The Advisory: Volume 9, Issue 2, August 2011

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Summary of Disciplinary Matters

In this Summary of Disciplinary Matters, the Law Society of Alberta seeks to educate and inform lawyers on its role as an independent regulator in the public interest.

The hearing reports issued may correspond to the hearings held during this period, but may reflect hearings held earlier. Some of the reports are summarized below. All hearing reports are available at under Lawyer Regulation/Hearings & Outcomes/Hearing Reports.

Reprimand of A.

Undertakings are fundamental to the practice of law and must be complied with by the lawyer who gives them.

A. represented the vendors of residential property. She undertook to the purchaser’s lawyer to discharge the mortgages on title. She was cited for her failure to discharge all the mortgages. A. agreed to the facts giving rise to this citation and admitted she had breached her undertaking. The Hearing Committee denounced A. for failing to fulfill her undertaking and reprimanded her for her failure. A. was ordered to pay costs of the hearing of $1788.

A. had dealt with the vendor, purchasers and lender in previous transactions. She relied on her knowledge of the parties and their ability to complete transactions and assumed this transaction would close. A. mistakenly believed there was a firm agreement between the vendors and lender to discharge the mortgages. As a result, A. did not obtain written mortgage payout statements from the lender. When the lender refused to negotiate the mortgage discharges, A. was unable to discharge her undertaking. The only alternative left A. was to return the cash to close to the purchasers.

The Hearing Committee was satisfied A.’s conduct was deserving of sanction because:

She failed to obtain written mortgage payout statements from the lender;

She relied instead on her knowledge of past dealings with the purchaser, vendors and lender;

When the lender told her it was not prepared to accept the payout proposed by the vendor, A. told the purchaser’s lawyer she was unable to fulfill her undertakings and therefore intended to return the cash to close with the expectation title would simply be restored to her clients.

The Hearing Committee (King-D’Souza, Raby, Carey) said it is not acceptable for a lawyer who is unable to fulfill her undertakings to attempt to put the onus of solving the problem on the purchaser’s lawyer by returning the cash to close and requesting a transfer back. A. told the Committee she now fully appreciates the need to have a firm written commitment from the lenders to discharge the mortgage before giving her undertaking to do so.

The Hearing Committee was comprised of Miriam Carey, Public Representative; Sarah King- D’Souza, QC; and Steve Raby, QC.

Suspension of B.

Two separate real estate transactions gave rise to 10 citations against a real estate lawyer who had practised for over 25 years.

B., acting for a borrower, accepted funds from the lender’s lawyer on the trust condition that he would provide a certified copy of title within a reasonable period of time showing discharge of a certain mortgage. B. paid out the funds in May 2006 but did not discharge the mortgage until September 2008. The Hearing Committee rejected B.’s attempt to blame the principal of the mortgagor for taking so long to sign the mortgage discharge. The proper and only procedure was to have the mortgagor sign the discharge before releasing the funds. The Hearing Committee found B. breached his trust condition and failed to respond to the lender’s lawyer.

B. acted for the purchaser of a home who wished to assume the existing mortgage. B. also acted for the vendors and the purchaser’s assignee. After the purchaser paid the cash to close to B., he transferred the home to another of his clients. B. did not tell the purchaser of this transfer nor did he have the purchaser’s consent to this intervening transfer. Although B. did eventually transfer title to the home to the purchaser’s assignee, the purchaser’s beneficial interest in the home was unprotected while the home was in the name of the intervening transferee. B. took no steps to implement the mortgage assumption and the purchaser’s assignee was ultimately unable to assume the mortgage.

The Hearing Committee found B.

was in a conflict of interest and failed to obtain the necessary consent to act on behalf of the vendors;

failed to obtain instructions from the buyer;

implemented instructions from the vendor that were contrary to professional ethics;

failed to fulfill his commitments to the buyer;

failed to ensure the buyer was fully informed as to the progress of the transaction; and

failed to respond to the Law Society on a timely basis.

The Hearing Committee (Higgerty, Schultz, Carey) found B.’s actions appalling. He placed his clients in jeopardy and, in the case of the home purchaser, kept his own client in the dark as he executed a highly questionable legal manoeuvre. He put lawyers and clients in the position of having to complain to the Law Society to get straight answers. Members of the public can only view his behavior with disdain. B. deliberately ignored his duty to vigorously protect the interests of his clients within the law and the ethics of the profession. The Hearing Committee found B. seemed to have difficulty grasping that his actions were fundamentally wrong.

The Hearing Committee suspended B. for 30 days, ordered him to pay the full costs of the hearing, and referred him to Practice Review.

The Hearing Committee was comprised of Miriam Carey, Public Representative; John Higgerty, QC; and Frederica Schultz, QC.

Fine and Reprimand for C.

Accurate and timely trust accounting is fundamental to a lawyer’s practice. It is essential that all members strictly comply.

C., a sole practitioner with a substantial real estate practice failed to comply with Law Society accounting rule beginning in 2004. In 2007, C. signed an undertaking with the Law Society to maintain his firm books and records as required by Law Society Rules. Notwithstanding this undertaking, C.’s non-compliance continued. A Hearing Committee (Fenwick, Nickerson, Ohlhauser) heard the three resulting citations.

Compliance with Law Society accounting rules is not a matter of convenience for lawyers but rather a matter of fundamental importance, particularly for real estate lawyers whose clients, other lawyers and other lawyers’ clients rely on the sanctity of trust funds. The Hearing Committee rejected C.’s explanation that 2006 to 2008 was a very busy time for real estate practitioners. Just as a surgeon’s governing body would not accept busyness as an excuse for failing to wash his hands and an engineer’s governing body would reject busyness as an excuse for failing to record measurements taken by the engineer, the Law Society similarly rejects this excuse for failing to maintain accounting records.

C. admitted the facts giving rise to the citations and admitted his guilt. The Hearing Committee found C.’s pattern of failing to comply with accounting rules conduct deserving of sanction and ordered him to pay fines and the actual costs of the hearing. The Chair reprimanded C.

The Hearing Committee was comprised of Fred Fenwick, QC; J.R. Nickerson, QC; Larry Ohlhauser, MD, Public Representative.

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