Self Report Leads To Interlocutory Suspension

A Hearing Division Tribunal of the Law Society of Upper Canada has ordered the interlocutory suspension of an attorney who had self-reported his misconduct

 The evidence supported the granting of the interlocutory suspension. On May 29, 2017, Mr. Findlay self-reported that he had used and was not able to replenish trust funds that the Superior Court had ordered him to hold in reserve for final distribution to class members in a class action. The amount that the court had ordered Mr. Findlay to hold in reserve was $1.5 million.

Background

In 2006, Mr. Findlay launched an action on behalf of a group of individuals who claimed they had sustained financial loss on account of reclamation efforts by members of the Six Nations communities. The action was certified as a class action in 2010.

 In June 2011, the class action was settled. The Government of Ontario paid $20 million in settlement funds to Findlay McCarthy LLP in trust. The parties then negotiated the distribution of the settlement funds. In an order dated September 28, 2011, the Court approved the Caledonia Compensation Plan (the “Plan”) which set out the proposed distribution of the settlement funds to class action members and others. The Order provided that if there were any settlement funds remaining after completion of the administration of the Plan, those funds would be repaid to Ontario.

The sum of $3,391,432.50 was paid from trust to Findlay McCarthy for fees and disbursements. The remaining $16,605,567.50 was invested and re-invested in ever-decreasing amounts as the settlement funds were disbursed. 

A subsequent Order, dated June 8, 2012, ordered Findlay McCarthy to hold a reserve fund of $1.5 million for two years after there had been final distribution of the settlement funds under the Plan. Further distribution was thereafter to be pursuant to direction of the Court.

The self report

On May 29, 2017 Mr. Findlay sent an email to the Law Society as follows:

Dear Sir/Madam:

My Name is John Findlay. LSUC No. 19502C

I am a lawyer with Findlay McCarthy Professional Corporation.

I wish to self-report on the use of trust funds that I have held in trust.

I am class counsel in a class action involving compensation to class members who received compensation from the Province of Ontario with respect to the occupation in Caledonia.

Following the initial distribution of the settlement funds there were funds that were held back pending final direction from the court.

I have used the holdback funds and I was not able to replenish the funds before effecting the final distribution.

My partner, Martha McCarthy, had no knowledge of this.

Nor did the final administrator of the fund, whom I have just informed.

I can be reached at the number below for any further questions or investigations.

John Findlay

Mr. Findlay was previously suspended from practice for two years from June 30, 2001 until June 30, 2003 after a finding that he misappropriated monies held in trust for two separate clients (total $75,647) and misapplied trust monies held on behalf of a third client ($9,674).

Thus

The Law Society investigation is at an early stage and all of the facts are not yet known. The evidence currently available, however, strongly indicates that Mr. Findlay has misappropriated trust funds and disobeyed a court order. Mr. Findlay admits that he used and was not able to replenish trust monies that he was ordered by the Court to hold for final distribution to class members. The court Order is very clear. Mr. Findlay’s records also acknowledge the Order and his obligation. He brought a motion for final distribution of the reserve fund. His ledger and annual report indicate, at least on paper, that he was holding these funds in trust as required.

Allowing Mr. Findlay to practise when there is strong evidence that he has misappropriated trust funds and disobeyed a clear court order risks causing harm to the public and the public interest in the administration of justice.

(Mike Frisch)