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REGULATION OF PROFESSION - Disciplinary procedure - What constitutes misconduct

Wednesday, April 24, 2019 @ 7:12 AM  

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Appeal by the defendant lawyer from a decision of the Law Society’s appeal panel dismissing his appeal from a decision finding him guilty for misconduct for failing to disclose a material error to a client. The appellant was retained by a church and a developer. The church had sold land to the developer. The appellant erroneously paid trust funds to the developer rather than to the bank on behalf of the church but then failed to inform the church. When the appellant demanded the return of those funds, they had already been committed to the developer’s expenses. The appeal panel noted the uncontroverted fact that the appellant did not disclose a trust error to one of his joint clients and decided the hearing panel reasonably concluded that the trust error was material and that it ought to have been disclosed.

HELD: Appeal dismissed. The appeal panel’s finding was reasonable. The fact that the affected client opted not to receive regular communication from the appellant about the operational aspects of the project did not eliminate the solicitor-client relationship that existed between the appellant and the church and did not eliminate the ethical and fiduciary duties the appellant owed to the affected client to report a material error to that client. The error was indeed material to the church because it had subordinated its mortgage to the indebtedness owed to the bank. While the hearing panel did make findings of fact that were in some respects opposite to those made in the complaint and the investigation report, the report was simply part of the initial process in determining whether a lawyer’s conduct meets the threshold test for issuing citations. It was up to the hearing panel to make findings of fact relative to guilt. The appeal panel did not err by failing to draw an adverse inference relative to the respondent’s decision not to call the author of the report as a witness at the initial hearing.

Law Society of Alberta v. Schuster, [2019] A.J. No. 347, Alberta Court of Appeal, P.W.L. Martin, F.L. Schutz and M.G. Crighton JJ.A., March 25, 2019. Digest No. TLD-April222019006