Special Compensation Fund claims

Martin Wirick
Vancouver, BC
Called to the Bar: May 14, 1979
Resigned from membership: May 23, 2002
Custodian appointed: May 24, 2002
Disbarred: December 16, 2002 (see Discipline Case Digest 03/05)
Special Compensation Fund Committee decision involving claims 20020209/1, 20020401/1, 20020304/1 and 20020193/1

Decision date: October 1, 2003
Report issued: November 10, 2003

Claimant: B Credit Union
Payment approved: $309,609.57 ($290,853.25 and $18,756.32 interest)

Claimant: C Bank
Payment approved: $162,932.29 ($151,795.07 and $11,137.22 interest)

The East 5th Avenue property

K was a nominee of Mr. G, a developer client of Mr. Wirick. In 2000 K purchased a property on East 5th Avenue in Vancouver and encumbered the property with a $156,000 mortgage in favour of C Bank. Acting under a power of attorney from K, Mr. G subsequently entered into an agreement for K to sell the property to Z and M.

Three days prior to the transfer, Mr. G (again acting under a power of attorney) further encumbered the property with a mortgage in favour of B Credit Union.

Mr. Wirick acted for K in the sale of the property to Z and M. In a letter to the purchasers' solicitor, Mr. Wirick undertook to obtain releases of the C Bank and B Credit Union mortgages.

On April 26, 2001, the property was transferred to Z and M who subsequently registered a mortgage in favour of another financial institution.

Mr. Wirick did not use the funds received from Z and M to pay out the C Bank and B Credit Union mortgages, but instead transferred the balance of the sale proceeds to unauthorized recipients.

The Special Compensation Fund Committee found that, while not every breach of undertaking is dishonest, the circumstances of these claims suggested, not negligence or error by Mr. Wirick, but an intention to deceive. He breached his undertaking to apply the proceeds of sale to the discharge of registered mortgages and he instead misappropriated or wrongfully converted the funds.

The Committee decided that it would not require the claimants to exhaust their civil remedies in this case by obtaining judgments against Mr. Wirick, noting that he had made an assignment in bankruptcy claiming liabilities far in excess of assets, and there was little hope of recovery from him.

The Committee found that C Bank and B Credit Union had suffered losses by not receiving the funds owed to them. Their claims were allowed, subject to certain releases, assignments and conditions, including the requirement of providing to the Law Society registrable discharges of their mortgages on title. The Committee also exercised its discretion to pay interest on these claims at the contract rate to May 24, 2002 and thereafter at the applicable rate to a maximum of 6% per annum.

As a result of the payment and discharge of the prior charges from title, the purchasers Z and M and their own mortgage lender would be placed in the positions they ought to have been in and would suffer no loss. Accordingly, their separate claims for compensation were denied