Special Compensation Fund claims

Re: A Lawyer*

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

Special Compensation Fund Committee decision involving claim 199903
Decision date: February 4, 2004
Report issued: April 23, 2004

Claimant A
Claim of $50,000 USD denied

The lawyer in this case acted for a company that offered an investment scheme. The company entered into an agreement with one investor (A) under which A would invest $50,000 USD. The lawyer received from A $30,000 USD and deposited these funds to trust. Per the terms of the agreement, A agreed that, upon execution of the agreement, the lawyer would release A’s funds to the company. There was no evidence that A provided the additional $20,000 USD to the lawyer; rather, it appears that A may have paid this money in cash directly to the company.

The lawyer paid the $30,000 USD to two people, one of whom was the wife of the company’s principal. The Special Compensation Fund determined that the company had directed the lawyer to pay the funds in the manner he did.

The Committee found that the lawyer acted in his capacity as a barrister and solicitor for the company. In these circumstances, however, he was not a signing party to the investment agreement with A, and he did not act for A or undertake to perform any legal services on A’s behalf.

The investor (A) knew that his funds would be paid to the company on execution of the agreement. The company indeed acknowledged receipt of the funds and an obligation to repay them to A. The company chose to direct money to two other people. While possibly not in strict compliance with A’s understanding of the intent of the agreement with the company, this did not mean that the lawyer had misappropriated funds. The Committee concluded that, in this situation, the lawyer had not misappropriated or wrongly converted the investor’s funds.

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 20020278, 20020157 and 20020545

Decision date: June 1, 2005
Report issued: September 1, 2005
Corrigenda date: November 9, 2005

Claimants: Credit Union A, Mr. and Ms. F, and Bank B
Payment for Credit Union A approved: $250,444.59 ($217,226.71 and $33,217.88 interest)

In 2001 V Construction Ltd. (a company belonging to Mr. Wirick’s client, Mr. G) sold a lot on Nelson Street to Mr. and Ms. F for $332,000. The lot was then encumbered by three mortgages. In late October 2001, in closing the transaction, Mr. Wirick reported to the solicitor for Mr. and Ms. F that he had discharged the first, second and third mortgages. In fact, contrary to his undertaking, Mr. Wirick did not use the sale proceeds to pay out and discharge, among other charges, the third mortgage of Credit Union A.

Mr. and Mrs. F meanwhile obtained $215,800 to finance their purchase through a mortgage loan from Bank B. The mortgage, which they expected to be a first mortgage, was registered on title.

In April 2002, Mr. Wirick filed a Form C discharge of the Credit Union A mortgage, which Credit Union A alleged was fraudulent. In October 2002, Credit Union A filed a Certificate of Pending Litigation and Writ of Summons in BCSC Action No. L023071 seeking a declaration from the court that the discharge of the mortgage was “fraudulent and as a result void and of no effect.”

On May 12, 2005, in a similar case to this one (Action No. BCSC 712), Mr. Justice Sigurdson allowed the rectification of title and reinstatement of the Credit Union A mortgages on two properties, subject to consideration of further evidence and argument on two issues.

The Special Compensation Fund Committee considered claims made by Credit Union A , Mr. and Ms. F and Bank B. The Committee determined that Mr. Wirick had not used the sale proceeds in accordance with his undertaking, and that his breach of undertaking amounted to wrongful misappropriation of funds in his capacity as a lawyer. Mr. and Ms. F had sustained a loss since their purchase monies were supposed to be used to pay out the charges on title, but in fact the Credit Union A mortgage was fraudulently discharged from title without being paid out.

Therefore, the Committee decided that, if it paid out the Credit Union A mortgage, its claim would be satisfied and Credit Union A would remove its Certificate of Pending Litigation and acknowledge satisfaction of any claim on its mortgage and lawsuit.

The Committee approved payment of $250,444.59 to Credit Union A, subject to various conditions and assignments, for the purpose of discharging its mortgage from title. By so doing, Mr. and Ms. F would be restored to the position they ought to have been in had Wirick fulfilled his undertakings.