Complaints, Lawyer Discipline and Public Hearings

Summary of Decision of the Hearing Panel on Facts and Determination

Spencer Owen May

Richmond, BC

Called to the bar: May 18, 2007

Hearing dates: February 1-3 and April 26, 2021

Written submissions: July 14 and 20, 2021

Panel: Dean Lawton, QC (chair), Michael Dungey and Monique Pongracic-Speier, QC

Decision issued: August 31, 2021 (2021 LSBC 35)

Counsel: Michael S. Shirreff and Gregory A. Cavouras for the Law Society; William G. MacLeod, QC for Spencer Owen May

FACTS

Spencer Owen May took a referral from another lawyer of a builder’s lien matter. May met with the clients and the solicitor acting for them, who translated for the clients as they spoke little English. May was advised that the two clients, through Company 1, had performed a renovation of a condominium owned by a married couple who were separating. He was advised that Company 1 had filed a builder’s lien for $500,000 against the condominium. At the time of the hearing, the condominium was for sale, was subject to a mortgage, and was at issue in another lawsuit.

May received a letter from the wife’s counsel confirming that the couple were the registered owners and claiming that the owners did not retain the company to undertake any renovations. May reviewed incorporation documents for Company 1 and found out it was incorporated well after the work had reportedly begun. May prepared and filed a second builder’s lien against the condominium with the names of his clients as claimants, instead of Company 1.

While away, May’s associate filed an action in the names of both the clients and Company 1. Upon his return, May learned that the wife’s lawyer was no longer acting for her. He attempted to serve the notice of civil claim but could not locate the defendants. He took no further steps for approximately eight months. One year after their initial meeting, May sent and received a written retainer agreement to his clients authorizing him to take instructions from their solicitor.

May did not comply with the Law Society’s client identification requirements. He did not obtain a telephone number for one of the clients, confirm their home addresses, obtain copies of driver’s licences or confirm whether the solicitor had identified the clients in accordance with the requirements.

The condominium went into foreclosure, and May amended the pleadings to correct a misnomer. Service of the notice of civil claim was attempted without success, and May obtained a court order for alternative service on the defendants. The defendants did not file a response. May applied multiple times for an order for default judgment, but the court denied all of his applications.

May wrote to the solicitor and asked his clients for more documentation to support the $500,000 claim. There were multiple issues with the documents they provided, including inconsistencies in amounts and details from what May had been previously told. The client took back one of the invoices, changed the details, and provided it back to May. May asked why the contract listed Company 1 when it was not incorporated until later, to which the client responded there was no written contract for the renovation but it was made up later and pre-dated to earlier.

One of his clients said he could get in touch with the husband owner. Upon learning this, May provided his client with three forms for the owner to sign and return. The first was a consent order by which the husband consented to pay the clients and Company 1 the sum of $500,000 plus interest and costs. The second was an acknowledgement of a debt of $500,000 owed by the owner to the clients and Company 1. The third document was a certificate of independent legal advice. May’s client returned the first two forms purportedly signed by the owner and witnessed by an unnamed person. The certificate of independent legal advice was not returned. May later determined that the court registry would not accept the consent order because the owner had not filed a response to the civil claim.

May’s paralegal contacted one of the clients to obtain more information about the loan and was told that $200,000 USD was loaned to the husband and deposited into his account in Las Vegas. The husband entered into the loan agreement, which “marked up” the loan to $500,000 CAD to take into account interest. May amended the pleadings again. However, he did not ask the clients for documents relating to the loan or cash transfer.

May took an affidavit from his paralegal about the $200,000 USD loan and the renovations. Attached to the affidavit was a “true copy of the renovation contract” though, to his knowledge, the contract was an amalgamation of the renovation contract with amended pages provided by the clients. May applied to further amend the notice of civil claim, which now alleged the $200,000 USD loan and renovation work valued at $281,600.

In speaking to the applications, May told the court the defendants appeared to have left the country and he had previously served by alternate service. He did not disclose that his client told him he contacted the husband who purportedly signed two documents. The court granted the orders, and the further amended notice of civil claim was filed and served by alternate service. Shortly after, the court granted an order for the sale of the condominium in the foreclosure proceedings, and May obtained an order for default judgment with damages to be assessed.

May applied to the court to have the clients’ damages assessed and for a declaration of a builder’s lien in favour of his clients. He filed affidavits including the amalgamated renovation contract and various amended invoices as “true copies.” May appeared in court to speak to the without-notice application and once again said the defendants appeared to have left the country. He did not advise the court his clients’ alleged contact with the husband.

The court granted an order in favour of May’s clients and directed May to obtain a desk order to correct misspellings, but neither the order nor the desk order were served on the defendants. In his evidence to the hearing panel, May said it slipped his mind. The condominium was later sold, and the proceeds of sale were paid into court.

In a separate matter for the same clients, May acted for Company 2 to commence a claim against the owners of a house. He was advised that Company 2 was owed money for renovations and the company had filed a builder’s lien for $450,000. May conducted a company search that showed the sole officer and director of Company 2 was a woman who had no apparent relationship to his clients. He did not obtain a business telephone number or address and did not gather any documentation from his clients in relation to the renovations.

May filed an action and a certificate of pending litigation against the title of the house. One of the owners of the house reportedly made payment to Company 2, and May was not involved in that transaction. May then released the certificate of pending litigation. A notice of change of directors was filed for the company, making one of his clients a director of the company effective four years prior.

May was retained for a second builder’s lien matter for Company 2. The instructions were provided by the clients’ solicitor, who advised Company 2 had built a house and a $2 million lien had been filed against the house. An email exchange between May and his assistant revealed May’s doubts about the $2 million claim. He proceeded to draft a notice of civil claim, filed the claim and a certificate of pending litigation. The claim was settled for full value. May received $2 million in trust and disbursed nearly $1.98 million to Company 2.

Approximately 10 months after the second matter, a newspaper reporter contacted May about a story the reporter was preparing on how May’s clients, individually or through their numbered companies, issued approximately $20 million worth of mortgages, loans and builder’s liens for non-existent construction or renovations. His clients were also found with more than $600,000 in cash, which was seized by the police. May read the article and ended the retainer with the clients.

The Law Society began an investigation of proceedings related to the clients. May provided materials to the Law Society, but initially omitted the email exchange with his assistant about his clients’ $2 million claim until the investigator requested additional documents. There were several further requests for documents, which May produced and apologized for his firm’s filing errors in not including the documents in the original production.

DETERMINATION

The panel found that May failed to fulfill his obligations of candour to the court and he was selective in what he disclosed to the court regarding the defendants’ whereabouts when it was a material fact in the without-notice court applications. This constituted professional misconduct. However, the panel did not find May’s conduct to be dishonourable or lacking in integrity, as such allegations comment on a lawyer’s state of mind, and in this case, the panel found that the evidence does not show that May was acting immorally or was motivated by an improper purpose.

The panel also distinguished between the two incidents of relying on a false or misleading affidavit. The panel found that May did not commit professional misconduct in relying on an affidavit in the application to amend pleadings because the duty of candour requires a lawyer to be accurate, candid and comprehensive on material issues, and in this application the panel found that the affidavit did not speak to material issues. However, in the application for assessment of damages, the panel found that the court was entitled to have full and candid information and it was a marked departure from the standards expected of a lawyer and therefore professional misconduct to present an affidavit with misleading information.

May also committed professional misconduct by failing to comply with the court’s direction to serve an order and to obtain a further order to correct naming errors.

The panel concluded May culpably failed to fulfill his professional obligations to make further inquiries of his clients when confronted with information and evidence that called out for it, and therefore committed professional misconduct. The misconduct occurred in two different time periods. In the first, he failed to investigate the evolving facts and was complacent in his consideration of documents delivered by his clients. In the second, May failed to make reasonable inquiries about the work he was asked to undertake, filed an action in the name of the company without finding out his authority to do so and filed the builder’s lien action without sufficient understanding of the corporation on behalf of which he was acting and without any proper understanding of the basis for his instructions.

The panel found that May’s failure to obtain client identification information was a breach of the Law Society Rules. However, on the facts of the case and due to the involvement of the solicitor, the Panel did not find that the cited client identification failures represented a marked departure from what is expected of a lawyer. The panel also dismissed the allegations that May committed professional misconduct or breached the rules by providing incomplete or misleading information to the Law Society.

2021 LSBC 35 Decision on Facts and Determination