Special Compensation Fund claims

Martin Jones

Formerly of Vancouver, BC

Called to the Bar: November 15, 1996

Ceased membership for non-payment of fees: January 1, 2003

Special Compensation Fund Committee decision involving claim 20020589

Decision date: December 1, 2004

Report issued: April 12, 2005

Claimant: Mr. A

Payment approved: $1,500

Mr. A and his wife paid Mr. Jones a retainer of $1,500 when they hired him to help with Mr. A’s application for permanent resident status.

Mr. Jones acknowledged receipt of the $1,500, but he did not appear to have recorded receipt of the funds nor placed them in his trust account. Further, Mr. Jones never completed the service he was retained for, issued any bill to Mr. A, returned the money or accounted for any of it. Thus, the Committee found Mr. Jones had misappropriated $1,500 of Mr. A’s money.

The Committee noted that it has the discretion to require claimants to exhaust their civil remedies before making a payment out of the Fund. In exercising this discretion, the Committee may consider, among other factors, likelihood of recovery, clear evidence of defalcation and hardship to the claimant. The Committee noted in this case that Mr. Jones was no longer practising law, had moved to Toronto and had indicated to the Law Society his intention to move to Washington, DC. Therefore, rather than requiring Mr. A to pursue the claim in Small Claims Court, the Committee decided Mr. A must assign to the Law Society any claim or cause of action he had in relation to Mr. Jones.

The Committee found that the claimant had suffered a loss in the amount of the $1,500 and approved a payment in that amount from the Fund to Mr. A, subject to certain assignments and conditions.

Special Compensation Fund Committee decision involving claim 20020140

Decision date: December 1, 2004

Report issued: April 12, 2005

Claimant: Doctor B

Payment approved: $1,500

Mr. Jones requested that Doctor B prepare two medical-legal reports regarding clients of Mr. Jones. Doctor B made a claim to the Special Compensation Fund Committee because he believed Mr. Jones had received funds from the Legal Services Society for payment of those reports, but had failed to reimburse Doctor B for his invoices. The Legal Services Society advised the Law Society on September 9, 2002 that it had reimbursed Mr. Jones $1500 for two of Doctor B’s invoices.

Even though the funds were not paid by Doctor B, himself, to Mr. Jones, but instead came from the Legal Services Society on the premise that Mr. Jones would pay them to Doctor B, the Committee determined they were clearly owed to Doctor B by Mr. Jones. Thus, the Committee found Mr. Jones had misappropriated $1,500 of Doctor B’s money.

As with the previous claim, the Committee decided that rather than requiring Doctor B to pursue the claim in Small Claims Court, Doctor B must assign the Law Society any claim or cause of action he had in relation to Mr. Jones as a condition of receiving compensation from the Fund.

The Committee found the claimant had suffered a loss in the amount of $1,500, which had been paid to Mr. Jones to pay Doctor B’s invoices and was not. The Committee therefore approved a payment of $1,500 from the Fund to Doctor B, subject to certain assignments and conditions.

Special Compensation Fund Committee decision involving claim 20020636

Decision date: December 1, 2004

Report issued: April 12, 2005

Claimant: Ms. P

Payment approved: $4,000

Ms. P and her husband paid Mr. Jones $4,000 to assist with her husband’s application to Citizenship and Immigration Canada.

Mr. Jones issued Ms. P receipts for her funds but did not appear to have recorded receipt of the funds nor placed them in his trust account. While Mr. Jones acknowledged receiving the funds, he never issued any bill to Ms. P, did not return the money or account for any of it. Thus, the Committee found Mr. Jones had misappropriated $4,000 of Ms. P’s money.

As with the previous claims, the Committee decided that rather than requiring Ms. P to pursue the claim in Small Claims Court, Ms. P must assign the Law Society any claim or cause of action she had in relation to Mr. Jones as a condition of receiving compensation from the Fund.

The Committee found that the claimant had suffered a loss in the amount of the $4,000 she paid to Mr. Jones and thus approved a payment in that amount from the Fund to Ms. P, subject to certain assignments and conditions.

Special Compensation Fund Committee decision involving claim 20020041

Decision date: December 1, 2004

Report issued: April 12, 2005

Claimant: Doctor W

Payment approved: $2,525

Mr. Jones requested that Doctor W prepare medical-legal reports regarding various clients of Mr. Jones. Doctor W made a claim to the Special Compensation Fund Committee for $3,450 because she believed Mr. Jones had received funds from the Legal Services Society for payment of at least 11 of the 14 reports she had prepared regarding Mr. Jones’ clients. She also asserted that, although Mr. Jones had received payment, he had failed to reimburse her for her invoices. The Legal Services Society advised the Law Society on August 30, 2002 that it had reimbursed Mr. Jones $2,525 for Doctor W’s invoices. The Committee noted that this amount covered 10 of Doctor W’s invoices.

Even though the funds were not paid by Doctor W, herself, to Mr. Jones, but instead came from the Legal Services Society on the premise that Mr. Jones would pay them to Doctor W, the Committee determined the funds were clearly owed to Doctor W by Mr. Jones. Thus, the Committee found Mr. Jones had misappropriated $2,525 of Doctor W’s money. The Committee determined that the balance of Doctor W’s claim, the amount of $925 was for outstanding invoices, which were not paid by the Legal Services Society to Mr. Jones. Payment of the unpaid invoices was a debt owed to Doctor W by Mr. Jones and did not constitute misappropriation or wrongful conversion.

As with the previous claims, the Committee decided that rather than requiring Doctor W to pursue the claim in Small Claims Court, Doctor W must assign the Law Society any claim or cause of action she had in relation to Mr. Jones as a condition of receiving compensation from the Fund.

The Committee found the claimant had suffered a loss in the amount of $2,525, which had been paid to Mr. Jones to pay Doctor W’s invoices and was not. The Committee thus approved a payment of $2,525 from the Fund to Doctor W, subject to certain assignments and conditions.

Re: A Lawyer*

* The lawyer is not identified as this claim was denied.

Special Compensation Fund Committee decision involving claim 20020650

Decision date: September 7, 2005

Report issued: October 31, 2005

Claimant A

Claim of $150,000 plus interest denied

Claimant A loaned a company $150,000, which was secured by an inter alia mortgage on properties in Surrey. Correspondence connected to the mortgage suggested the same notary public represented both A and the mortgagor. There was no mention of the lawyer in the original file received by the Special Compensation Fund Committee from the notary public who acted for A.

A letter to the claimant from the notary indicated A’s mortgage would be registered and the previous financial charges would be discharged. The letter did not expand on who would file the discharge. The previous financial charge was not discharged, and eventually the mortgagee foreclosed on the properties. The result was that A’s interest was lost.

The claimant’s sworn application to the fund stated the money she loaned for the mortgage was to a client of the lawyer and that it was the lawyer who gave the undertaking to discharge the previous financial charge. The Committee found no evidence the lawyer was ever involved.

The Special Compensation Fund concluded that while A may have sustained a loss, there was no evidence it was the result of misappropriation or wrongful conversion by a member of the Law Society. Accordingly, the claim was denied.

Re: A Lawyer*

* The lawyer is not identified as this claim was denied.

Special Compensation Fund Committee decision involving claim 20030008

Decision date: December 7, 2005

Report issued: January 27, 2006

Claimants A & B

Claim of “an amount to be determined” denied

The lawyer in this case acted for A & B. They knew they were mortgagors with respect to two mortgages on a property in Vancouver; however, the claimants believed the mortgages had been discharged.

In June of 2002, A & B discovered that was not the case, and the mortgages were still on title. As a consequence, the claimants lost their good credit rating, and in September of 2002 the bank refused to renew the mortgage on their own property. The bank initiated foreclosure proceedings and A & B retained the lawyer to assist them.

The lawyer received payments, in trust, from the claimants totaling $15,241.50. He forwarded the money to another lawyer, who acted for the bank. However, the matter was not resolved and the bank foreclosed and sold the property.

In August of 2003, the lawyer prepared an account in the amount of $5,623.05 for services rendered with respect to the claimants’ property. The Committee found that while work was done on the file and all funds received by the lawyer with respect to the claim were accounted for, it was impossible to determine whether the amounts charged to A & B for legal work were appropriate. The Committee determined that all funds the claimants gave to the lawyer were either returned to them or applied to the lawyer’s bills for service. Further, the Committee found no evidence of misappropriation. Therefore, while A & B may believe they suffered a loss, the Committee concluded they had not met the requirements for their claim to be paid by the Special Compensation Fund, and the claim was denied.

Arthur Skagen

Surrey, BC

Called to the Bar: May 18, 1989

Gave an undertaking not to practice: September 8, 2003

Custodian appointed: September 11, 2003

Ceased membership for non-payment of fees: January 1, 2004

Special Compensation Fund Committee decision involving claim 20035015

Decision date: October 12, 2005

Reports issued: November 29, 2005

Claimant: Mr. V

Payment approved: $50,000

Mr. Skagen was Mr. V’s corporate lawyer for approximately 10 years. In July 2002, Mr. V asked Mr. Skagen to send an offer to purchase a property.

The letter of intent to purchase the property set out that a $50,000 deposit was required and was to be made payable to Mr. V’s solicitors in trust. In September 2002, Mr. V provided Mr. Skagen with a bank draft for the deposit amount of $50,000. An audit report later revealed that the draft was deposited into Mr. Skagen’s trust account, but was not credited to Mr. V. Instead, the funds were credited to another client and used for another purpose. Mr. Skagen did not respond or offer any explanation for this.

The Special Compensation Fund Committee found Mr. Skagen misappropriated or wrongfully converted the funds he received from Mr. V. Accordingly, the Committee approved a payment of $50,000 from the Fund to Mr. V, subject to certain assignments and conditions.

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)

In all of the cases summarized below, Mr. Wirick acted for the vendor, Mr. G, a developer client, one of Mr. G’s nominees, or one of Mr. G’s companies in respect of conveyances and mortgages of real property. In each instance, there were one or more existing mortgages and in some cases there were also assignments of rents on the properties at the time of the purchases. Mr. Wirick accepted the funds of the purchaser(s) on his undertaking(s) to pay out and legally discharge the existing mortgage(s). Mr. Wirick did not fulfil his undertaking(s).

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(s) to apply the proceeds of sale to the discharge of registered mortgage(s) 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 these cases 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.

Subject to various conditions and assignments, the Special Compensation Fund Committee has approved the following claims involving situations such as those described above:

1. Special Compensation Fund Committee decision involving claims 20020220 and 20020100

Decision date: March 5, 2003

Report issued: April 15, 2003

Claimants: P & P and C Bank

Payment for C Bank approved: $145,623.96 ($140,393.27 and $5,230.69 interest)

The claim of P & P was denied as the allowed claim of C Bank restored P&P to their bargained position, which they would have maintained had Mr. Wirick fulfilled his undertakings.

2. Special Compensation Fund Committee decision involving claims 20020531, 20020117 and 20020436

Decision dates: October 27, 2004 and February 2, 2005

Reports issued: September 26, 2005

Claimants: T & Y, D & D and C Bank

Payment for D & D approved: $233,782.29 ($200,000 and $33,782.29 interest)

The claims of T & Y and C Bank were denied because the allowed claim of D & D restored the other claimants to their bargained positions, which they would have maintained had Mr. Wirick fulfilled his undertakings.

3. Special Compensation Fund Committee decision involving claims 20020156, 20020549, 20020374, 20020097, 20020489, 20020297, 20020298 and 20020299

Decision dates: February 2, March 16 and May 4, 2005

Reports issued: June 1, 2005 for T & W; April 26, 2005 for Credit Union A; and May 26, 2005 for Ms. P, H & H, C Bank and D Bank

Claimants: T & W, D Bank, Credit Union A, Ms. P, H & H and C Bank

Payment for Credit Union A approved: $841,576.70 ($724,930.86 and $116,645.84 interest)

The claims of T & W, D Bank, Ms. P, H & H and C Bank were denied because the allowed claims of Credit Union A restored the other claimants to their bargained positions, which they would have maintained had Mr. Wirick fulfilled his undertakings.

4. Special Compensation Fund Committee decision involving claims 20020285/39, 20020490/39 and 20020495/39

Decision date: July 6, 2005

Report issued: September 12, 2005

Claimants: Credit Union A, C Bank and S & K

Payment for Credit Union A approved: $280,644.58 ($240,816.64 and $39,827.94 interest)

The claims of C Bank and S & K were denied because the allowed claim of Credit Union A restored the other claimants to their bargained positions, which they would have maintained had Mr. Wirick fulfilled his undertakings.

5. Special Compensation Fund Committee decision involving claims 20020488, 20020666, 20020281, 20020155, 20020547 and 20020280

Decision date: July 6, 2005

Report issued: September 12, 2005

Claimants: Credit Union A, L & L, B Bank, W & L and C Bank

Payment for Credit Union A approved: $397,710.85 ($343,121.10 and $54,589.75 interest)

The claims of L & L, B Bank, W & L and C Bank were denied because the allowed claims of Credit Union A restored the other claimants to their bargained positions, which they would have maintained had Mr. Wirick fulfilled his undertakings.

6. Special Compensation Fund Committee decision involving claims 20020537/264, 20020128/264 and 20020665/264

Decision date: September 7, 2005

Report issued: January 9, 2006

Supplementary decision date: October 12, 2005

Report issued: January 9, 2006

Claimants: L/L & L, D & M and B Bank

Payment for D & M approved: $241,457.53 ($200,000 and $41,457.53 interest)

The claims of L/L &L and B Bank were denied because the allowed claim of D & M restored the other claimants to their bargained positions, which they would have maintained had Mr. Wirick fulfilled his undertakings.

7. Special Compensation Fund Committee decision involving claims 20020439/23 and 20020271/23

Decision date: November 9, 2005

Report issued: January 9, 2006

Claimants: W & H and Credit Union A

Payment for Credit Union A approved: $193,802.68 ($162,748.87 and $31,053.81 interest)

The claim of W & H was denied because the allowed claim of Credit Union A restored W & H to their bargained position, which they would have maintained had Mr. Wirick fulfilled his undertakings.

8. Special Compensation Fund Committee decision involving claims 20320, 20164, 20356, 20319, 20037, 20577, 20309, 20162, 20578, 20310, 20161, 20357, 20252, 20163, 20358, 20302, 20160, 20359, 20292, 20159, 20579, 20250, 20165 and 20619

Decision date: February 1, 2006

Report issued: August 3, 2006

Claimants: R & J, A & S, F Bank, S Corporation and Credit Union A

Payment for R & J approved: $337,501.66 ($335,020.28 and $2,481.38 interest)

Payment for A & S approved: $341,416.26 ($332,072.91 and $9,343.35 interest)

The claims of F Bank, S Corporation and Credit Union A were denied as their claims would be satisfied because payment of the claims to R & J and A & S were directed to be made to F Bank, S Corporation and Credit Union A as mortgagees of the claimants.