The Cash Refund Rule
A Hearing Panel of the Law Society of British Columbia enforced a rule for the first time.
The Respondent is a Vancouver-based immigration lawyer with nearly 30 years of practice experience. On October 12, 2012, he acted on the instruction of his client AA to refund the balance of his $15,000 cash retainer to an intermediary by issuing him a $10,318.60 bank draft (the “Bank Draft”).
On January 5, 2017, after investigating the Bank Draft refund at some length, the Law Society cited the Respondent for contravening the cash refund requirement of Law Society Rule 3-51.1(3.2) then in force [now Rule 3-59(5)] (the “Citation
A lawyer who accepts an aggregate amount in cash of $7,500 or more under subrule (3.1), must make any refund greater than $1,000 out of such money in cash.
The Citation alleged that the Respondent’s contravention of Rule 3-51.1(3.2) constituted professional misconduct, pursuant to section 38(4) of the Legal Profession Act.
The client sought to emigrate from Iran to Canada.
The attorney’s associate travelled to Iran in connection with the matter. The client discharged the attorney.
The Respondent was aware of the cash refund requirement under Rule 3-51.1(3.2) when he issued the Bank Draft. But he did not seek guidance from the Law Society regarding the application of Rule 3-51.1(3.2) prior to refunding AA’s retainer.
The matter came to light
In filing his firm’s 2012 trust report with the Law Society, the Respondent answered “yes” to the question that asked, “Did the practice pay any refunds related to cash receipts, in excess of $1,000?” He answered “no” to the question that asked, “Were all such refunds done by way of a cash payment (not by trust cheque) as required by Rule 3-51.1(3.1)?” The Respondent explained his “no” answer thus:
The excess trust funds of $10,318.60 were were [sic] returned to the client using a money order. Which we were instructed to forward to a relative in the U.S. We could not have done this by sending cash.
The Respondent’s 2012 trust report answers caused a Law Society auditor to express concerns of misconduct to the Law Society’s Professional Conduct department in October 2013. Following a lengthy investigation of those concerns, the Law Society issued the Citation.
Findings
On the facts established by the Agreed Statement of Facts, the Panel found that the Respondent’s knowing contravention of the cash refund requirement of then Rule 3-51.1(3.2) was a marked departure from the standard of compliance expected of lawyers. He made no effort to ascertain from the Law Society how to properly observe the cash refund rule under the circumstances. Apart from his own stated concerns of safety and convenience, nothing prevented him from providing cash to the Designate in fulfillment of AA’s instructions and in compliance with the Law Society Rules.
This Panel found that the Respondent displayed culpability grounded in a fundamental degree of fault by deliberately disregarding Rule 3-51.1(3.2) for the sake of perceived safety and convenience. His behaviour therefore constituted professional misconduct as conditionally admitted.
In the first action enforcing the provision
The Panel…ordered the Respondent to pay a $4,000 fine to the Law Society by October 31, 2017. The Respondent’s hearing took about a half-day to be heard. The Panel therefore awarded $1,262.05 in costs to the Law Society. This amount is composed of $1,000 for a complete hearing, pursuant to Schedule 4 Tariff Item 25, and $262.05 in total Rule 5-11(5) disbursements, including the court reporter fees for half-day attendance.
(Mike Frisch)