Special Compensation Fund claims
The Special Compensation Fund, funded by all practising lawyers in B.C., is available to compensate persons who suffer loss through the misappropriation or wrongful conversion of money or property by a B.C. lawyer acting in that capacity. Although instances of misappropriation in the profession are rare, the Special Compensation Fund is a public protection the profession takes seriously.
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 a summary of the written reasons for decisions of the Committee.
For each claim, the Committee must canvass such preliminary issues as:
- Should the claim be considered prior to the conclusion of discipline proceedings?*
(*The consideration of claims usually follows discipline proceedings. When considering complaints against a lawyer who has ceased membership, the Discipline Committee may in some instances decide not to pursue those complaints but to place the material on the lawyer's file should he or she apply for reinstatement.)
- Should the claim be tabled and the claimant required to obtain a judgment against the lawyer?
- Was the claim made within the two-year time limit?
In considering the merits of a claim and before it can exercise its discretion on whether to pay a claim, the Committee must determine several critical issues:
The Committee may require a claimant to first obtain a judgment against the lawyer, or may relieve the claimant of this requirement, and has the discretion, in certain circumstances, to award interest or legal costs to a claimant. The Committee usually requires the claimant, as a condition of payment, to assign to the Law Society any rights of recovery against the lawyer.
|Bruce Ross Pomeroy
Called to the Bar: May 19, 1989
Payment approved: $153,124.37
Decision: September 11, 2000
Report issued: December 4, 2000
Mr. Pomeroy represented B, an elderly and vulnerable woman, in the sale of a house and preparation of a will in 1993. B gave Mr. Pomeroy power of attorney without Mr. Pomeroy ensuring, or even advising, that B obtain independent legal advice. Mr. Pomeroy then had B authorize a loan in his favour, which he used to advance a $155,000 loan to his wife, secured by a mortgage. There were already two other mortgages on the property and insufficient equity to support B's mortgage. When the property was sold in 1994, the first and second mortgages were paid out, but Mr. Pomeroy paid the remaining $24,452.97 of sale proceeds into his own account. Mr. Pomeroy also withdrew $1,300 from the estate to pay his own credit card bill and $1,200 for his own use. In total, he repaid $4,375.63 to B. A discipline hearing panel found that Mr. Pomeroy had converted most of B's savings to his own use.
The Committee was satisfied that Mr. Pomeroy had misappropriated or wrongfully converted $153,124.37 and ordered payment of this amount from the Fund to B, without interest. Although B had obtained default judgment in Supreme Court against Mr. Pomeroy, damages in the matter had not yet been assessed. Given the cost and the difficulty of recovery from Mr. Pomeroy, the Committee decided B need not pursue the damages assessment to recover from the Fund.
Payment approved: $134,878.91
Decision: November 27, 2000
Report issued: April 23, 2001
In 1993 Mr. Pomeroy provided legal services to, and became the attorney for, G, an elderly woman who was recently widowed, had little education and lacked business and investment sophistication. Mr. Pomeroy had G sign, without independent legal advice, a loan authorization that allowed him to oversee or to personally borrow up to $200,000, with or without security. Mr. Pomeroy borrowed more than $172,000 over a period when G's competency was in question or she was in fact incompetent. He provided as security a mortgage over his matrimonial home, although there was insufficient equity in the property to support the mortgage. He further withdrew $7,800 from G's account without rendering any account to her.
A discipline hearing panel had found that Mr. Pomeroy had borrowed money from G with reckless disregard as to whether he could repay it, and continued to do so even when he knew that G was incompetent and that he could not repay her.
The Special Compensation Fund Committee ordered payment to the claimant of $134,878.91, being the net amount of her claim less repayments made by Mr. Pomeroy and money paid to her following foreclosure of the mortgage.
Claimant: J Estate
Payment approved: $166,500
Decision: February 5, 2001
Report issued: May 10, 2001
Mr. Pomeroy represented J on various matters. He drafted a will for J in which Mr. Pomeroy was named as executor.
After J's death in 1995 and the grant of probate, Mr. Pomeroy transferred $160,000 from the estate as a loan to companies controlled by another of his clients. The loan was to be secured by a mortgage, but the mortgagor did not in fact own the property in question. In disbursing the loan proceeds, Mr. Pomeroy paid himself $69,000. He took a further $6,500 from the estate with no explanation.
The Committee found that Mr. Pomeroy had misappropriated or wrongfully converted the funds in his capacity as a lawyer and had provided no explanation. The Committee noted his history of acting in conflict with respect to J, his pattern of behaviour with other elderly, unsophisticated clients and the finding of the discipline hearing panel that his primary aim was to benefit himself.
The Committee approved payment of $166,500, without payment of interest.
Payment approved: $189,543.19, including legal fees and expenses
Decision: July 9, 2001
Report issued: September 28, 2001
Mr. Pomeroy began acting in divorce proceedings for M, an unsophisticated client. In January, 1993 he received $474,926.61 as proceeds from the sale of the matrimonial home under the divorce settlement.
Mr. Pomeroy subsequently withdrew from trust the sums of $10,225.81 and $10,000 without explanation and without evidence the funds were for payment of fees. He then paid out $1,650 to another client, without M's authorization or knowledge.
In 1995 Mr. Pomeroy convinced M to lend $160,000 for a property development, without advising her the loan was to another of his clients and without recommending independent legal advice. The mortgage provided as security was over property not in fact owned by the mortgagor and was therefore not valid security.
Mr. Pomeroy disbursed the funds, retaining $30,000 for himself despite having advised M that the money would be held for her benefit. Mr. Pomeroy convinced M to make two other loans, including a $20,000 loan that, without her knowledge, was for Mr. Pomeroy. There was no documentation or security and the loan was not repaid.
The Committee found that Mr. Pomeroy received the funds for M in his capacity as a lawyer and that, while it could be argued the funds were placed with Mr. Pomeroy for investment purposes, this did not alter his lawyer-client relationship with M. He had misappropriated or wrongfully converted the funds.
The Committee approved payment of $179,543.19, being the total amount of the misappropriation ($201,875.81) less the funds that M had received as repayment on the principal of her loan ($22,332.62). The Committee declined to award interest but paid $10,000 towards M's legal costs and relieved her of pursuing an action against Mr. Pomeroy.