Complaints, Lawyer Discipline and Public Hearings

Summary of Decision of the Hearing Panel


William Henry Lim

Vancouver, BC

Called to the bar: July 13, 1977

Written materials: April 2, 2019

Panel: Sarah Westwood, chair; David Layton, QC; Guangbin Yan

Decision issued: May 30, 2019 (2019 LSBC 19)

Counsel: Kathleen Bradley for the Law Society; Gerald Cutler, QC for William Henry Lim

AGREED FACTS

A colleague at William Henry Lim’ s firm was representing a potential lender who had been approached by a group of borrowers for a loan of $2.5 million. Two of the borrowers approached Lim with a proposal for the lender. The lender sought appraisals for the properties to be put up as security. The borrowers said that would take too long and asked Lim if he would lend them the money. Lim agreed to lend the money, not as a lawyer but in his private capacity as director of a corporation. The terms would be those previously proposed to the prospective lender, including repayment of the loan amount plus a $600,000 bonus within three months, and accrual of interest at four per cent per month if payment was not made within three months.

Lim asked an associate at his firm to draw up a loan agreement, but did not specify whether the four per cent interest was compound or simple, nor whether it applied to the amount of the loan only, or to the amount of the loan plus the $600,000 bonus. The document drawn up by the associate specified that interest was to be calculated monthly, and compounded monthly. Lim also drafted a promissory note referring to $2.5 million as the principal sum, specifying that interest of four per cent of the principal sum would be charged per month, calculated monthly and compounded monthly.

Four per cent compound interest per month on a $2.5 million loan produces an annual effective rate of 60.1 per cent. Section 347 of the Criminal Code of Canada sets the threshold for a “ criminal rate” of interest at 60 per cent per year.

When the borrowers did not repay the loan by the three-month maturity date, Lim hired other counsel to initiate foreclosure proceedings. When the borrowers still did not pay, Lim took the matter to trial. The trial judge found that Lim intended the interest to be compounded and therefore charged at a criminal rate. The judge ordered that the borrowers repay Lim the $2.5 million that had been advanced to them, without interest.

Investigation by the Law Society revealed information not put before the trial judge that indicated that Mr. Lim had not intended to charge a criminal rate of interest.

ADMISSION AND DETERMINATION

Lim admitted to the Law Society that, in his capacity as director of a corporation, he caused the corporation to enter into a loan agreement he ought to have known provided for interest at a criminal rate and that that conduct constitutes conduct unbecoming a lawyer. Lim maintained, however, that charging a criminal rate of interest was not his intent and that the problematic conduct resulted from a lack of attention during a rushed transaction.

The hearing panel accepted Lim’ s admission that his conduct constitutes conduct unbecoming a lawyer and found there was no evidence that Lim intended to charge the borrowers a criminal rate of interest.

DISCIPLINARY ACTION

The panel ordered that Lim pay:

  • a fine of $8,000, and
  • costs of $1,000.

2019 LSBC 19 Decision of the Hearing Panel