Victim Compensation Reexamined in Ontario

In the aftermath of the disappearance and death of a high profile Toronto lawyer, the legal community has expressed a greater interest in the victim compensation fund in place for clients of lawyers and paralegals practicing in Ontario.

At the February Convocation, new guidelines were put in place for the victim Compensation Fund, which has been in place since 1953. The fund serves to protect the public per s. 51(5) of the Law Society Act, and is administered by a Compensation Fund Committee established under By-Law 12. The Guidelines created by this Committee was recently upheld by the Divisional Court in Tarek El Hennawy et al. v. The Law Society of Upper Canada, where Justice Himel stated,

[30] Convocation’s authority to establish these Guidelines is derived from its absolute discretion to make grants from the Fund. The Guidelines are a way of structuring the exercise of that discretion and providing some consistency. We agree that Convocation was entitled to establish these Guidelines and required no express statutory authority to do so. The Guidelines recognize that there must be some nexus between the lawyer’s dishonesty and his or her capacity as a lawyer and legal practice before there will be access to the Fund. The Fund is not unlimited, and outlining this nexus is consistent with the statutory framework. We respectfully disagree with the applicants’ position that the Guidelines are ultra vires because they apply an additional and stricter requirement than the Act concerning the nexus between the dishonesty of the lawyer and his or her professional business. The Guidelines expand on the criteria regarding eligibility for grants from the Fund. They are not inconsistent with the Act because the Act does not provide that any claimant is entitled to receive a grant if they meet the threshold criteria in s. 51(5). We find that the provisions of the statute and the Guidelines are consistent.

The new Guidelines explicitly state their purpose in the Preface to help achieve greater transparency and comprehensibility, borrowing language from Alberta’s Assurance Fund Guideline. A provision adds that decisions by the Fund are final, subject to judicial review, and that the Committee has absolute discretion.

The formulation for determining the amount of compensation has also been stated more simply:

The Fund will consider the value of work performed by the lawyer or paralegal and the cost of disbursements, whether or not the claimant received an account for the work or the disbursements. The fact that work was performed may cause the Fund to reduce a grant or deny one altogether.

Convocation also approved the creation of new Policies and Procedures which can be amended by the Committee without the approval of Convocation. The Policies and Procedures describe the decision making process that the Committee undertakes.

Further potential developments to the Fund were described recently in the Toronto Star:

Any further changes to the compensation fund would also have to be approved at convocation, a regular meeting of law society benchers. At the February meeting, several benchers expressed support for raising the cap or doing away with it entirely.

Ottawa lawyer and fraud specialist David Debenham said he is cautiously optimistic that the law society will change limits on victim compensation he describes as “silly” and “obsolete.”

“The lawyers should be paying what is required for this fund because we trade on our reputation,” Debenham said. “The cost and the benefit should go together. If we’re not protecting our good will, we have to pay the price for that.”

Wardle said he expects the committee to bring its recommendations to benchers this spring.


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