Special Compensation Fund claims

The Special Compensation Fund, funded by all practising lawyers in BC, is available to compensate persons who suffer loss through the misappropriation or wrongful conversion of money or property by a BC lawyer acting in that capacity. (Note: The primary source of compensation for claims after May 1, 2004 is the trust protection coverage under Part B of the Compulsory Professional Liability Insurance Policy.)

The Special Compensation Fund Committee makes decisions on claims for payment from the Fund in accordance with section 31 of the Legal Profession Act and Law Society Rules 3-28 to 3-42. Rule 3-39 (1)(b) allows for publication to the profession of summaries of the written reasons of the Committee. These summaries are published with respect to paid claims in 2004, and without identifying the claimants.

Balraj Parmar

Vancouver, BC
Called to the Bar: May 21, 1999
Suspended from practice pending hearing: November 30, 2000
Voluntarily ceased membership: January 1, 2001
Disbarred: October 3, 2002 (Discipline Case Digest 03/16)

Special Compensation Fund Committee decisions involving claims 20010028, 20010031, 20010033, 20010035, 20010029, 20010030 and 20010032

Date of decisions: June 9, 2004
Reports issued: September 9, 2004

Claimant: A
Payment approved: $200

Claimant B
Payment approved: $500

Claimant: C
Payment approved: $500
Balance of $1,500 denied

Claimant D
Payment approved: $600

Claimant E
Claim of $2,500 denied

Claimant F
Claim of $200 denied

Claimant G
Claim of $1,000 denied

While a practising lawyer and employed at a law firm as an associate, Mr. Parmar acted for the claimants on different legal matters.

In 2001 the Law Society cited Mr. Parmar on various conduct matters, including wrongful conversion, false concoction of documents and misleading clients. Mr. Parmar subsequently ceased membership and was disbarred by a discipline hearing panel on October 3, 2002. As a result of the disbarment, other pending citations against Mr. Pamar relevant to these claims were rescinded.

Client A: In 1999 Client A retained Mr. Parmar to apply for citizenship for A’s son. Mr. Parmar’s firm received $1,000 in trust from the client and Mr. Parmar received another $200 in cash. Although Mr. Parmar was supposed to complete and submit a citizenship application, he failed to do so and repeatedly misled A on the status of the application. The Special Compensation Fund Committee accepted the claimant’s evidence that Mr. Parmar had received the $200 in cash and did not deposit this money to the firm’s trust account. He instead misappropriated these funds and the client suffered a loss.

Client B: In October 2000 Mr. Parmar represented B with respect to a separation agreement. Mr. Parmar received $500 from B and did not deposit this money to the firm’s trust account. He misappropriated these funds and the client suffered a loss.

Client C: In September 2000 C retained Mr. Parmar to assist with an overseas sponsorship application for C’s wife. C wrote a cheque for $2,000, of which $1,500 was for legal fees and $500 for the sponsorship application fee. The payee portion of the cheque was left blank. Mr. Parmar received the cheque but did not deposit it to the firm trust account. Instead he had the cheque cashed and paid to himself personally. Mr. Parmar misappropriated the funds after having performed little or not work for the client. The law firm that had employed Mr. Parmar, however, performed the work for C without charging fees. As a result, C’s loss was limited to $500 for payment of another application fee.

Client D: In January 2000 D retained Mr. Parmar to represent him in a divorce. Mr. Parmar misled D by telling him various lies and later producing a divorce certificate that was not genuine. D and his family provided Mr. Parmar with two cash payments totalling $600. This money was not deposited to the firm trust account but was misappropriated by Mr. Parmar and the client suffered a loss.

The Committee found that, in each of these cases, Mr. Parmar had received funds in his capacity as a lawyer and had misappropriated the money. The Committee noted the finding of misappropriation was supported by various factors, including the fact that Mr. Parmar did little or no work on these files, failed to place the money in trust, failed to render an account and had a pattern of conduct that was characterized by dishonesty.

The Committee authorized payment of the claims of A, B, C and D as noted above, which was the loss suffered by each of them as a result of Mr. Parmar’s misappropriations.

In representing clients E, F and G on different immigration matters, Mr. Parmar accepted funds from these clients that he did not deposit to the law firm’s trust account. Instead, he misappropriated the funds, having performed little or no work on these client files, other than some work done on the file of G.

The Special Compensation Fund Committee found that, thanks to the law firm that employed Mr. Parmar performing pro bono work, each of these clients ultimately received the legal services expected and they suffered no loss. As a result, the Committee denied these three claims.

Re: A Lawyer

The lawyer is not identified as all these claims were denied.

Special Compensation Fund Committee decisions involving claims 20010013, 20010016, 20010015, 20010185, 20010193, 20010184 and 20010182

Decision date: March 3 and March 31 2004
Reports issued: June 17, 2004:

Claimant A
Claim of $98,000 denied

Claimant B
Claim of $169,000 denied

Claimant C
Claim of $15,000 plus interest denied

Claimant D
Claim of $20,000 denied

Claimant E
Claim of $25,000 denied

Claimant F
Claim of $9,000 denied

Claimant G
Claim of $22,000 denied

In 1997 client Z retained a BC lawyer with respect to whom these claims were later made. Z wished to raise funds by way of loans from individuals. Z told the lawyer and potential lenders that he (Z) stood to inherit millions of dollars under a will. One of the conditions for the inheritance was that Z had to show he was “responsible in his personal affairs.” Z said the executor of the estate interpreted this to mean that Z had to be debt-free. Z said he wished to borrow money to pay off the existing loans, appear to be debt-free and receive his inheritance. He offered high rates of return, up to 100%, to others in return for short-term loans. The Special Compensation Fund Committee referred to this as Z’s “investment opportunity” scheme.

A, B, C, and D were individuals who, after learning of the investment scheme, provided loans to Z. Each of them provided all or part of their money to Z’s lawyer for deposit to his trust account on behalf of Z. On instruction from Z, the lawyer subsequently paid the funds out to a third party, which the investors understood would happen. The lawyer maintained that he honestly believed the funds were used to repay Z’s loans.

The Special Compensation Fund Committee was not satisfied that the lawyer had acted dishonestly or fraudulently in appropriating or converting the money. He paid out the funds in accordance with the instructions he received from Z and in a way that the claimants were told would happen.

Three other individuals (E, F and G) also made loans to Z, by providing their money to third parties who were to deliver the money to Z or Z’s lawyer. The Special Compensation Fund Committee found no indication that Z’s lawyer had received the funds from these investors in trust or at all. Because he did not at any time have their funds in his trust account or his possession, the lawyer could not have misappropriated or wrongfully converted them.

While the claimants had sustained losses in that they were not repaid under Z’s investment opportunity as they expected to be, the Special Compensation Fund Committee found the loss did not come about as a result of a misappropriation or wrongful conversion of the funds by the lawyer. The Committee accordingly denied all the claims.

Re: Two Lawyers

The lawyers are not identified as this claim was denied.

Special Compensation Fund Committee decisions involving claims 010001 and 010002

Decision date: December 1, 2004
Report issued January 28, 2005

Claimant A
Claim of $50,853.88 denied

In 1997, Lawyer X was retained by the executor of an estate to assist with the estate administration. An accounting was forwarded to the beneficiaries.

The claimant, one of the beneficiaries, would not consent to the accounting and she retained a lawyer to address the concern that the executor appeared to be purchasing an estate asset (a mobile home) in her personal capacity. The mobile home was sold by the estate for $45,000 to a third party and then resold a few months later for $80,710.

The passing of accounts was heard before a registrar in August 1999. Lawyer Y, of X’s firm, appeared at the hearing. The registrar found that the executor did not perform some of her duties adequately, but had obtained an adequate amount in the sale of the mobile home. The registrar determined that the executor should not have taken her fee without the written consent of all the beneficiaries or a passing of accounts. As a result, she should repay the fee. A master subsequently ordered the repayment of the executor’s fees and payment of certain other amounts to the estate. The lawyers did so in compliance with the order.

The claimant made a complaint to the Law Society about the lawyers in 2000. She subsequently submitted a Special Compensation Fund claim in 2004. She acknowledged that the lawyers had complied with the order to repay funds to the estate but she claimed $50,853.88: 1) $39,651.19 for the estate’s purported loss on the sale of the mobile home; 2) $1,710 paid to the estate lawyers, whose work she said “damaged rather than advanced the interests of the estate”; and 3) $9,492.69 to recover costs she claimed to have incurred to protect the estate assets for the beneficiaries.

The Special Compensation Fund Committee noted, with respect to the claim on the mobile home, that the claimant was unhappy with the amount of the sale of an estate asset, an amount that had been approved by a registrar. The claimant was dissatisfied with the work performed by the estate lawyers and she claimed for costs. The Committee found that, while the claimant may believe she had sustained a loss, it was not as a result of funds being misappropriated or wrongfully converted by a member of the Law Society. The Committee accordingly denied the claim.