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.

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, and without identifying the claimants.

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 20020216, 20020152 and 20020424

Decision date: June 18, 2003
Report issued: August 29, 2003 / referred for publication November 14, 2003

Claimant: A Bank
Payment approved: $210,178.92 ($200,379.54 and $9,799.38 interest)

The L Street property

In February, 2002 Mr. Wirick represented S as vendor in the sale of a residential property on L Street in Vancouver to RL and LL for $280,000.

The vendor, S, was a nominee of Mr. G, who was also a client of Mr. Wirick. At the time that S sold the L Street property to RL and LL, the property was subject to a mortgage of $201,500 and an assignment of rents. S had originally arranged this mortgage financing with A Bank when he purchased the property earlier that year.

RL and LL arranged a new mortgage of $300,000 with B Bank to fund their property purchase. On March 8, the solicitor for the purchasers forwarded $270,771.88 to Mr. Wirick in trust, on this latter's undertaking to pay out the A Bank mortgage and assignment of rents. In breach of his undertaking, Mr. Wirick did not use these funds to pay out the prior mortgage, but instead transferred the funds to another property, paid an account of his law firm and forwarded the remaining funds to V Ltd., a construction company owned by his client Mr. G.

As a result of Mr. Wirick's breach of undertaking, the A Bank mortgage and assignment of rents remained on title of the L Street property and in priority to the B Bank mortgage

The Special Compensation Fund Committee found that, while not every breach of undertaking is fraudulent, in this case Mr. Wirick's pattern of behaviour did not suggest an error, but rather conduct similar to that reflected in his earlier discipline proceedings. He misled and deceived the purchasers' lawyer and he breached his undertaking in order to facilitate the misappropriation and wrongful conversion of the purchase money that he received in trust.

The Committee decided that it would not require the claimant, A Bank, to exhaust its civil remedies in this case by obtaining a judgment against Mr. Wirick, given that there was little hope of recovery from him.

The Committee allowed the claim of A Bank, subject to certain releases, assignments and conditions, including the requirement that A Bank discharge its mortgage and assignment of rents. Noting that A Bank was in a position to commence foreclosure proceedings against the innocent purchasers, RL and LL, the Committee also exercised its discretion to pay to A Bank interest 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, B Bank and RL and LL would suffer no loss. Accordingly, their separate claims for compensation were denied.


Special Compensation Fund Committee decision involving claims 20020211, 20020593, 20020212, 20020594, 20020098, 20020213, 20020241, 20020102, 20020214 and 20020242

Decision date: July 9, 2003
Report issued: October 29, 2003

Claimant: A Credit Union
Payment approved: $919,674.74 ($864,000 and $55,674.74 interest)

The P Avenue property

In September, 2001 Mr. Wirick represented V Ltd. in the refinancing of adjacent properties on P Avenue in Burnaby. V Ltd. was a construction company that belonged to Mr. G, another client of Mr. Wirick.

V Ltd. had originally bought the properties as two lots in December, 1999 through mortgage financing from T Mortgage Corporation and several individuals: AN, BN and SN. Each property was subsequently subdivided into two strata lots, for a total of four strata lots.

V Ltd. arranged with A Credit Union to refinance the strata properties through two inter alia mortgages: one mortgage of $440,000 over the first two strata lots and the second mortgage of $440,000 over the second two strata lots. On September 28, 2001 the solicitors for A Credit Union forwarded $862,510 to Mr. Wirick as solicitor for V Ltd. on Mr. Wirick's undertaking to discharge the mortgages and assignments of rent that were already on title.

In breach of his undertaking, Mr. Wirick did not use any of the funds he received to discharge the prior mortgages. He did subsequently pay out these mortgages, but from funds received on a later date. He also discharged the mortgages, other than the BN mortgage, which was paid out but not discharged.

On October 17, 2001 K purchased one of the four strata lots on P Avenue from V Ltd. for $322,071.21. K obtained a new mortgage to help finance the purchase. His notary public forwarded the net sale proceeds to Mr. Wirick on this latter's undertaking to pay out and discharge all prior mortgages and charges and the inter alia mortgage of A Credit Union. In breach of his undertaking, Mr. Wirick did not use the funds to pay out or discharge the mortgages. The A Credit Union inter alia mortgage accordingly remained on title.

Also on October 17, 2001, L purchased the second strata lot from V Ltd. for $322,071.21. The notary public representing L forwarded the net sale proceeds to Mr. Wirick on his undertaking to pay out and discharge all of the prior mortgages and the A Credit Union inter alia mortgage. In breach of his undertaking, Mr. Wirick again failed to pay out and discharge the mortgages. The A Credit Union mortgage remained on title.

H and S purchased the third strata lot from V Ltd. on October 15, 2001 for $330,206.74. They obtained mortgage financing of $220,800 from B Bank. The solicitor for H and S forwarded $333,293.15 to Mr. Wirick on his undertaking to pay out all the prior charges and the A Credit Union inter alia mortgage. Mr. Wirick did not use any of the funds to pay out or discharge the mortgages. The T Mortgage Corporation, AN, BN and SN mortgages were subsequently paid out from other funds that Mr. Wirick received and all these mortgages, except the BN mortgage, were discharged from title.

On October 19, 2001 CH and FC purchased the fourth strata lot from V Ltd. They arranged mortgage financing. Their solicitor forwarded $311,275.90 to Mr. Wirick on his undertaking to pay out and discharge all of the prior charges on title and the A Credit Union inter alia mortgage. Mr. Wirick did not use these funds to pay out and discharge the mortgages and other charges as he had undertaken to do.

The Special Compensation Fund Committee found that Mr. Wirick's breaches of undertaking in these circumstances were egregious and wilful. In each case, he diverted funds that he had received on specific undertakings. His actions were dishonest and resulted in misappropriation and fraudulent conversion of the funds. This conduct was discreditable in the extreme and completely at variance with the straightforward and honourable dealings expected of a lawyer.

The Committee decided that it would not require A Credit Union to exhaust its civil remedies in this case by obtaining a judgment against Mr. Wirick, given that there was little hope of recovery from him and given that, for A Credit Union to exercise its remedies, would result in foreclosure proceedings against innocent claimants.

The Committee allowed the claim of A Credit Union, subject to certain releases, assignments and conditions, including the requirement that A Credit Union discharge its inter alia mortgage. As a result, all other claimants (both purchasers and the financial institutions from which they obtained new financing) would be made whole and restored to the position they ought to have been in.

The Committee also exercised its discretion to pay to A Credit Union interest on its claim at the contract rate to May 24, 2002 and thereafter at the applicable rate to a maximum of 6% per annum.