received by the Society at its Auckland branch
on 1 March 2012;
(b) On 23 April 2012 you attended an interview with the Society’s s 30
panel, which was convened for the purpose of considering your
application. The panel comprised a member of the Society’s
inspectorate, Mr Anderson and a senior Auckland lawyer,
Mr Segedin. The interview was conducted consistently with the
Society’s regulatory responsibilities in this area, in which it is
obliged to be satisfied that applicants are suitable persons to practise
on their own account having regard to the matters set out in
Regulation 12(1)(b) & (c) of the Lawyers and Conveyancers Act
(Lawyers: Practice Rules) Regulations 2008;
(c) The s 30 panel members were not satisfied with the quality of many
of the responses you gave to the questions put to you at the
interview. As a result, they did not recommend your approval to
practise on your own account.
(d) Rather than reject an application outright in those circumstances, it
is the Society’s routine practice to refer such an application to its
specialist Fitness for Practice (FFP) Committee. That is what
happened in your case. Your application was received by the
national office on 10 May 2012. It was intended that the FFP
Committee would consider your application and would most likely
decide either to:
• recommend to the Board to grant the application notwithstanding
the concerns of the s 30 panel; or
• give you further time to make submissions about specified

matters and/or to provide further information, for the purpose of
then considering the application with those matters being taken
into account and then to make a recommendation to the Board;
Alternatively the Committee could have recommended to the
Board, with reasons, that the application be declined.
(e) The Fitness for Practice Committee was due to meet on 22 May and
your application was on the agenda for that meeting. That was the
same day that a copy of the judicial review proceeding was received
by the Society. In those circumstances, the FFP Committee was
unwilling to consider your application further, pending the Society’s
legal advice about the status and effect of the proceeding so far as
the then pending s 30 application was concerned.
This explains the current status of your application. Since the Society’s s 30
procedures are incomplete in relation to your application, it wishes to provide
you with the opportunity to continue in the manner described in point (d)
above. If you do want to continue in that way, the FFP Committee is willing
to consider your application when it next convenes in June 2012.
It is a condition of your acceptance of this offer that you discontinue the
judicial review proceeding since it is inappropriate for the Society to be
continuing a parallel process. Please let me know how you want to proceed,
as soon as possible.
In the event that you do not accept the offer to re-commence your s 30
application, please ensure that a copy of this letter is provided to the Court in
the event that you elect to apply for interim relief, as has been suggested.
[39] This was the first explanation Mr Zhao actually had of the
problems that had cropped up at this interview. Even then the explanation
was sparse. The panel was simply “not satisfied with the quality of many
of the responses you gave to the questions put to you at the interview”.
Mr Zhao had not at that time seen the reports by Messrs Segedin and
Anderson quoted earlier. Nor even a summary. The letter did not refer to
the communications between Mr Deliu and the Society relating to the
alleged promise to provide a letter explaining what the problems were
with the application. The allegation that it had certainly had been
ventilated in correspondence prior to 29 May 2012, as well as in the
statement of claim.
[40] The Society’s position was that it would only continue to
consider the application if the review proceedings were withdrawn. In that
case, any of the three potential outcomes at the Fitness for Practice
Committee might arise – including a recommendation to the Board that
the application be declined. The Society did not offer to provide more
information about what was being put in front of the Committee. Nor did
it offer Mr Zhao an opportunity to be heard by the Committee. That was
one of the three possible outcomes, but only if the Committee decided it
wanted to hear from him.
[41] Later that night, Mr Deliu wrote to the Society and its counsel.
Despite the fact that the review proceedings were on foot, he insisted that
the Society proceed with Mr Zhao’s application. He asked for the legal
basis for the decision not to progress Mr Zhao’s application. He also
suggested it was improper for the Society to seek to compel him to
withdraw his “lawful claims” as a condition of progressing the

application.
[42] And there for present purposes the correspondence ends.
Statutory scheme
[43] It is proper to start with reference to the overriding purpose of
the Act, as set out in s 3. So far as relevant they are to “maintain public
confidence in the provision of legal services” and to “protect the
consumers of legal services”.
[44] Section 30 of the Act provides, relevantly as follows:
30. Practice by lawyer on his or her own account — (1) No lawyer
may commence practice on his or her own account, whether in partnership or
otherwise, unless —
(a) he or she —
(i) meets the requirements with regard to both practical legal
experience and suitability that are imposed by rules made under
this Act; and
(ii) meets any other criteria that are prescribed by rules made under
this Act; or
(b) he or she is granted by the High Court, on grounds set out in rules
made under this Act, leave to practise on his or her own account.
(2) A lawyer who is a director or shareholder of an incorporated law
firm is deemed to be practising on his or her own account.
(3) A lawyer may apply to the High Court for leave to practise on his or
her own account.
(4) The High Court, in deciding whether to grant an application for
leave, must have regard to the matters that are specified in rules made under
this Act in relation to such an application.
(5) The High Court may grant leave subject to such conditions (if any)
as it thinks proper.
(6) A lawyer commits an offence who, in contravention of this section,
commences practice on his or her own account.
[45] Sections 65 and 67 of the Act provide the regulatory functions
and powers of the Society. The former include controlling and regulating
the practice in New Zealand by barristers and solicitors of the profession
of the law. The latter includes all such powers, rights and authorities
necessary, expedient or conducive to the performance of its regulatory
functions. Section 30(1)(a) plainly anticipates rules being made governing
the requirements and criteria for practice by a lawyer on his or her own
account. There is no argument in this case that the regulations –
Regulations 12–14 of the Lawyers and Conveyancers Act (Lawyers:
Practice Rules) Regulations 2008 – are valid. The challenge rather is to
the process adopted under those regulations.
[46] Regulation 12(1) provides as follows:
12. Criteria for eligibility to practise on own account — (1) For the
purposes of section 30(1)(a) of the Act, the requirements and other criteria
that must be met before a lawyer may commence practice on his or her own
account as a barrister and solicitor are —
(a) that during the 5 years immediately before the date of commencing
practice on his or her own account, the lawyer has had not less than
3 years’ legal experience in New Zealand; and
(b) that the lawyer has received, during the 3 years immediately before
the date of commencing practice on his or her own account,
adequate (in the view of the Law Society) instruction and
examination on the duties of lawyers under the Act, and any
regulations and rules made under it, that relate to the receipt and
handling of client money and the operation of lawyers’ trust
accounts; and
(c) that the lawyer has satisfied the Law Society that he or she is a
suitable person to practise on his or her own account as a barrister
and solicitor, having regard to —
(i) the lawyer’s legal experience; and
(ii) how the lawyer intends to practise on his or her own account
(for instance, in sole practice, as a partner in a firm, or
otherwise); and
(iii) the fields of law in which the lawyer intends to practise; and
(iv) any other matters that the Law Society considers are relevant.
[47] This case concerns Regulation 12(1)(c). As we have already
seen, the Society’s internal memorandum of 11 May 20126 recorded that
Mr Zhao had satisfied Regulation 12(1)(a) and (b). So the question was
whether he had:
... satisfied the ... Society that he ... is a suitable person to practise on his ...
own account as a barrister and solicitor
having regard to the four sub-criteria set out in that provision. Those were
his relevant legal experience, how he intended to practise, the fields of law
in which he intended to practise, and “any other matters that the Law
Society considers relevant”.
[48] The Society is entitled to devise a process to satisfy itself as to
suitability. Plainly the question goes beyond good character. Such
assessment necessarily will have a measure of subjectivity. The process
must be transparent and reasonably consistent, and must address relevant
considerations. It is accepted by Mr Zhao, as it must be, that his
complaints history in New Zealand is relevant – notwithstanding the fact
that it is not directly referred to in the application form. The Society has
that information already, and it may use it so far as is relevant. It is the
extent of relevance of the making of seven complaints, none of which
were found to require further action, which is in issue here. Likewise the
existence and content of the additional “briefing” of the interviewers.
Mr Zhao also accepts that his competency with regard to the
establishment and operation of a trust account is a relevant consideration,
as also would be his competency in dealing with client money. Here his
objections relate to the degree of emphasis on this topic, especially
inasmuch as he had passed the Trust Account Supervisor programme.
[49] The practical process adopted by the Society for the processing
of a s 30(1) application is, it must be said, somewhat delphic. I have
commented already, on the Society website.7 That website does not refer
to the conduct of an interview. However, Mr Zhao and Mr Deliu properly
accept that such an interview is appropriate and they take no issue with it
6 See [32] above.

7 See [12] above.
being conducted in principle. The website states that the Branch will
“process” the application and “make a recommendation” to the national
office of the Society in each case. It says that if issues arise, they will be
referred to the Committee. What might happen then is not indicated.
[50] In her affidavit the General Manager Regulatory for the Society,
Ms Mary Ollivier, explains in more detail what occurs in practise:
2.4 The procedure followed is that the application is examined by a senior
officer of the Law Society at the particular branch office where it was
submitted. Subject to satisfactory compliance with the
Regulation 12(1)(a) & (b) matters, applicants are required to attend an
interview with a member of the Law Society’s Inspectorate and a senior
lawyer appointed from a list of suitable lawyers in the locality of the
branch.
2.5 The interview panel has available to it the full file relevant to the
application, including any trust account examination paper and any
relevant records concerning complaints and discipline. Following the
interview, the panel is required to make a recommendation whether or
not to approve the application. This is a recommendation to National
office staff under my supervision, for a final decision in all straight
forward cases.
2.6 In some cases the interview panel may decide not to recommend the
approval of the application and, in those circumstances, the application
will be referred to the Law Society’s Fitness for Practice Committee
(“the FFP Committee”).
2.7 The FFP Committee is a specialist advisory committee appointed by the
board under Rule 158 of the Lawyers and Conveyancers Act (Lawyers)
Constitution 2008. It is comprised of senior lawyers from around the
country and its purpose is to ensure:
(a) A higher level of scrutiny in non standard case; and
(b) Uniformity in the analysis of the non standard cases and therefore
uniformity in the Law Society’s decision-making, bearing in mind
its status as the national regulator.
2.8 In considering an application, the FFP Committee may proceed as
follows:
(a) It may decide to recommend to the Board (which is the decision
maker in non standard cases) that the application should be granted,
notwithstanding the concerns that had prompted the referral of the
application to it; or
(b) It may enter into a process in which it makes further enquiry
including seeking further evidence and/or submissions from the
applicant, possibly directed at specified areas of concern, following
which a recommendation would be made to the Board, one way or
the other; or
(c) It might decide to recommend to the Board to decline the
application.
2.9 In any case where the application is declined by the Board, the applicant
is notified in writing with reasons and advised of their statutory right to
apply to the High Court.
[51] Mr Paul Collins, counsel for the Society, explained the
practical situation in a little more detail. The focus of a s 30 assessment
8 Presumably in fact a reference to r 14.

is the suitability of the practitioner to work unsupervised as a barrister and

solicitor. To that extent, therefore, it differs from the earlier assessments
made on admission, and thereafter upon the issue of a practising certificate
(ss 39 and 40 of the Act). There are about 160 s 30 applications annually.
Most are resolved at Branch level. Everyone is interviewed. The
interviewers report to the Branch Manager. If the interviewers signify
approval, the Branch Manager would normally approve the application
and inform the national office of the Society accordingly. That explanation
diverges a little from that given by Ms Ollivier.
[52] To that limited extent, the panel members can be the effective
decision makers. In any other case, the application will be referred to the
Committee. The Society’s website reinforces that.9 It is “if issues arise”
that reference is made to the Committee. Mr Collins confirmed the
explanation given by Ms Ollivier as to what then occurs. The matter is
dealt with administratively, as the Society’s website states.10 An applicant
does not necessarily get a hearing before the Committee. Such a hearing
is but one of the three potential outcomes upon reference to the
Committee. The Committee makes a recommendation to the Board. The
Board makes the final decision.
Pleadings and submissions
Plaintiff
[53] The plaintiff challenges three aspects of the Society’s
processes:
(a) the “decision of the Society not to recommend the application for
approval”;
(b) the decision to refer his application to the Committee; and
(c) the decision not to progress his application after the proceedings
were issued, which is said to be a “decision to decline” the
application.
These challenges are made in Mr Zhao’s amended statement of claim,
which I treat as definitive of the issues the Society is required to answer.
I say this because Mr Deliu’s written submissions ranged somewhat
further. On that additional journey I decline to venture.
[54] Decision not to recommend: The “decision” not to recommend
Mr Zhao for approval was effectively made by the two interview panel
members, Messrs Segedin and Anderson. But it was not, as Ms Ollivier
makes clear, more than a provisional decision, as there were further
processes to be completed before a final decision was made – and that by
the Board.
[55] Mr Deliu (for Mr Zhao) submits that the decision breaches
natural justice because Mr Zhao was not given proper notice of what
concerns the Society had with this application prior to the interview “nor
even told what the interview would be about” and was “thereby denied a
reasonable opportunity to respond”. The Society did not explain the
processes to be adopted. It did not give a reasoned decision for its adverse
9 See [12] above.

10 Idem.
recommendation. Secondly, the decision not to recommend is said to be

unreasonable in having taken into account irrelevant considerations.
Specifically, the previous Law Society complaints (none of which had
resulted in a finding of unsatisfactory conduct, misconduct “or anything
that could be deemed to be adverse to the plaintiff”). Thirdly, it is
submitted that the decision not to recommend is flawed in not taking into
account relevant considerations. Specifically, Mr Zhao held a practising
certificate, (meaning he was of good character) and concerns as to his
knowledge of the operation of a trust account could have been met by
approval as a principal operating a solicitor’s practice without a trust
account.11
[56] Decision to refer: The decision to refer the application to the
Committee is said to have breached natural justice because Mr Zhao was
not given reasons for the adverse recommendation, and not given an
opportunity to comment on the decision or address the Committee. The
decision is said also to breach his legitimate expectations inasmuch as the
Society had given a promise to Mr Zhao that before referral he would be
given a letter explaining the concerns of the Auckland Branch and an
opportunity to address those concerns.
[57] Decision not to progress: The Society decision not to further
progress Mr Zhao’s application is said to be a “decision to decline” and
was said also to breach statutory duties owed by the Society.
[58] Remedy: The remedy sought by Mr Zhao differed in
submissions from that pleaded. What he now seeks is as follows:
(a) reconsideration of his application by a new s 30 interview panel;
(b) that the complaints (resolved on the basis that no further action be
taken) be declared to be matters the panel not consider; and
(c) a declaration that in the event the new panel again issues an
adverse recommendation, that Mr Zhao be advised promptly of
the reasons for that adverse recommendation.
Defendant
[59] For the Society, Mr Collins submits that there was no
reviewable error, because “nothing that occurred up to the time of
commencement of these proceedings constituted an actual or proposed
exercise of a statutory power of decision”. Consequently, Mr Collins
submits, the review applications are premature. Further, the plaintiff has
an alternative to judicial review because he is entitled to apply directly to
the Court for approval to practise on his own account. That is said to be
the course that Mr Zhao should follow if dissatisfied with the Society’s
processes, rather than seeking judicial review.
[60] As to the merits of the arguments advanced, Mr Collins
submits that the “not recommended” report from the panel was “simply
part of the defendant’s internal analysis”. But no decision had been made.
The Committee was yet to consider the matter. It might have granted the
application outright, or it might have given Mr Zhao an opportunity to
respond to the panel’s concerns. Mr Collins acknowledged, however, that
11 Section 317.
a third potential outcome of the Committee would be a recommendation

to the Board that the application be declined without further opportunity
for submission. In that case, Mr Collins said, the applicant had his
alternative remedy by application directly to the High Court.
[61] As to the consideration of past complaints, the defendant’s
regulatory function required it to inquire as to his suitability to practise
alone, given the statutory purposes in s 3 of the Act. The Society has a
wide-ranging mandate under reg 12 to inquire into any matter it considers
relevant. Resolved complaints (even where recommending no further
action) remained relevant simply by the fact that the applicant had
garnered so many such complaints. They remained relevant to his
maturity as a practitioner and his ability to practise on an unsupervised
basis. The finding that no further action need be taken on a complaint did
not mean the complaint necessarily lacked substance. The conduct might
still be “unsatisfactory conduct” for the purposes of s 12. Section 138(1)
sets out a variety of circumstances in which a standards committee may
resolve to take no further action on complaints. The Society in making a
s 30(1) decision was entitled to look beyond the mere surface conclusion
of the standard committees’ decisions.
[62] As to failure to take into account relevant considerations, in
particular the plaintiff’s possession of a practising certificate, the inquiry
under s 30 is not purely a question of character. Regulation 12 routinely
requires consideration of the suitability of a practitioner of good character
to practise on his or her own account. The application was not made on the
basis of Mr Zhao practising without a trust account. By passing the Trust
Account Supervisor training programme Mr Zhao was always permitted
to operate on a trust account basis (and would then be subject to
inspection and levies). He could seek exemption by electing not to run a
trust account (and not receiving client money or property). But that was
not the basis on which the application had been made. To the contrary,
Mr Zhao had earlier been inquiring of the Society about how to go about
opening a trust account.12
Issues
[63] This case gives rise to five issues:
(a) Issue 1: Is the application for review premature?
(b) Issue 2: Was the interviewers’ decision not to recommend
approval invalid?
(c) Issue 3: Was the decision to refer Mr Zhao’s application to the
Fitness for Practice Committee invalid?
(d) Issue 4: Was the decision not to progress Mr Zhao’s application
after proceedings were issued invalid?
(e) Issue 5: What remedy (if any) is appropriate?
Issue 1: Is the application for review premature?
[64] There are two aspects to this submission by the Society. First,
the absence of a decision (or at least, a concluded decision). The second
12 At [14] above.
is the existence of the alternative option to apply directly to the Court for
approval to practise on his own account, under s 30(3).
[65] I have summarised the Society’s submissions at [59] above.
The Society placed particular reliance on the decision of Ronald Young J
in Marlborough Aquaculture Ltd v Chief Executive, Ministry of
Fisheries.13 But that decision made clear that review might yet occur in
the case of a preliminary decision where, inter alia, it is “a step in the
process where the step is capable of altering rights, interests or
liabilities”.14 There is ample other authority to the same effect. Ronald
Young J relied on the High Court of Australia decision in Hot Holdings
Pty Ltd v Creasy.15 That was a case where a preliminary assessment and
recommendation by a mining warden would have a discernible effect upon
the Minister’s subsequent exercise of discretion to grant a mining licence.
While the warden’s report was recommendatory and did not bind the
Minister, it was either as a matter of statute orgood administrative practice
a relevant consideration that the Minister was bound to have regard to
(although not bound to follow).16
[66] In this case I am satisfied that the exercise by interviewers (and
by members of the Committee) of the power devolved to them to
recommend (or withhold recommendation) the right to practise on one’s
own account is a reviewable action. First, it is clear that the interviewers’
investigative, and their and the Committee’s recommendatory, powers
involve the exercise of a statutory power. It forms a part of the whole
power vested in the Society.17 Secondly, where the interviewers issue a
positive recommendation, that is given considerable weight by the Society
(whether it be at Branch or national level) in exercising the s 30(1)
statutory power of decision. Thirdly, the report given by the interviewers
on a negative recommendation will be influential in any determination by
the Committee, following reference to it. The Committee may indeed
make no further inquiries, and exercise the third option of recommending
refusal of the application without further reference to the applicant.
Fourthly, as Ronald Young J observed in the course of the Marlborough
Aquaculture decision, even at a preliminary stage a power to investigate
and recommend may “go off the rails”, such that it is necessary that a
court quash the decision.18 An example given by the Judge was bias. If
established at a preliminary stage, that would likely be fatal to all
subsequent decision making. It is not necessary in such a case that the
applicant for judicial review stay his or her hand until the process plays
out to its likely adverse outcome.
[67] Of course, where processes leading to a final decision are not
completed, review remains discretionary and will be exceptional. In
Board of Airline Representatives NZ Inc v Attorney-General19 Gallen J
said:
13 Marlborough Aquaculture Ltd v Chief Executive, Ministry of Fisheries [2003] NZAR 362
(HC).
14 At [15].
15 Hot Holdings Pty Ltd v Creasy (1996) 185 CLR 149 (HCA).
16 At [56] per Brennan CJ, Gaudron & Gummow JJ.
17 See Polynesian Spa Ltd v Osborne [2005] NZAR 408 (HC) at [54].
18 At [15].
19 Board of Airline Representatives NZ Incorporated v Attorney-General HC Wellington
CP391/98, 8 December 1998.
In the vast majority of cases to which reference was made, the Courts have
considered the procedure which was adopted to determine whether or not a
decision made in consequence of or following upon that procedure, was a
decision which could properly stand, or in some cases whether it amounted
to a decision at all. In the vast majority of cases, the procedures have been
completed and could therefore be considered in their entirety. I accept that
conceptually the Courts could become involved in an assessment of
procedure where a formal decision had not in fact been arrived at, but in my
view that has to be a wholly exceptional case and I consider could only occur
whether procedure could in some sense be seen as a part of the decision
itself. [Emphasis added.]
[68] These matters are also canvassed in the Court of Appeal in
Attorney-General v Zaoui.20 Glazebrook J noted there should be no
blanket acceptance of the “ripeness” doctrine in New Zealand, that being
excluded by the Judicature Amendment Act 1972.21 William Young J,
while accepting that prematurity may provide a discretionary ground for
declining review, noted that such an argument would have been of little
merit in that case. There the Inspector General intended to conduct this
review on a basis the High Court had held was not going to comply with
the rules of natural justice. It would not therefore have been premature for
Mr Zaoui to seek relief in relation to the Inspector General’s proposed
course of action.22
[69] The Society’s other argument – the existence of the “parallel
process” for judicial approval of applications to practise on one’s own
account under s 30(3) – is relevant both to the preliminary prematurity
point, and to the question of remedy at the end. This parallel process is
problematic. As the provision makes clear, in considering such an
application the High Court is to consider the matters specified in the rules
made under the Act.23 The relevant rule is reg 13(1). For present purposes
it is sufficient to say that the matters the High Court must have regard to
under reg 13 are essentially the same matters the Society is to have regard
to under reg 12. Mr Collins suggested that in assessing the lawyer’s
relevant legal experience, intended mode of practice and other matters the
Court considered relevant, the Court itself might interview the lawyer. The
suggestion that a High Court Judge might interview a prospective
candidate on the complexities of solicitors’ trust accounting, matters a
High Court Judge is unlikely to have had recent (or perhaps any)
experience of, is not especially satisfactory. It appears there is no authority
in relation to the application of reg 13.
[70] The following points arise. First, the procedure for direct
application to the High Court under s 30(3) is a secondary rather than
primary procedure. An applicant will be expected, therefore, to make
application to the Society under s 30(1) in the first instance.24 Secondly,
while the issues for consideration by a Court under a s 30(3) and the
Society under s 30(1) are effectively identical, the processes for the
20 Attorney-General v Zaoui (No 2) [2005] 1 NZLR 690 (CA).

21 At [106]–[107].
22 At [183]–[184].
23 Section 30(4).
24 Compare Borick v Otago District Law Society [1991] 2 NZLR 169 (CA) at 170–171.
determination are not the same. Those in the Court are less satisfactory
than those of the Society, which has far more relevant experience in such
matters and a body of comparative cases to consider in exercising that
power of decision in a consistent fashion. Thirdly, it may be appropriate to
make the application to the High Court direct under s 30(3) in exceptional
cases, such as where there are reasonable grounds for believing the
Society would not now exercise its power in accordance with law (that is,
independently and reasonably). By definition such cases would be
exceptional. This case is certainly not yet one of them. Fourthly,
applicants who proceed under the primary s 30(1) route to the Society, are
entitled to have their application considered properly and lawfully in
accordance with due process. It is not an answer to a challenge to the
Society’s process, submitting that it has not done right by the applicant, to
say that there is an alternative course of action open. The applicant is
reasonably entitled to due process by the primary decision maker.
Conclusion
[71] The application for review is not premature.
Issue 2: Was the interviewers’ decision not to recommend approval
invalid?
Conduct of interview
[72] As has been noted already25 Mr Zhao takes no issue with the
fact that an interview was conducted. Nor does he take any issue with the
composition of the interview panel. I dismiss his complaints that he was
not given due notice of the subject matter of the interview, or the
processes to be adopted in the interview. The short answer to this point is
that Mr Zhao made no inquiry as to content. He inquired about other
matters, and received answers. But not about the interview. When the
interview was postponed from 13 to 27 April, he sought retention of the
original date. He appears to have had a high degree of confidence as to his
ability to fly through the interview. It is not clear what he thought its
subject matter would be. Certainly, he cannot have been surprised that it
would cover trust accounting and the handling of client money. He should
have been in a very good position to answer those questions. He had
passed the Trust Account Supervisor programme just two months before.
In his affidavit he says that:
I thought that the point of interview would be to discuss my character, how
I intended to practise in the future and things of this nature and not really
require much, if any, advance preparation. I specifically inquired about the
trust account setting up procedures but the response was that an inspector
would help me at [a] later stage.
[73] Three points should be made about this. The first is that that
impression was not based on anything the Society had told him. Secondly,
although Mr Anderson thought the Society had sent a syllabus to
Mr Zhao, it had not done so.26 The third is that the inquiry he had made
of the Society on 5 March 2012 in relation to setting up his trust
25 At [14] above.
26 See [29] above. See [14] above.
account27 was concerned with “practical procedures” – in particular

whether he was to set it up through the Law Society or a trading bank. He
was told that trading banks had procedures for that purpose, and that the
interviewers could provide him with a practice checklist at the time of his
interview. That might, perhaps, have suggested that trust accounting
procedures would be part of that interview. But it does not require much
reflection to appreciate that trust accounting procedures would be a
relevant consideration at an interview concerning the suitability of a
person to practise on his or her own account as a solicitor. I note that the
application form indicated that Mr Zhao would be practising on his own
behalf, in an incorporated firm called “Richard Zhao Lawyers Ltd”.
Natural justice – panel “briefing”

[74] Exercise of a statutory power is vested by s 30(1) in the
Society. The Society can adopt whatever procedure it considers
appropriate to discharge that power. Logic and experience, if not statutory
words, compel the conduct of an interview. There is no need, however, for
those interviewers to be hermetically sealed from the rest of the “Society”.
The Society may talk to itself.
[75] As a matter of law, a decision-maker is free to undertake such
inquiries as it thinks fit, and to obtain the views of relevant persons, in
particular those it already employs.28
[76] It follows that the undertaking (if it occurred) of the briefing of
the interviewers by the Society officer was not unlawful. Rather, however,
the question is whether Mr Zhao had a right to know of that briefing, and
more particularly its content. Secondly, when?
[77] As to the former point it is clear that natural justice requires that
prejudicial material must be disclosed before an adverse decision is made,
so that the applicant has an opportunity to correct that information.29 That
obligation is subject to two important qualifications. The first is there is
nothing in the statute contrary to such an obligation. Here there is not.
Secondly, the decision maker is under no obligation to disclose material
the applicant is already aware of and would expect the decision maker to
pay regard to.30
[78] In this case, of course, Mr Zhao was aware of the previous
complaints. He accepts they would be before the interviewers. So the
issue is whether information received in any briefing was prejudicial and
should have been put to Mr Zhao for comment, and whether, also, there
was any surprise in the information (and therefore unfairness) in it not
being put to him. Only if that was the case need Mr Zhao have been
afforded an opportunity to respond to it.
27 See [14] above.

28 See Daganayasi v Minister of Immigration [1980] 2 NZLR 130 (CA); Harris v
Department of Employment and Work Place Relations [2007] FCA 404, (2007) 111 ALD
579.
29 See, for example, Matthew Smith New Zealand Judicial Review Handbook (Brookers,
Wellington, 2011) at [57.5.5]; GDS Taylor Judicial Review: The New Zealand
Perspective (2nd ed, LexisNexis, Wellington, 2010) at 522 and Woolf, Jowell & Le Sueur
De Smith’s Judicial Review (6th ed, Sweet & Maxwell, London, 2007) at 389–391.
30 Talukder v Removal Review Authority [2000] NZAR 194 (CA) at 198.
[79] In Mohu v Attorney-General31 Mr Mohu had applied for

permanent residency. His previous wife’s solicitors had written to the
Department advising she was no longer willing to sponsor him and that
there was no prospect of reconciliation. The Department declined
Mr Mohu’s application. He asked for reasons. Eventually, the Department
acknowledged that their decision to decline was based on the information
received in confidence from Mrs Mohu’s solicitors. Hardie Boys J found
there was a duty of disclosure. The Judge said:32
I can think of no more fundamental requirement of fairness than that the
decision made should be based on all reasonably available relevant material.
In particular, to receive and rely on material that is adverse or prejudicial to
the applicant without giving the applicant the opportunity of answering it,
especially when it comes from a source that is likely to be partisan, seems to
me to cut at the very foundations of fairness. There is of course a limit to the
extent which the Department must go, as is demonstrated in R v Hope,
Secretary of State for the Home Department, Ex parte Mughal [1974] 1 QB
313. But as that case shows, the applicant must be given “a real opportunity”
of putting his case before the authorities. A failure to disclose prejudicial
material that is to be taken into account denies the applicant that real
opportunity.
[80] And in Ali v Deportation Review Tribunal33 Elias J said:34
If therefore, there is no surprise in an allegation or if, even if there is surprise,
there could be no prejudice because further notice would not have assisted
the person affected to meet the allegation, then there is no unfairness in the
process. It perhaps goes without saying that where surprise is established and
especially where the decision is of great significance for the person affected,
it will not be right to infer absence of prejudice easily.
... whether a person affected is taken by surprise by an allegation or
consideration turns on whether the substance of the allegation or
consideration was known. In Rajan v Minister of Immigration [1996] 3
NZLR 543, a failure to disclose two documents known to the Immigration
Service containing material prejudicial information was not a breach of
natural justice where there was no doubt that the appellants were aware of the
substance of the two documents in question. In those circumstances the
opportunity to counter the information or to argue that it had little weight was
available.
There the Minister approved a deportation order. A letter had been sent to
the Immigration Service by Mr Ali’s wife’s solicitor. Elias J was satisfied
there was nothing in this letter of surprise to the plaintiff and to which he
lacked fair opportunity to respond.
[81] I also note the High Court of Australia decision in Kioa v
Minister for Immigration and Ethnic Affairs.35 In that case a departmental
31 Mohu v Attorney-General (1983) 4 NZAR 168 (HC).

32 At 173.
33 Ali v Deportation Review Tribunal [1997] NZAR 208 (HC).
34 At 220.
35 Kioa v Minister for Immigration and Ethnic Affairs (1985) 159 CLR 550 cited with
approval most recently in Television New Zealand Ltd v W HC Auckland
CIV-2007-485-1609, 18 December 2008. See also R (On the application of O’Leary) v
Chief Constable of Merseyside [2001] EWHC Admin 57.
report to the Minister’s delegate included information which was not put
to Mr Kioa for comment. Brennan J said:36
A person whose interests are likely to be affected does not have to be given
an opportunity to comment on every adverse piece of information,
irrespective of its credibility, relevance or significance. Administrative
decision-making is not to be clogged with enquiries into allegations to which
the repository of the power would not give credence, or which are not
relevant to his decision or which are of little significance to the decision
which is to be made. Administrative decisions are not necessarily to be held
invalid because the procedures of adversary litigation are not fully observed
...
Nevertheless, in the ordinary case where no problem of confidentiality arises
an opportunity should be given to deal with adverse information that is
credible, relevant and significant to the decision to be made. It is not
sufficient for the repository of the power to endeavour to shut information of
that kind out of his mind and to reach a decision without reference to it.
Information of that kind creates a real risk of prejudice, albeit subconscious,
and it is unfair to deny a person whose interests are likely to be affected by
the decision an opportunity to deal with the information.
[82] In the present case the content of the briefing, if (1) adverse and
(2) going beyond information which Mr Zhao would appreciate the
Society would likely possess in connection with his complaints (which he
knew or should have known were a relevant subject of inquiry), would
need to be disclosed. Desirably that disclosure would occur prior to the
interview. Desirably, perhaps, the briefing would not have occurred at all.
But as I have said, the Society is entitled to speak to itself in these matters.
If, however, the information is adverse and would be surprising, then it
needs to be disclosed to the applicant before a final determination on his
rights is made. Desirably that would be as early in the process as possible.
[83] I am however satisfied that disclosure of any such information
could legitimately occur prior to any consideration of the application by
the Committee, rather than needing to be disclosed before the interview.
That is because, as I conclude in the next part of this judgment, reference
to the Committee was inevitable regardless of the significance or
otherwise of the complaints. That in turn was because of Mr Zhao’s
disastrous want of understanding of basic trust accounting and fiduciary
responsibilities in relation to client funds. On that basis alone an adverse
recommendation by the interviewers was inevitable.
Relevant and irrelevant considerations
[84] It is said on behalf of Mr Zhao, first, that the Society took into
account irrelevant considerations when it considered the complaints
record.
[85] I do not accept that argument. Mr Zhao accepts the Society
could and should consider the complaints record. To Mr Zhao’s credit,
none of the complaints required further action. But as Mr Collins
submitted37 a determination that no action be taken on a complaint does
36 At 628–629.
37 At [60].
not mean that the complaint necessarily lacks substance. The

circumstances of the complaint may yet remain relevant to a s 30(1)
decision as to suitability to practice on one’s own account. In particular,
with a trust account and the ability to handle client money. Taken on its
own, without the other consideration resulting in the adverse
recommendation (lack of understanding of trust accounting procedures),
the complaints record might not be enough to justify an adverse
recommendation. But it is by no means an irrelevant consideration. Just
one requiring correct weighting.
[86] Secondly, Mr Deliu submits that the decision not to
recommend approval failed to take into account relevant considerations
that the plaintiff held a practising certificate (meaning that he was of good
character) and that he could have practised as a principal without a trust
account.
[87] Again, I cannot accept that argument. It misconceives the
Society’s role under reg 12(1)(c). It is there concerned with suitability for
practice on one’s own account. It is a far larger question than whether the
practitioner has good character. Section 49 of the Act puts character
(jointly with qualification) at the forefront of evaluation for admission as
a barrister and solicitor. Essentially the requirements for admission in
most cases will be a combination of qualification and good character (“fit
and proper persons to be admitted as barristers and solicitors of the High
Court”). Similarly and secondly, issue of a practising certificate under s 39
of the Act is a combination of qualification (under the Practice Rules made
under s 94(a)) and the applicant being a fit and proper person to hold a
practising certificate.38 Section 41(2) of the Act makes clear that that is a
potentially broader inquiry than whether the person is a fit and proper
person to be admitted in the first place. As Mr Collins submitted, the
evaluation of fitness to hold a practising certificate is more thorough on
initial application. Thereafter a practising certificate will generally be
issued on acceptance by the Society of a declaration of compliance. But
the inquiry to be undertaken under s 30(1) is different. It is not a question
simply of character, or of fitness to practise, but of the suitability of that
person to take charge of a practice. That is a different inquiry. A person
who is suitable to practise under supervision is not necessarily a person
suitable to practise on their own account. Particularly as a sole
practitioner, operating a client trust account and handling client money.
[88] As to the other aspect of Mr Zhao’s complaint, Mr Collins
says that it is possible retrospectively to exempt solicitors from levies for
trust account inspection, and from contribution to the fidelity fund, where
they do not operate a trust account. Here Mr Zhao had authority to have
a trust account, by reason of his passing the Trust Account Supervisor
examination in February 2012. The Society does not have statutory
authority to impose restriction areas of practice. A solicitor can only
restrict his or her area of practice, or right to operate a trust account, by
undertaking. Here no such undertaking had been offered by Mr Zhao. To
the contrary, he had been inquiring of the Society how to go about opening
38 Section 41(1).
up a trust account.39 The giving of such an undertaking not to practise

with a trust account could of course be a matter taken up with the
Committee. But the interviewers were under no obligation to raise it as an
option.
[89] Thirdly, if all the above were not enough it is clear that the
adverse recommendation of the interviewers was on any view justified by
Mr Zhao’s poor showing on the questions relating to trust account
management. It will be recalled that he sought to practise as sole director
and shareholder of an incorporated law firm, had not indicated (for what
it is worth) any intention to seek exemption from trust accounting
supervision (by not operating such an account), had not offered an
undertaking not to practise with a trust account, had in fact been asking
the Society about how to set up such an account, and had as recently as
just two months before the interview passed the Trust Account Supervisor
programme.
[90] Against that background Mr Zhao can have no legitimate
objection as to the extent of focus in his interview on trust accounting and
the handling of client money. He may not have prepared for such
questions, but he cannot legitimately blame the Society for his approach to
preparation. If the website and other information were not clear, he should
have asked. His very recent passage of the Trust Account Supervisor
programme meant that he should have flown through those questions.
Other questions concerning borrowing from a client and the availability of
the fidelity fund to cover a solicitor’s insurance cover shortfall in the event
of negligence40 are simply inherent to practising on one’s own account.
Mr Zhao had to know the answers to most or all of these questions to be
suitable to practise on his own account. He did not know the answers.
Other candidates that day had prepared properly, and had an instinctive
understanding of these matters. They passed. It is plain from the reports of
the two interviewers and the subsequent discussion between them41 that
this aspect of the interview, rather than the complaints, was the dominant
consideration in the decision not to recommend Mr Zhao. On those issues
alone, Mr Zhao was not yet suitable to practise on his own account.
[91] In light of Mr Zhao’s performance at the interview on those
core issues, a decision not to recommend him was inevitable. It would,
following the Society’s usual processes, then be up to the Committee to
decide how to respond to that deficiency in Mr Zhao’s suitability to
practise on his own account.
Conclusion
[92] The preliminary decision of the interviewers not to recommend
Mr Zhao was not invalid.
Issue 3: Was the decision to refer Mr Zhao’s application to the Fitness for
Practice Committee invalid?
[93] Although expressed as a challenge to the decision to refer the
application to the Committee, that consequence was the inevitable result
39 At [14].
40 It is not available for that purpose. Mr Zhao thought it was. See [27]–[28].
41 See at [30].
of Mr Zhao’s unsatisfactory interview. The conduct of that interview was

not invalid. The reference to the Committee was, therefore, not invalid
either. The real issue of invalidity argued under this heading concerns the
process adopted by the Society in convening the Committee on
22 May 2012.
[94] As we have seen,42 Mr Zhao has deposed that he was told by
the Society’s Registry Manager that before the Committee conferred on
22 May 2012, he would receive a letter explaining what the problems
with his application were and have a chance to address the Committee.
That sworn evidence is not responded to by the Society. I have said that
I take it to be truthful.43 The consequence of that finding is clear and
compelling.
[95] It is clear that the assurance given by the Society, that it would
provide reasons and an opportunity to be heard by the Committee, created
a legitimate expectation as to process. The essential principles of
legitimate expectation are summarised by Ronald Young J in Talley’s
Fisheries Ltd v Cullen.44 In the present case the legitimate expectation
arises from an express promise, and it is within Ronald Young J’s third
category of a legitimate expectation as to a fair procedure. Here the
express promise given by the Registry Manager was clear and
unambiguous. There was no suggestion by the Society that the Registry
Manager lacked actual or ostensible authority to make the
representation.45 It is evident Mr Zhao relied on the promise. He did not
take other pre-emptive action, such as sending a submission to the
Committee. It would in any case have been difficult for him to do so in the
absence of the promised reasons. He was entitled to wait for those. When
Mr Zhao’s counsel emailed the Registry Manager, noting that the
promised letter had not yet arrived, the promise was neither denied nor
revoked.
[96] In these circumstances I am satisfied that the decision of the
Society to proceed with the meeting of the Committee on 22 May 2012,
without having given Mr Zhao either reasons for the adverse
recommendation or the opportunity to be heard by the Committee, was in
breach of that legitimate expectation.
Conclusion
[97] The convening of the Fitness for Practice Committee to
consider Mr Zhao’s application, in these circumstances, was invalid.
Issue 4: Was the decision not to progress Mr Zhao’s application, after
proceedings were issued, invalid?
[98] I can be very brief in relation to this issue.
[99] I have found that each step in the Society’s determinative
process (interview recommendatory determination, Committee process
and recommendatory determination) is potentially reviewable. The
42 At [33].
43 At [34].
44 Talley’s Fisheries Ltd v Cullen HC Wellington CP287/00, 31 January 2002 at 48.
45 De Smith’s Judicial Review (6th ed, Sweet & Maxwell, London, 2007) at 12-034, citing
South Bucks District Council v Flanagan [2002] EWCA Civ 690, [2002] 1 WLR 2601.
Society cannot object that the judicial review of either is premature. It

must follow also, however, that faced with proceedings brought on the
date the Committee was to convene, the Society was justified in not
convening the Committee in relation to Mr Zhao’s application, and in not
progressing Mr Zhao’s application further.
[100] It is difficult to see what else the Society could have done. For
it to have proceeded with the Committee’s determinative process in the
circumstances I have found, involving as they do a breach of Mr Zhao’s
legitimate expectations, would have been unlawful. The Society was not
bound to proceed with its process when Mr Zhao was contending (as it
turns out with justification) that that process was flawed and unlawful.
Delay by the Society in these circumstances was entirely justifiable.
Issue 5: What remedy (if any) is appropriate?

[101] There being no invalidity in relation to the interview, the
remedies proposed on behalf of Mr Zhao46 are not appropriate. What is
necessary is a remedy that accurately carries into effect Mr Zhao’s
legitimate expectation as to the further consideration of his application
before the Committee. This I will address below under “Disposition”.47
Conclusion
[102] In this judgment I have concluded:
(a) The application for judicial review brought in these proceedings
was not premature. Both the interview process and the
Committee’s intended exercise of statutory powers (as part of the
entire statutory power of decision under s 30(1)) was capable of
altering Mr Zhao’s rights and interests. Those actions were
therefore susceptible to review.
(b) The Society was bound to provide Mr Zhao with the content of
any briefing of the interview panel by Society officers to the
extent it was adverse and would be surprising to Mr Zhao.
However, because reference to the Committee was in this case
inevitable, the Society did not need to provide that information
before the interview was conducted. It did need to do so before
the Committee convened.
(c) Mr Zhao’s complaints record was not an irrelevant consideration,
for either the interview panel or the Committee, notwithstanding
that all had been resolved on the basis that no further action was
required. They remained, individually or collectively, relevant to
his suitability to practise on his own account, although were
unlikely to be determinative of that matter.
(d) Mr Zhao’s poor showing in the interview in answering questions
on trust account management and the handling of client funds
made an adverse recommendation by the interview panel
inevitable. His application of necessity would be referred to the
Committee. It would then be up to the Committee to decide how
46 See at [58].
47 See at [103].
to respond to that deficiency in Mr Zhao’s suitability to practise

on his own account.
(e) Before the Committee convened an officer of the Society gave
Mr Zhao an assurance that he would receive a letter explaining
what the problems with his application were and have a chance to
address the Committee. That assurance gave rise to a legitimate
expectation on Mr Zhao’s part that he would be treated
accordingly by the Society. The decision of the Society to
convene the Committee on 22 May 2012, without having given
Mr Zhao either reasons for the adverse recommendation or the
opportunity to be heard by the Committee, was in breach of that
legitimate expectation.
(f) The Society was entitled to suspend the application process, and
not reconvene the Committee, when Mr Zhao issued proceedings
contending that that process was flawed and unlawful. Delay by
the Society in these circumstances was entirely justifiable.
Disposition
[103] I declare that the Society on or about 22 May 2012 acted in
breach of Mr Zhao’s legitimate expectation that he be given a written
summary of the reasons for interviewers’ recommendation against
approving him to practise on his own account, and an opportunity to be
heard by the Fitness for Practice Committee at its meeting on
22 May 2012.
[104] I am satisfied that disclosure in these proceedings has now
given Mr Zhao the interviewers’ reasons for making that
recommendation. I do, however, order the Society to provide Mr Zhao
with an adequate summary of the contents of any briefing given to the
interview panel about Mr Zhao’s complaints record. For the sake of
expedition I do not limit that requirement to matters which would, in
terms of Ali v Deportation Review Tribunal, constitute subject matter
“surprising” to Mr Zhao.
[105] I further order that the Society reconvene the Committee, and
give Mr Zhao an opportunity, in person or by counsel or both, to address
the Committee in support of his application.
Costs
[106] Mr Zhao has succeeded, albeit somewhat modestly against
the bold palette of grounds originally advanced. He is perhaps entitled to
costs. If sought, I will receive memoranda.
Reported by: Zannah Johnston, Barrister and Solicitor

Zhao V New Zealand Law Society

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Zhao V New Zealand Law Society

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894 High Court [2012]

Zhao v New Zealand Law Society

High Court Auckland CIV-2012-404-2777; [2012] NZHC 2169

recommendation) the right to practice on one’s own account was a

1 See [44] below.

expect to receive approval? Secondly, what was the quickest time in

It appears to me that Mr Zhao’s considerable complaints file is a serious

3 See s 138(2) of the Act.

resolved.4 In the course of argument Mr Deliu accepted that in

4 A supplementary memorandum filed by Mr Zhao’s counsel informed me that on

7. In response to Question 13 – Can a Lawyer borrow money from a client

Conveyancers Act (Lawyers: Practice Rules) Regulations 2008.5 Without

5 See [46] below.

• give you further time to make submissions about specified

withdraw his “lawful claims” as a condition of progressing the

6 See [32] above.

8 Presumably in fact a reference to r 14.

is the suitability of the practitioner to work unsupervised as a barrister and

9 See [12] above.

recommendation. Secondly, the decision not to recommend is said to be

a third potential outcome of the Committee would be a recommendation

20 Attorney-General v Zaoui (No 2) [2005] 1 NZLR 690 (CA).

account27 was concerned with “practical procedures” – in particular

Natural justice – panel “briefing”

27 See [14] above.

[79] In Mohu v Attorney-General31 Mr Mohu had applied for

31 Mohu v Attorney-General (1983) 4 NZAR 168 (HC).

not mean that the complaint necessarily lacks substance. The

up a trust account.39 The giving of such an undertaking not to practise

of Mr Zhao’s unsatisfactory interview. The conduct of that interview was

Society cannot object that the judicial review of either is premature. It

Issue 5: What remedy (if any) is appropriate?

to respond to that deficiency in Mr Zhao’s suitability to practise

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