THE LAW SOCIETY OF ALBERTA HEARING COMMITTEE REPORT

Transcription

1 THE LAW SOCIETY OF ALBERTA HEARING COMMITTEE REPORT IN THE MATTER OF THE Legal Profession Act, and in the matter of a Hearing regarding the conduct of TARANJEET AUJLA a Member of The Law Society of Alberta INTRODUCTION AND SUMMARY OF RESULT 1. On April 21, 2010 a Hearing Committee of the Law Society of Alberta convened at the Law Society Office in Calgary to enquire into the conduct of the member, Taranjeet Aujla. The Committee was comprised of Fred R. Fenwick, Q.C., Chairman, Sarah King- D Souza, Q.C., and Rose Charter, Q.C. The LSA was represented by Garner Groome. The member was present throughout the hearing and was represented by Mr. Allan Sattin, Q.C. 2. The Member faced two citations: 1. IT IS ALLEGED that you failed to disclose information to another solicitor, Carl McClintock, creating a misapprehension and you failed to correct the misapprehension, and that such conduct is deserving of sanction. 2. IT IS ALLEGED that you failed to honour your undertaking to another solicitor, Carl McClintock, and that such conduct is conduct deserving of sanction. 3. At the commencement of the hearing, and with the consent of the Law Society and the Member, citation No. 2 was amended to read: IT IS ALLEGED that you failed to honour your undertaking to another solicitor, Carl McClintock, within a reasonable time, and that such conduct is deserving of sanction. 4. Prior to the commencement of the hearing, with the consent of the Member and counsel for the LSA, an agreed binder of exhibits was circulated to the Hearing Committee, which, significantly, contained as Exhibit 6 an Agreed Statement of Facts. The Exhibits were formally entered at the hearing. 5. The Member admitted guilt on citations 1 and 2 (as amended) at the commencement of the hearing, evidence was heard, the Hearing Committee accepted the admission, found that the Member was guilty of conduct deserving sanction, concluded that a reprimand (with no fine) was in order and delivered the reprimand at the conclusion of the hearing. Taranjeet Aujla Hearing Committee Report April 21, Prepared for Public Distribution September 30, 2010 Page 1 of 11

2 JURISDICTION AND OTHER PRELIMINARY MATTERS 6. As amended, the member faced two citations: 1. IT IS ALLEGED that you failed to disclose information to another solicitor, Carl McClintock, creating a misapprehension and you failed to correct the misapprehension, and that such conduct is deserving of sanction. 2. IT IS ALLEGED that you failed to honour your undertaking to another solicitor, Carl McClintock, within a reasonable time, and that such conduct is conduct deserving of sanction. 7. Exhibits 1-4, containing the Letter of Appointment of the Hearing Committee, the Notice to Solicitor, the Notice to Attend and the Certificate of Status of the Member, established the jurisdiction of the Hearing Committee. The Certificate of Exercise of Discretion was entered as Exhibit 5. These Exhibits were entered into evidence. 8. There was no objection by the Member or counsel for the LSA regarding the constitution of the Hearing Committee. 9. The entire hearing was conducted in public. FACTS 10. The bulk of the evidence at the Hearing was contained in an Agreed Statement of Facts entered as Exhibit 6, a copy of which is appended as Exhibit A to this Hearing Report. 11. In summary, the salient details are referred to below. 12. The transaction in question involved the sale of land in Calgary. The Member was acting for the purchaser, the vendor was a numbered company, controlled by Mr. GF who was also a Member of the Law Society. The Member, on behalf of the purchaser was placing a mortgage on the property. The Complainant, Mr. McClintock, was the lawyer representing the mortgagor. The vendor company had a Caveat on the property which needed to be postponed to the mortgage which was being placed. 13. The Member had received from GF, written confirmation that GF would agree to the postponement of the Caveat. A letter of October 7, 2005 outlining this was entered as Exhibit On the strength of this letter, the Member accepted the trust conditions of the Mortgagor s solicitor (the Complainant) which included the necessity of the said postponement, registered documents and began to receive mortgage advances on behalf of his client. 15. On or about October 11, 2005, arising out of matters not apparently related to the transaction in question, GF informed the Member that the Caveat would not be postponed, putting the Member in a position where although he had used documents subject to a trust condition, he was not able to perform the condition. Taranjeet Aujla Hearing Committee Report April 21, Prepared for Public Distribution September 30, 2010 Page 2 of 11

3 16. At that time, notwithstanding that the trust condition was his personal obligation, the Member left it to the person he knew to be the controlling mind of his corporate client, a successful realtor in Calgary, to resolve the difficulties and ensure that the conditions were met that would allow the Member to obtain the postponement of a caveat. 17. GF sent the member a letter October 11, 2005 containing conditions a) through e) in regards to these negotiations. However, when questioned at the hearing, the Member could make no sense out of some of the conditions and stated that he left them essentially to be provided by his client, in other words out of his control. 18. Notwithstanding the fact that compliance with the trust condition imposed by the Complainant and accepted by the Member was no longer possible, or at least within control of the Member, the Member did not tell the Complainant. The Complainant continued to advance the mortgage based on his assumption that the Caveat had been postponed to his mortgage security. 19. The mortgage postponement was eventually obtained, but almost three years later. 20. Contained within the Agreed Statement of Facts, the Member agreed that he failed to disclose information to the Complainant regarding his inability to guarantee compliance with the trust condition, that this amounted to a failure to honour an Undertaking and that all of this is conduct deserving sanction. DECISION 21. The Hearing Committee accepted the admission of the Member regarding the breach of undertaking. SUBMISSIONS RE: SANCTION 22. Counsel for the LSA indicated that the Member had no previous disciplinary record, was cooperative in the preparations for the hearing including agreements as to facts and asked that the sanction be a reprimand plus costs. 23. The Member acknowledged his responsibility in the Agreed Statement of Facts and acknowledged in testimony that his conduct in real estate matters and compliance with undertakings would be punctilious in the future. DECISION ON SANCTION 24. The Hearing Committee had regard to the mitigating factors including the Member s cooperation during the investigation, the Member s lack of discipline record, and the Member s statements during the sanction phase. 25. The Hearing Committee, taking into account all of the factors and evidence concluded that the sanction should be a reprimand, no fine, and the Member paying actual costs of the Hearing. Taranjeet Aujla Hearing Committee Report April 21, Prepared for Public Distribution September 30, 2010 Page 3 of 11

4 26. The Chair of the Hearing Committee delivered the reprimand to the Member, specifically noting the importance that members of the Law Society comply with the Code of Professional Conduct and accepted the statements of Justice Côtė in Carling Development v. Aurora River Tower (2005 ABCA 267) regarding the reliance placed in Alberta on the punctilious observation of trust conditions in the conveyancing of real property. Trust conditions aim to link obligation directly to use of documents, and upon using the documents on the Complainant s trust conditions, the Member became personally obligated to ensure compliance. Very soon after he used the documents, the Member received notification from GF that the required postponement would not be given and the Complainant deserved immediate notice of this. 27. Delivering the reprimand, the Chair noted, however, that even before the subject of the breach of trust conditions arises, the Committee was alarmed by the complete lack of a legal analysis conducted by the Member in regards to the documents in question. For example: (a) (b) When GF withdrew from his previous statement that he would grant the required postponement, we see no complaint from the Member to GF (who was after all a lawyer). Without ruling on issues such as the binding nature of GF s previous declaration and whether or not the Member could have taken the position that GF was estopped from taking such a position, the Committee suggests that such an analysis ought to have been at least attempted. When GF sent the Member a letter October 11, 2005 (Exhibit 15) containing conditions to resolve the dispute about whether or not the postponement to Caveat would be given, the Member could not even explain the conditions. Again, there was a complete absence of any analysis as to the nature of the terms suggested, the propriety of terms, who was going to ensure compliance with the terms, indeed the member at the hearing could not even tell us what one of the terms meant. 28. The Hearing Committee notes that the Member s professional requirement of competence in applying his knowledge and judgment to a situation is critically important and had the Member given any thought to the requisite documents, his analysis may have pointed to either a legal way to resolve the matter, an analysis of the propriety of the subsequent conditions suggested by GF, or at least alerted the Member to the fact that he had put himself in a position where his undertakings could no longer be fulfilled. 29. Subsequent to this lack of analysis, the Member then simply relied on his client to comply with the undertaking. The Member had no reason to believe that his client could resolve the postponement issues and (see 25 b above) had no understanding of the issues being discussed between them. This was inappropriate. CONCLUDING MATTERS 30. No referral to the Attorney General is required in this matter. 31. No separate notice to the profession is required in respect of this matter. Taranjeet Aujla Hearing Committee Report April 21, Prepared for Public Distribution September 30, 2010 Page 4 of 11

5 32. The decision, the evidence and Exhibits in this hearing are to be made available to the public with the names of the Complainant, clients, third parties or other employees to be redacted. Dated this 14 th day of June, Fred R. Fenwick, Q.C., Bencher Chair Sarah King-D Souza, Q.C., Bencher Rose Carter, Q.C., Bencher Taranjeet Aujla Hearing Committee Report April 21, Prepared for Public Distribution September 30, 2010 Page 5 of 11

6 EXHIBIT A to Hearing Report Taranjeet Singh Aujla Law Society Hearing - April 21, 2010 AGREED STATEMENT OF FACTS BACKGROUND 1. Mr. Aujla acted on behalf of a purchaser, T. T. Ltd. (and resale to Alberta Ltd.) of an acreage property from a numbered company, Alberta Ltd. Alberta Ltd. is a company wholly owned by Mr. G. F. (Exhibit 19). Mr. F. is also a lawyer. Mr. Aujla s client later arranged for $1.3 million in financing from D. C., who was in turn represented by Mr. McClintock. 2. The land owned by Alberta Ltd. comprised approximately 64 acres. The property was to be subdivided into two parcels, a 24 acre parcel and a 40 acre parcel. It was the 24 acre parcel that was purchased by Mr. Aujla s client (Exhibits 7 and 8). Because the subdivision had not taken place, the entire 64 acre parcel was transferred to Mr. Aujla s client and Alberta Ltd. placed a Caveat on the Title to protect its interest in the remaining 40 acres. The sale transaction of the 24 acre parcel was completed. Subsequently, the new owner of the property, Alberta Ltd., refinanced the 24 acre unsubdivided parcel, which refinancing involved Mr. McClintock s client, D. C.. Once again, due to the lack of subdivision, that mortgage was placed over the entire 64 acres, rather than the 24 acre unsubdivided parcel. 3. The litigation involving the subject property has been extensive. It involves proceedings between mortgage lenders, borrowers, purchasers and vendors and includes the following actions: (a) Action 0601-XXXX - being an action between the vendor, Alberta Ltd., and the purchasers; (b) Action 0701-XXXX - being a foreclosure action by D. C. against the mortgagor and guarantors; (c) Action 0801-XXXX - being a foreclosure action by M. C. C., the first mortgage lender, against the mortgagor; (d) Action 0701-XXXX - being an action in negligence by D. C. against the purchaser, guarantors, caveator and lawyers. Taranjeet Aujla Hearing Committee Report April 21, Prepared for Public Distribution September 30, 2010 Page 6 of 11

7 4. The D. C. foreclosure action eventually proceeded to an Order for Sale. On July 22, 2008, at the time the Order was granted, Alberta Ltd. (Mr. F. s company), agreed to allow the D. C. second mortgage to be paid out in priority to its claim. This resulted in the full payout of the first and second mortgages on the property with a balance of funds retained in Court. 5. The action between the vendor and purchasers, action 0601-XXXX, as well as the said negligence action, 0701-XXXX, have both recently been settled. AGREED FACTS 6. Mr. Aujla agrees to the following facts with respect to the complaint: (a) He acted on behalf of the purchaser of the unsubdivided 24 acre parcel of land whose vendor was Alberta Ltd., a company wholly owned and controlled by G. F., Q.C.; (b) The transaction in relation to the purchase was completed, however, subdivision did not take place as planned and the entire unsubdivided parcel was transferred to the purchasers; (c) To protect its interest in the proposed subdivision Alberta Ltd. registered a Caveat against the Title, which became a second charge on Title (Exhibit 9); (d) Subsequently the purchaser of the unsubdivided 24 acre portion refinanced with D. C., being Mr. McClintock s client, and due to the unsubdivided nature of the land, that mortgage was registered against the entire 64 acres; (e) Pursuant to two trust letters from Mr. McClintock to Mr. Aujla (Exhibits 10 and 11) a condition of the D. C. loan was that the Alberta Ltd. Caveat had to either be discharged or postponed to its mortgage; (f) Mr. Aujla contacted Mr. F. and arranged for Mr. F. s client s agreement to provide a postponement of the Caveat. Mr. F. sent to Mr. Aujla a letter dated October 7, 2005 (Exhibit 12) regarding his agreement to postpone the Caveat; (g) Upon receiving this advice, Mr. Aujla passed Mr. F. s letter on to Mr. Taranjeet Aujla Hearing Committee Report April 21, Prepared for Public Distribution September 30, 2010 Page 7 of 11

8 McClintock, along with his undertaking drafted October 5, 2005 (Exhibit 13) to obtain a discharge or a postponement of the Caveat. It was eventually agreed by Mr. McClintock that a postponement of the Caveat would be acceptable; (h) At the same time as the mortgage transaction with D. C. was proceeding, Mr. Aujla s client and Mr. F. had other business dealings which did not involve the property, the subject of the D. C. mortgage; (i) Prior to Mr. McClintock advancing funds to Mr. Aujla, Mr. F. withdrew his company s agreement to postpone. This was communicated by a handwritten facsimile transmission dated October 11, 2005 at 8:00 a.m. (Exhibit 14). On the same date, at approximately 11:41 a.m., Mr. F. sent to Mr. Aujla a second fax (Exhibit 15) agreeing to the postponement subject to some conditions; (j) The conditions imposed by F. before he performed on his undertaking to postpone had nothing to do with the property involved in the D. C. mortgage; (k) Mr. Aujla provided the condition information to his client, who then met with Mr. F.. Mr. Aujla s client then reported back that the matters had been resolved; (l) Neither of the communications of October 11, 2005 were passed on to Mr. McClintock by Mr. Aujla. They were not reviewed by Mr. Aujla until the following day after he had received the first of what would be two advances from Mr. McClintock. He did not think there was a need to inform Mr. McClintock at that time as he thought the issues between his client and the Caveator had been resolved; (m) In fact those other business dealing matters were eventually resolved between Mr. Aujla s client and Mr. F. in or about December 2005 and finalized in April As at April 2006 conditions which resulted in the refusal to postpone the Caveat had been removed. No action was taken, however, because other issues between the vendor and purchaser regarding the remaining 40 acre parcel were in litigation; (n) On October 12, 2005 (Exhibit 16), Mr. Aujla received the first advance of mortgage funds from Mr. McClintock and paid out the same on October 12, Mr. McClintock confirmed his reliance upon Mr. Aujla s undertaking and the October 7 th F. letter sent by Mr. Aujla in advancing the funds; Taranjeet Aujla Hearing Committee Report April 21, Prepared for Public Distribution September 30, 2010 Page 8 of 11

9 (o) On October 27, 2005 (Exhibit 17) Mr. Aujla received the second and final advance of mortgage funds from Mr. McClintock and paid out the same on October 28, Mr. McClintock confirmed his reliance upon Mr. Aujla s undertaking and the October 7 th F. letter sent by Mr. Aujla in advancing the funds. By this time Mr. Aujla should have suspected that he would not be getting Mr. F. s postponement within a reasonable time; (p) Mr. F. says he sent a fourth fax to Mr. Aujla dated November 1, 2005 (Exhibit 18). It is not clear whether Mr. F. s letter of November 1, 2005 was sent by him or received by Mr. Aujla. Mr. Aujla cannot locate a copy of the letter on his file. In addition, there is no fax machine generated confirmation document confirming that the letter was sent. Mr. F. says the usual practice at his office is to stamp the correspondence after visually confirming a successful transmission. In addition, no document has been produced which indicates fax machine markings on the document itself indicating it was sent; (q) Mr. Aujla did not receive any correspondence from Mr. F. after Mr. F. s letter of October 11, 2005 and none has been produced except for the purported letter of November 1, Mr. Aujla does acknowledge that attempts may have been made by Mr. F. to contact him by telephone. However, Mr. Aujla did not follow up with Mr. F. and only followed up with his own client, who advised Mr. Aujla that the matters involved in the October 11, 2005 letter were being dealt with and subsequently that a litigation matter had arisen over the remaining 40 acre parcel; (r) Subsequent to the last advance Mr. McClintock made several inquiries of Mr. Aujla about the lack of obtaining the postponement of the Caveat and lack of compliance with the undertaking but Mr. Aujla did not reply, instead simply doing what he could do to try to resolve the underlying dispute between his client and Mr. F.. Eventually Mr. McClintock had to formally demand compliance with the undertaking on March 12, 2007 (Exhibit 20). Mr. Aujla replied on March 24, 2007 (Exhibit 21), by informing Mr. McClintock of the disagreement between his client and Mr. F. concerning the postponement of the Caveat and that the matter was in litigation; (s) Shortly thereafter Mr. McClintock was contacted by Mr. Gerry Albert, counsel for the lenders with respect to the foreclosure litigation, and asked if he could provide some information about the Caveat, which he did. Later, on May 18, 2007 (Exhibit 22) Mr. Taranjeet Aujla Hearing Committee Report April 21, Prepared for Public Distribution September 30, 2010 Page 9 of 11

10 Albert sent a letter to Mr. McClintock providing him a copy of the first October 11, 2005 fax (Exhibit 14) from Mr. F. to Mr. Aujla. This caused serious concerns in Mr. McClintock s mind (Exhibit 23) prompting his complaint to the Law Society soon after; (t) During the complaint process Mr. McClintock was made fully aware of the exchange of correspondence between Mr. F. and Mr. Aujla on October 11, Mr. McClintock now recognizes that Mr. Aujla may have been operating under some confusion at the time of the first advance as to whether or not the postponement would be provided. However, Mr. McClintock confirms that he would not have made the second advance if he had been informed of the problems Mr. Aujla was having with Mr. F. and that compliance with the undertaking was conditional; (u) On July 22, 2008, at the Order for Sale stage of the foreclosure action commenced by D. C., Mr. F. agreed to postpone his company s Caveat and allowed D. C. to be paid out in advance of his company s claim (Exhibit 24). Those funds were paid out in full with interest and full solicitor-client costs. The result of this is that Mr. McClintock s client ultimately suffered no financial loss. Mr. Aujla was then finally in a position to fulfill his undertaking. 7. By the time the dust settled Mr. Aujla was unable to comply with his undertaking within a reasonable time. He recognizes and acknowledges the undertaking and that the undertaking was unconditional. In dealing with the transaction in the manner in which it was done, Mr. Aujla recognizes that he made four errors. These errors are: (a) Relying on another individual (Mr. F.) to provide documentation when he had no control over the individual s actions and when the individual was wearing two hats - one as a lawyer and one as a principal of a private company; (b) Relying on another individual (his client) to deal with the conditions and not verifying compliance; (c) Giving Mr. McClintock an unqualified undertaking; (d) Not notifying Mr. McClintock of the changing circumstances about his uncertain ability to provide a postponement before Mr. McClintock advanced funds. 8. In the result then, Mr. Aujla agrees that he failed to disclose information to Mr. Taranjeet Aujla Hearing Committee Report April 21, Prepared for Public Distribution September 30, 2010 Page 10 of 11

11 McClintock which should have been disclosed to him, thus creating a misapprehension about Mr. Aujla s ability to comply with his undertaking, and he failed to correct that misapprehension contrary to Chapter 4, Rule 2 of the Code of Professional Conduct. Mr. Aujla admits his conduct is deserving of sanction as alleged in Citation Mr. Aujla also acknowledges that he failed to honor his undertaking to Mr. McClintock in accordance with Chapter 4, Rule 10 of the Code of Professional Conduct. Mr. Aujla proposes, however, that the second citation should be amended to having failed to honor the undertaking within a reasonable time. Mr. Aujla admits his conduct is deserving of sanction as per his proposed amendment to Citation These facts are made for the purposes of Section 60 of the Legal Profession Act. This Agreed Statement of Facts is not exhaustive and evidence may be adduced by Mr. Aujla or the Law Society that is not inconsistent with the stated facts herein. DATED at the City of Calgary, in the Province of Alberta, this 8 th day of April, Taranjeet Singh Aujla Taranjeet Aujla Hearing Committee Report April 21, Prepared for Public Distribution September 30, 2010 Page 11 of 11