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 the identification of claimants.
Special Compensation Fund Committee decision involving claims 20020056 and 20020423
Decision date: March 5, 2003 Claimant: A Bank
Report issued: May 2, 2003
Payment approved: $158,478.63 ($152,244.93 and $6,233.70 interest)
Decision date: March 5, 2003
Claimant: A Bank
The F Street property
In March, 2002 Mr. Wirick represented T who purchased a property on F Street in Vancouver for $227,000. T arranged a $152,750 mortgage loan from A Bank, and the mortgage and assignment of rents were registered on title on March 5.
T was a nominee of Mr. G whom Mr. Wirick also represented. T held the F Street property in trust for V Ltd., a company owned by Mr. G.
T sold the property to L and D. They obtained $275,000 in mortgage financing through A Bank. Mr. Wirick received from the purchaser's solicitor the sale proceeds in trust on his undertaking to pay out and discharge the prior A Bank mortgage and assignment of rents. Mr. Wirick did not in fact use the funds to pay out these charges, contrary to his undertaking. Instead, he transferred the funds to another property, paid his own account and forwarded the remaining funds to another financial institution.
As a result of Mr. Wirick's breach of undertaking, the prior mortgage and assignment of rents (with T as mortgagor) remained on title and in priority to the mortgage obtained by L and D, which was the only charge that should have been on title.
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 funds that he received in trust.
The Committee decided that it would not require the claimant 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 on A Bank to discharge the T mortgage and assignment of rents. Noting that A Bank was in a position to commence foreclosure proceedings against the innocent purchasers L and D, the Committee also exercised its discretion to pay to A Bank interest at the contract rate of 4.9% to the date of payment.
As a result of the payment, and discharge of the prior charges from title, both A Bank and L and D would be restored to the positions they would have been in had there been no wrongful conversion of funds by Mr. Wirick. Accordingly, a separate claim by L and D for compensation was denied.
Special Compensation Fund Committee decision involving claims 20020055, 20020326 and 20020234
Decision date: June 18, 2003
Report issued: July 3, 2003
Claimant: B Credit Union
Payment approved: $191,249.36 ($180,887.59 and $10,361.77 interest)
The 61st Avenue property
In June, 2000 T purchased a residential property on 61st Avenue in Vancouver, financed through a B Credit Union mortgage of $186,300. In November, 2001 T entered into a contract to sell the property to C for $475,000. The property was to be conveyed to C's spouse (M). Mr. Wirick acted for T in the conveyance of the property to M.
M was financing the purchase of the property through a mortgage with C Bank. M's lawyer sent the sale proceeds to Mr. Wirick in trust on his undertaking to, among other things, pay out and discharge the B Credit Union mortgage from title. Mr. Wirick deposited the funds to his trust account but did not pay out and discharge the B Credit Union mortgage, contrary to his undertaking.
The Special Compensation Fund Committee found that, while not every breach of undertaking is dishonest, the circumstances of this case suggested not negligence or error, but an intention by Mr. Wirick to deceive and to facilitate the misappropriation and wrongful conversion of the funds.
The Committee decided that it would not require the claimant 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. B Credit Union had not commenced foreclosure proceedings in this case at the Law Society's request, pending a decision on its claim against the Fund.
B Credit Union suffered a loss in that it had not received the funds to which it was entitled on sale of the property.
The Committee allowed the claim of B Credit Union in the principal amount of the mortgage, together with interest at the mortgage rate to May 24, 2002 and thereafter at the mortgage rate to a ceiling of 6% per annum, subject to certain releases, assignments and conditions agreed to by all claimants. B Credit Union was, among other things, required to provide the Law Society with a statutory declaration setting out the availability of any insurance to pay its claim and whether it had instigated any disciplinary action against any employee, terminated the employment of any employee or whether any employee had resigned as a result of any matter connected with this claim. All claimants were also required to provide the Law Society with their original files and original documents with respect to this matter.
As a result of the payment and discharge of the B Credit Union mortgage, C, M and C Bank would sustain no loss and their claims against the Fund were accordingly denied.