The Alberta Court of Appeal has dismissed a former lawyer’s appeal against his disbarment by the Law Society of Alberta (LSA) for misappropriating over $300,000 in client funds.
S.B., admitted to the LSA in 1994, practised law in Edmonton until 2015. Following internal revelations of financial irregularities, he was found guilty of conduct deserving sanction on four citations and admitted guilt on three additional citations. These involved misappropriating funds, contravening accounting rules, and failing to act with integrity. The LSA disbarred him and ordered him to pay $120,000 in costs.
Suspension versus disbarment
Challenging the findings on two citations and the severity of the sanction, S.B. appealed to the Court of Appeal, seeking to replace his disbarment with a three-year suspension and to reduce the costs award by half. He argued that the hearing committee made unreasonable findings and misapprehended evidence, particularly regarding a property sale and trust account management.
The court reviewed the case’s background, noting that in May 2015, S.B. disclosed a $180,000 deficiency in his firm’s pooled trust account to the LSA. This admission came after his associates confronted him about the financial discrepancies. An investigation led to 12 citations against him, including allegations of misappropriating client funds, breaching accounting rules, failing to be candid with the LSA, and failing to act with integrity.
During the LSA hearing, S.B. admitted guilt on three citations. The hearing committee found him guilty on four additional citations, concluding that he misappropriated significant sums from clients both within and outside the firm’s trust accounts. The misconduct included taking funds from vulnerable clients, such as those with disabilities.
S.B. appealed to the LSA Benchers, contending that the hearing committee made unreasonable findings and violated procedural fairness, specifically the rule in Browne v Dunn. He claimed inconsistencies in the findings and argued that they were not supported by evidence. The appeal panel upheld the original decisions, stating that the findings were reasonable and evidence-based.
Court of Appeal
In his appeal to the Court of Appeal, S.B. maintained his arguments, focusing on alleged misapprehensions of evidence and errors regarding the property sale and his disbarment. He also contended that the hearing committee failed to properly consider mitigating factors such as his unblemished 20-year career, medical diagnoses of depression and alcoholism, and other personal circumstances.
The court applied appellate standards of review, noting that findings of fact are reviewed for palpable and overriding error, while sanctions in professional disciplinary matters are reviewed for reasonableness.
Addressing the alleged misapprehension of evidence, the court acknowledged minor inaccuracies in the hearing committee’s findings but determined that these did not affect the overall outcome. For instance, although there were errors concerning the firm’s financial obligations and the status of the trust accounts, these did not undermine the core findings of misappropriation and misconduct.
Regarding the property sale, the court upheld the finding that S.B. misappropriated the net sale proceeds held in trust. It noted that he directed $18,653.16 to himself despite other potential claimants, including his former partner, C.F., and without obtaining proper consent. The court found this action intentional rather than a mere mistake, as S.B. had preferred his own interests over those of legitimate claimants.
On the issue of sanction, the court held that disbarment was appropriate given the severity of the misconduct. “Disbarment is not only reserved for cases involving dishonest dealing with money,” the court stated, emphasizing that such serious breaches of trust undermine public confidence in the legal profession. The court considered that S.B.’s actions involved significant sums over an extended period and affected vulnerable clients.
The court also examined S.B.’s arguments concerning his medical conditions and personal circumstances. While acknowledging his struggles with depression and alcoholism, the court found that these factors did not mitigate the sanction. It stated that for personal circumstances to influence sanctioning, there must be a causal connection between the condition and the misconduct. The court concluded that the hearing committee reasonably assessed these factors, noting that the medical evidence did not establish a direct link between his conditions and his actions.
Costs award
Furthermore, the court found no error in the costs award. It determined that the amount was reasonable, considering the complexity of the case and the seriousness of the misconduct. The costs represented about 75 per cent of the LSA’s estimated hearing expenses.
In its conclusion, the court dismissed the appeal, affirming both the disbarment and the costs award. The decision underscores the judiciary’s deference to professional regulatory bodies in matters of professional misconduct and highlights the importance of maintaining public confidence in the legal profession.
For more information, see Beaver v Law Society of Alberta, 2024 ABCA 354 (CanLII).
