Law Society of Upper Canada v. Frank Mott-Trille — Decision to Disbar (October 21, 1997)

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IN THE MATTER OF the Law Society Act, AND IN THE MATTER OF Frank Radley Mott–Trille of the City of Brampton, a Barrister and Solicitor

G. MacKenzie, Chair; P. Copeland and H. Sealy

Heard: June 15, 1995, February 2 and 24, May 3, 10 and 11, June 3, 7 and 10 and December 13, 1996 Decision of the Committee: January 22, 1997 Decision of Convocation: October 21, 1997

Summary:

Mott–Trille, Frank Radly Brampton, Ontario Age 65, Called to the Bar in 1954

Particulars of Complaint

Professional Misconduct

Misapplied approximately $35,000 from a client;

Misapplied approximately$ 89,131.13 from the estate of a client;

Misapplied approximately $65,000 from the estate of a client;

Misappropriated approximately$ 45,000 from the estate of a client by using funds to prepay fees on an unrelated matter;

Misapplied approximately $675,000 in trust funds belonging to a client;

Transferred$ 224,745,41 from his trust account to his general account for fees and disbursements prior to delivery of a fee billing;

Misapplied approximately $30,000 in trust funds held for two beneficiaries.

Convocation's Disposition (10/21/97)

Permission to resign, otherwise disbarment.*

Note: The Member did not file his resignation within seven days and therefore was disbarred on October 29, 1997.

REPORT of the Discipline Committee

On July 29,1993, Complaint D189/93 was issued against Frank Radley Mott-Trille alleging that he was guilty of professional misconduct.

On September 20,1993 Complaint D246/93 was issued. On June 3, 1994 Complaint D180/94 was issued.

The matter was heard in public on June 15, 1995, February 2, February 24, May 3, May 10, May 11, June 3, June 7 and June 10, 1996 before a Discipline Hearing Panel (the "Panel") composed of Gavin MacKenzie (Chair), Paul Copeland, and Hope Sealy. Mr. Mott- Trille (the "Solicitor") was in attendance throughout the hearing and was represented by his counsel, Charles C. Mark, Q.C. Christina Budweth and Glenn Stuart appeared on behalf of the Law Society.

DECISION

The following particulars of professional misconduct were found to have been established:

Complaint D189/93

(a) On or about May 21, 1992, the Solicitor misapplied $35,000 more or less from his client Ruth Ramsbottom;

(b) On or about June 11, 1992, the Solicitor misapplied $89,131.13 more or less from the estate of Phyllis Winters;

(c) In or about August 1991, the Solicitor misapplied $65,000 more or less from the estate of Florence Antoniuk; and

(d) In or about September 1991, the Solicitor misappropriated $45,000 from the estate of Margaret Finlay by using these funds to pre-pay his fees on an unrelated matter.

Complaint D246/93

(a) During the period December 18, 1991 to January 19, 1992, the Solicitor misapplied $675,000 more or less from his trust account of funds belonging to his client, Jeannette Steed; and

(b) In the period November 4,1991 to December 30,1991,the Solicitor transferred $224,745.41 from his trust account to his general account representing fees and disbursements prior to the delivery of a fee billing as required by section 14(8)(c) of Regulation 708 under the Law Society Act.

Complaint D180/94 (a) On or about December 9,1988,the Solicitor misapplied $30,000.00 more or less,of funds to be held in trust for the benefit of Vera and Michael Giammarco.

REASONS

Background

The Panel admitted into evidence two lengthy agreed statements of fact and many documents. It also heard the viva voce evidence of approximately twenty witnesses including the Solicitor. In addition to hearing oral argument, the Panel considered written submissions that were delivered on certain issues both at the time of and after the completion of oral argument.

The Solicitor is 65 years of age. He was called to the bar in Great Britain (Gray's Inn) in 1953, and was called to the bar in Ontario in 1954. He was a Rhodes Scholar before he undertook a career in law.

The Solicitor's practice has included both "solicitors' work" and litigation. He has practised most recently in Brampton, in association with his daughter, Sarah Mott-Trille.

The Solicitor admitted particular (a) of Complaint D180/94 (misapplying 30,000 more or less of funds to be held in trust on behalf of Vera and Michael Giammarco), and in argument Mr. Mark conceded that the Solicitor breached section 14(8)(c) of Regulation 708 under the Law Society Act as alleged in particular (b) of Complaint D246/93 (transferring 224,745.41 from his trust account to his general account representing fees and disbursements prior to the delivery of a fee billing). Each of the other allegations in the Complaints as set forth above was contested.

In the reasons that follow the Panel has summarized the evidence relating to each particular in the Complaints, although it has considered the particulars in an order that is slightly different from the order in which they are set out in the Complaints.

Particular 2(a) of Complaint D246/93 - Alleged Misapplication of $675,000 belonging to Jeanette Steed.

The Law Society alleges in particular 2(a) of Complaint D246/93 that:

During the period December 18, 1991 to January 19, 1992, [the Solicitor] misapplied $675,000 more or less from his trust account of funds belonging to his client, Jeanette Steed.

(a) Agreed Statement of Facts

The evidence that the Panel received in relation to this Particular included the following paragraphs from the agreed statement of facts that was marked Exhibit 4 at the hearing:

The Solicitor was retained by Jeanette Steed in April, 1989, concerning a matrimonial matter. Mrs. Steed is 70 years of age. Mrs. Steed and her husband had been married in 1950. There were three children of the marriage and Mrs. Steed never worked outside the home after her marriage.

At the time of her retainer of the Solicitor, Mrs. Steed had limited knowledge of financial matters. She received a housekeeping allowance from her husband and was not responsible for the investment of any of her own funds except a 60,000 bequest from her mother in 1983 which was invested in Canada Savings Bonds. [The parties agreed at the hearing that Mrs. Steed in fact received the60,000 bequest from her father, who died approximately three months after her mother: Exhibit 8, paragraph 14.]

Mrs. Steed knew the Solicitor as a fellow member of the Jehovah's Witness faith. Although he belonged to a different congregation, Mrs. Steed and the Solicitor had met at Witness conventions. She had known him to be an elder in the church. He had attended to a divorce and marital settlement on behalf of one of her daughters.

At the time of Mrs. Steed's separation from her husband she was aware that as a result of an estate freeze, a trust had been created during the course of their marriage of which the beneficiaries were the Steed's three daughters and she was completely cut out. She was not aware then, nor is she to this date, fully aware of the placement of the various funds of the Trust. She was however, aware that he had substantial business assets and real estate holdings and provided sufficient particulars thereof for the purposes of her litigation.

During the course of Mrs. Steed's solicitor and client relationship with the Solicitor, she developed trust and confidence in him both as her solicitor and a fellow member of the Jehovah's Witness faith. Mrs. Steed socialized with the Solicitor to a limited extent, once spending the afternoon at his country home with one of her daughters and grandchildren. The Solicitor was invited to the second marriage of one of her daughters.

The principal issue between the Steeds resulting from their separation was Mrs. Steed's entitlement to any funds in the Steed Family Trust. Alan Poole was retained as co-counsel in the matter. The parties attended on a fully argued interim motion and were successful. There were protracted negotiations and the matter was eventually settled.

On November 4, 1991, the Solicitor received a settlement cheque in the amount of 1,357,000 payable to the Solicitor in trust. An additional500,000 was received by way of cheque to create a trust for Mrs. Steed, the Jeanette Steed Trust. Mrs. Steed was to receive the benefit of the use of the income during her lifetime.

The capital of the trust was to be preserved for the benefit of the Steeds' daughters.

At or about the time of the receipt of the settlement funds, Mrs. Steed and the Solicitor had discussions regarding the investment of her monies.Mrs. Steed asked the Solicitor for advice and assistance in investing this money and specified two criteria:

A certain percentage of the funds should be invested in blue chip or safe stocks; and

Mrs. Steed was aware that the Solicitor invested in mortgages on behalf of clients from time to time; as a result, Mrs. Steed instructed the Solicitor to invest in short term mortgages, "not more than two years".

The Solicitor reported to Mrs. Steed regarding the transfer of $200,000 to the Jones, Gable, brokerage firm, by letter dated November 20, 1991.

With respect to the remainder of the funds, Mrs. Steed advised the Solicitor that prior to investing in mortgages she wished him to call her and advise her of the essential elements of the investment. Mrs. Steed gave these instructions not because she anticipated having to veto any prospective investments but rather so that she would know the whereabouts of her funds.

On November 5, 1191, 1,200,247.50 of the funds were invested in T-Bills through the Royal Bank. The bills were cashed in November and December, 1991, and interest of 11,115.80 was credited to Mrs. Steed's trust account. The funds, totalling $1,368,115.80 were distributed as follows, as evidenced by the Solicitor's trust ledgers attached as Exhibit 43 to this agreed statement of facts:

Date Details Amount

Nov. 4/91 F. Mott-Trille - fees and disb. 144,601.57 Nov. 11/91 Humberview Motors - deposit for car 5,000.00 Nov. 13/91 Humberview Motors - purchase of car 36,054.45 Nov. 19/91 Jones, Gable - purchase of shares 200,000.00 Alan Poole - for billing 463.89 Dec. 13/91 Jeanette Steed 100,000.00 Dec. 16/91 F. Mott- Trille - fees and disb. 5,243.84 Dec. 18/91 Loan to Reid and Dhamalie 42,500.00 Dec. 30/91 F. Mott-Trille - fees and disb. 74,900.00 Dec. 31/91 Alan Poole - fee billing 382.53 Jan. 2/92 Loan to Steve and Fontini Lazaridis 50,000.00 Jan. 7/92 Advance to Reid/Dhamalie/Finlason re: 675,000 mortgage on 2019-2035 Davenport Rd., Toronto 60,000.00 Jan. 14/92 Advance to Reid/Dhamalie/Finlason re: 675,000 mortgage 5,308.00 Jan. 19/92 Final advance to Reid/Dhamalie/ Finlason re: 675,000 mortgage 567,192.00 Feb. 14/92 Loan to Bacus/Stavrou 8,245.95 Mar. 9/92 Loan to Ronald Hodgins 13,500.00 Mar. 24/92 New loan to Reid/Dhamalie 5,304.00 Apr. 3/92 Loan to Momm 12,119.39 May 15/92 Loan to Stevenson 20,000.00 Loan to Ramsbottom 17,300.18 $1,368,115.80

Of the amounts set out in paragraph 100 above the following are the subject of complaints by Mrs. Steed and the Society:

Lazaridis mortgage 50,000.00 Reid/Dhamalie/Finlason mortgage 675,000.00 Loan to Ronald Hodgins 13,500.00 Loan to Reid/Dhamalie 5,304.00 Loan to Momm 12,119.39 Loan to Stevenson 20,000.00 Loan to Ramsbottom 17,300.18 793,223.57 ==========

Mrs. Steed only became aware of the Lazaridis mortgage investment when the Solicitor reported to her by letter dated January 6, 1992, a copy of which is attached as Exhibit 44 to this agreed statement of facts.

The Lazaridis mortgage was registered on a property at 5 Parkhurst Boulevard in Leaside. As at September 24, 1993, this property had an appraised value of 355,000.The Solicitor has provided an appraisal dated October 1, 1992 which values the property at 525,000.00.Mrs. Steed has instituted Power of Sale proceedings and the property is presently listed for sale for 349,000.00.Mrs. Steed's claim, under her mortgage, is approximately 38,600.00, inclusive of interest, to date. The Solicitor has advised, and the Society has no reason to question his information, that the present outstanding value of the first mortgage is $277,000.00.

Most payments on the Lazaridis loan came through the Solicitor to Mrs. Steed.

In or about March, 1992, the Solicitor advised Mrs. Steed of a potential investment in a medical building in Brantford. Mrs. Steed travelled with the Solicitor to Brantford to inspect the property and meet with the listing real estate agent. Mrs. Steed declined to make the investment.

By letter dated April 9, 1992, Mrs. Steed wrote to the Solicitor confirming that she did not wish to purchase the medical clinic in Brantford. She further instructed him not to make any more investments on her behalf and advised that in the future, she intended to attend to her own financial matters. She asked the Solicitor for an accounting of funds owing to her.A copy of Mrs. Steed's April 9, 1992 letter is attached as Exhibit 45 to this agreed statement of facts.

By letters dated April 10, 1992 which are collectively attached as Exhibit 46 to this agreed statement of facts,the Solicitor reported to Mrs. Steed about the payout of a loan made to Mrs. Steed's daughter, Anne, and her husband, Morrell Bacus.

The Solicitor reported to Mrs. Steed regarding a number of loan investments by letters all dated June 11, 1992. The first written report of the Reid/Dhamalie/Finlason mortgage is made to Mrs. Steed by way of the June 11, 1992 letter. Copies of the June 11, 1992 letters are attached collectively as Exhibit 47 to this agreed statement of facts.

Both the Solicitor and Mrs. Steed will give evidence regarding paragraphs 109,111,and 120 at the return of this matter before the Committee.

The Solicitor reported to Mrs. Steed regarding the Dhamalie mortgage by letter dated June 16, 1992, a copy of which is attached as Exhibit 48 to this agreed statement of facts. Mrs. Steed responded by letter dated June 19, 1992, a copy of which is attached as Exhibit 49 to this agreed statement of facts.

Mrs. Steed also wrote to the Solicitor regarding the calculations respecting repayment of the Bacus mortgage in response to the Solicitor's June 11, 1992 letter in that regard. The Solicitor responded by a letter of the same date. Both Mrs. Steed's and the Solicitor's letters of June 19, 1992 regarding the Bacus mortgage are attached collectively as Exhibit 50 to this agreed statement of facts.

Mrs. Steed received a notice of sale under mortgage respecting the Parkhurst property re the Lazaridis loan in early July 1992.Mrs. Steed faxed the Solicitor the Notice of Sale on July 10, 1992 under cover of letter of the same date, copies of which are attached as Exhibit 51.

On July 14, 1992, he responded to her inquiry for information on the situation by providing a cheque in the amount of $10,000 from Mr. Lazaridis as well as updated information on the status of the mortgage.A copy of the Solicitor's July 14, 1992 letter is attached as Exhibit 52 to this agreed statement of facts.

By letter dated July 14, 1992, which was personally delivered to her home, the Solicitor reported to Mrs. Steed respecting his representation of her to date. A copy of the Solicitor's July 14, 1992 letter is attached as Exhibit 53 to this agreed statement of facts. The Solicitor enclosed in this letter fee billings dated November 4, 1991 in the amount of 144,601.57 and December 30, 1991 in the amount of 74,500, copies of which are attached collectively as Exhibit 54 to this agreed statement of facts.

The Solicitor had, on November 4, 1991 and December 30, 1991 already withdrawn these amounts from trust without rendering the fee billing to Mrs. Steed.

On July 17, 1992, Mrs. Steed and her daughter, Margaret Pearson, met with the Solicitor to discuss the account delivered by the Solicitor on July 14, 1992. Mrs. Steed confirmed the essence of their conversation in the letter dated July 18, 1992 a copy of which, complete with handwritten notes made by Mrs. Steed pursuant to that meeting, is attached as Exhibit 55 to this agreement statement of facts.

During the meeting of July 17, 1992, the Solicitor agreed to refund fees in the amount of $32,100 to Mrs. Steed.

The Solicitor did deliver a cheque in the amount of $32,100.00 to the Toronto-Dominion Bank where it was credited to the account of Mrs. Steed under cover of a letter dated July 30, 1992.

The Solicitor also reported further to Mrs. Steed by letter dated July 30, 1992, a copy of which is attached as Exhibit 56 to this agreed statement of facts. The letter contains handwritten notations in Margaret Pearson's handwriting made during a conversation between the two on August 11, 1992. ...

By letter dated August 13, 1992, the Solicitor ... assured Mrs. Steed "the mortgages are in good standing and you are protected". A copy of the Solicitor's August 13, 1992 letter is attached as Exhibit 57 to this agreed statement of facts.

By letter dated September 14, 1992, a copy of which is attached as Exhibit 58 to this agreed statement of facts, Mrs. Steed instructed the Solicitor to make arrangements for a repayment of the Lazaridis mortgage. By letter dated September 22, 1992, a copy of which is attached as Exhibit 59, the Solicitor made the demand for payment under cover of letter of same date and reported to Mrs. Steed enclosing a copy of the demand and a cheque in the amount of 500. The Solicitor has not commenced power of sale proceedings in respect of the Lazaridis loan. The Solicitor's explanation for his failure to do so is that he was not specifically requested to do so. Mrs. Steed received her last payment on the Lazaridis mortgage on October 28, 1992. A recent payment of 6,000 was made leaving a total of $36,500 plus interest owing on this indebtedness.

Mrs. Steed acknowledged the Solicitor's September 22, 1992 letter on the Lazaridis matter by letter dated September 26, 1992. The Solicitor corresponded with her further on October 9, 1992 in which letter he advised:

...Steve Lazaridis will be paying off your mortgage in full as soon as he obtains the commitment on the new first mortgage on the 15 Astley property.

The most recent information that I have on this is that this commitment letter should be available next week and shortly thereafter, your mortgage will be paid off in full.

Under cover of letter dated October 28, 1992, the Solicitor provided Mrs. Steed with a cheque in the amount of $16,875.00 representing a quarterly mortgage payment on the Reid/Dhamalie/Finlason mortgage.

By letter dated December 15, 1992, which was copied to Margaret Pearson, the Solicitor made a formal demand for payment on the Davenport Road property.

A copy of this demand is attached as Exhibit 60 to this agreed statement of facts.

By letter dated January 3, 1993, Margaret Pearson wrote to the Solicitor demanding a further update on the Reid/Dhamalie matter. A copy of Margaret Pearson's January 3, 1993 letter is attached as Exhibit 61 to this agreed statement of facts.

During a telephone conversation with the Solicitor on January 7, 1993, Mrs. Pearson was advised that in regard to the Lazaridis loan, several of Mr. Lazaridis' brothers would be selling assets to pay back the loan to Mrs. Steed. In addition, Mrs. Pearson was advised by the Solicitor that Mr. Lazaridis had a large valuable home in Rosedale which has been listed for sale. The Solicitor advised Mrs. Pearson he expected Mrs. Steed would be repaid within one to two months, from the proceeds of the sale.

Under cover of letter dated January 12, 1993, a copy of which is attached as Exhibit 62 to this agreed statement of facts, the Solicitor provided Margaret Pearson with an appraisal report prepared for the Royal Bank of Canada respecting the Davenport Road properties. The Report estimated the market value of the properties to be $1,650,000.00. The appraisal was conditional upon the use of the property for its highest and best use that being a five-storey apartment building approved by the City of Toronto in July, 1991.

The Solicitor provided Mrs. Pearson and Mrs. Steed with a letter dated March 29, 1993 from Saddlebrook Construction Inc. Under cover of a letter dated April 3, 1993, the letter included estimates of development schedule for the property.A copy of the Saddlebrook March 29, 1993 letter is attached as Exhibit 63 to this agreed statement of facts.

The Solicitor advised Mrs. Steed that the Parkhurst Boulevard property had been listed for sale by letter dated June 10, 1993.

There is an existing first mortgage on two of the lots of 2019-2035 Davenport Road in the amount of $455,000 in favour of Security Trust Company which was registered on May 30, 1990.

The entire amount of the Reid/Dhamalie advance is still outstanding.

The following paragraphs from one of the agreed statements of fact that the Panel received in evidence are also relevant to this particular in the Complaints (among others):

Pan American Holdings Limited is an Ontario corporation controlled by Howard F. Finlason, the Solicitor's cousin. Pan American is in the business of real estate development and construction. Although the Solicitor has advised he has no financial interest in Pan American, he is a director and officer of that corporation as evidenced by the corporation's last Form 1 filing made on July 19, 1989.

During the period September 1982 to present, the Solicitor's son-in-law, Vlado Dresar, had been president of the corporation.

Beginning as early as 1984, the Solicitor shared an office address and telephone number with Pan American Holdings Ltd. In January 1984, the Solicitor's letterhead indicated his address as Suite 1003, 111 Elizabeth Street, Toronto. The letterhead of Pan American Holdings Ltd. on or about that period of time shows the same address and telephone number as the Solicitor. Further, the letterhead of Pan American Holdings during the period 1989 through 1991 indicates the same address and telephone number, being 977-1850, as the Solicitor. It is understood that for about a year prior to the spring of 1992, Pan American rented a small office on the fifth floor at 111 Elizabeth Street, Toronto, directly from the landlord and although it was on the same floor as the Solicitor's office, it was not part of his office space. The Law Society's auditor's observations during his first attendance at the Solicitor's office in the fall of 1990 would confirm this. However, on the auditor's return visits, he noted that the name plate for Pan American had been placed outside the Solicitor's office door and further noted that the telephone on the Solicitor's desk had a button labelled "Pan American". Pan American did also have the telephone number 599-8884 in Toronto, and later its own telephone number in Brampton, 459-6132. This change in number is coincident with the Solicitor moving his office to Brampton. Pan American, from time to time, give Howard Finlason's home address as its office address. The Solicitor's explanation for the shared address and telephone number is that since Howard Finlason was not always in the office, and Pan American did not have a secretary, it was preferable to have mail delivered to an office where it would be dealt with in a timely way and telephone messages could be taken.

Howard Finlason is also President of W.H.F. Construction & Equipment Ltd., another of the Solicitor's clients. W.H.F. Construction was also involved in the Davenport Road project described below for certain aspects of construction. The Solicitor is named as both an officer and director of W.H.F. in both its Articles of Incorporation and its 1989 Form 1 filing. There have not been any subsequent Form 1 filings.

In 1989, Pan American became involved in a land assembly at 2019-2035 Davenport Road, Toronto on behalf of Reid/Dhamalie who were the owners of the property. Pan American helped to develop the property and had it rezoned. Pan American planned to construct a five story, fifty-five suite low cost apartment building on the property which they hoped would be purchased by City Home, a non-profit housing association for the City of Toronto. The project was, in fact, the subject of an Agreement of Purchase and Sale between Reid/Dhamalie and Finlason and the City of Toronto a copy of which, without schedules, is attached as Exhibit 1 to this agreed statement of facts. Also attached is a letter dated April 11, 1992 from City Home to Messrs.

Reid/Dhamalie/Finlason. Title to the properties at 2019-2035 Davenport Road are held variously in the names of Reid/Dhamalie/Finlason, not Pan American. 2019 Davenport Road was purchased in December 1984 for 67,000. 2021 and 2025 Davenport Road were purchased in October 1990 for 325,000. 2019 and 2021- 2025 Davenport road were encumbered with a first mortgage of 455,000 in favour of Security Trust and a second mortgage in the amount of 675,000 in favour of Jeanette Steed. The 2035 parcel is encumbered only by the same mortgage in the amount of $675,000 to Jeanette Steed as at December 8, 1992. Copies of the abstracts of title are attached collectively as Exhibit 2 to this agreed statement of facts.

As at September 30,1989,the financial statements of Pan American show loans payable of approximately 1.4 million dollars. Most of these funds are owed to clients of the Solicitor's law practice. Financial statements also revealed that the liabilities of the company exceeded its assets by approximately $600,000."

(a) Viva Voce Evidence

Jeanette Steed testified that though she was a registered nurse prior to her marriage in 1950, she did not work outside the home thereafter.

She testified that her former husband, a civil engineer by training, became very successful after forming a large construction company engaged in building roads and bridges.

Mrs. Steed explained that during her marriage her husband had primary responsibility for the family's financial affairs.

Mrs. Steed testified that she became a member of the Jehovah's Witness faith in 1971, and that she knew the Solicitor to be an Elder of the Church.

Mrs. Steed testified that she first met the Solicitor regarding her separation from her husband in 1985, but made only one visit to his office at that time. She added that she did not go back to see the Solicitor again concerning the breakdown of her marriage until April, 1989. She wanted to be represented by someone of the same religious faith, she testified. She also testified that she continued to have confidence in the Solicitor as of the conclusion of her divorce proceeding.

Mrs. Steed testified that when the matrimonial litigation was settled (on November 4,1991) she and the Solicitor met at the offices of Osler, Hoskin & Harcourt with two lawyers of that firm who were representing her husband.After that meeting she and the Solicitor went back to the Solicitor's office, she testified, and for about three-quarters of an hour discussed how the settlement funds would be invested. Only she and the Solicitor were present at this meeting.

Mrs. Steed testified that during this discussion they agreed that 200,000 from the Steed Trust and 200,000 from the balance of the settlement funds would be put into blue chip stocks with the firm Jones Gable & Co. (a firm recommended by the Solicitor); that 100,000 would be put in her bank account at the Toronto Dominion Bank; that 42,000 would be spent on a new Oldsmobile car; and that the balance of the funds would be invested in mortgages and real estate. She added that the Solicitor told her that he was knowledgable about mortgages and real estate, and that she said that she would like to invest money in mortgages, anywhere between 50,000 and 200,000 but no more than $200,000 in any one mortgage, whether it was a first or a second.

Mrs. Steed also testified (as set forth also in paragraph 114 of the agreed statement of facts, above) that she advised the Solicitor that prior to investing in mortgages she wished him to call her and advise her of the essential elements of the investment. "Not that I might wish to veto it," she testified, "but I wished to know where my money was."

The chart included in paragraph 115 of the agreed statement of facts discloses that the $675,000 allegedly misapplied by the Solicitor was advanced to the borrowers between January 7 and January 19, 1992. Mrs. Steed testified that between January and March, 1992 she had no face-to-face meetings with the Solicitor, but that she telephoned him during that period. She testified that "at the end of December, the end of January, end of February and end of March, I kept asking Mr. Mott-Trille each time for a breakdown of my account. I could not understand why he was not giving me a breakdown of my account because I knew I should be getting one. And I said to him I want you to tell me where my money is. He said: 'yes, you have every right to know where your money is. I will get around to it.'"

Mrs. Steed testified that toward the end of March she travelled with the Solicitor to Brantford because he wanted her to look at a medical clinic that was for sale. On the way, she testified, the Solicitor told her "about some small loans he had made for me. He said they are safe. You don't need to worry, they are safe."

Mrs. Steed testified that she did not want to invest in the medical clinic in Brantford, and indeed decided at that time that she did not want any more of her money to go into any project that the Solicitor might suggest. The Solicitor had not asked her for her authority to make the additional mortgage investments that he had referred to during the trip to Brantford, and by that point she was losing confidence in him and wanted not to have any more to do with him. However, she testified, she did not confront the Solicitor about the fact that he had made the investments he told her about without her authority because he said that they were small investments and that they were safe.

Mrs. Steed testified that not long after her trip with the Solicitor to Brantford, on April 9,1992,she wrote to the Solicitor.Her letter reads as follows:

"Dear Frank:

First of all, I wish to thank you for all that you have done for me over the last four years.

As I wish to live a quiet, peaceful life the next 10,20 or more years, I do not wish to be a money lender. Please do not negotiate any more first or second mortgages, and please do not renew any. As well, I do not wish to buy the medical clinic in Brantford. I do appreciate your thoughtfulness in considering me.

I do respect you and trust you implicitly. I do now wish to be in control of my own money.

I have a daughter and son-in-law who are bankers and from now on I shall ask their advice on my finances.

Please give me a breakdown of my account and please deposit the balance in my account #3300260 at Toronto-Dominion bank at Eglinton and Avenue Rd.

Looking forward to seeing you at Anne and Morrell's wedding.

Sincerely yours,

Mrs. Steed explained that at this point she was discussing everything with her daughter, Margaret Pearson, and was losing confidence in the Solicitor. "I wished to get rid of him and do it in a polite way. And I wanted to thank him for all that he had done ... and I said I respect you and trust you implicitly. Well, I wanted to be polite in getting rid of him."

Mrs. Steed testified that shortly thereafter she received a letter dated April 10, 1992 from the Solicitor reporting on a 315,000 loan from the Steed trust to Mrs. Steed's daughter Anne and her fiance Morrell Bacus. She testified that until her receipt of the Solicitor's April 10 letter she had received a report from the Solicitor about only one other loan, namely the January 2, 1992 loan to Steve and Fontini Lazaridis in the amount of 50,000. The Solicitor reported this loan to Mrs. Steed in a letter dated January 6, 1992. She testified that when she received the Solicitor's April 10, 1992 letter concerning the loan to her daughter and son-in-law to be she thought "how nice it was for him to send me this, why didn't he send me letters like this about the other loans he had made?"

Mrs. Steed testified that on June 15, 1992 she received a letter from the Solicitor dated June 11, 1992 in which the Solicitor informed her for the first time of the $675,000 loan to Reid/Dhamalie/Finlason, which was advanced in January 1992.

With this letter the Solicitor enclosed a trust cheque in the amount of$ 33,750, which represented the April and July 1992 quarterly payments on the mortgage, which bore interest at 10% annually.

Mrs. Steed testified that when she got this letter (and other reporting letters that the Solicitor sent to her at about the same time) and "saw that 675,000 of my money was invested on some Davenport property, I felt heartsick. 675,000 is a major portion of my settlement, the settlement from my husband. I had asked that no more than 200,000 be put in one loan. So I was heartsick to think that 675,000 had gone into this loan on this Davenport property."

Mrs. Steed testified that her daughter Margaret and she "drove around to see this property, and when we looked at it we were shocked. It's three small buildings, one is a double house, three little buildings, and so much money went to people."

Mrs. Steed testified that on June 19 she sent a letter to the Solicitor that her daughter Margaret Pearson had helped her to write.Her letter reads, in part, as follows:

"My next concern is with the Reid/Dhamalie/Finlason mortgage. Quite simply - who are they? , and what are the terms and conditions of the mortgage? I would appreciate being provided with the same documentation as you provided me with, re the Lazaridis mortgage. That is, a copy of the mortgage(s), a copy of the insurance policy(ies), and their financial statement(s). I cannot understand why you have not informed me of this rather large investment much earlier.

Frank, I really would appreciate an answer to my concerns, very quickly, as they weigh heavily on my mind ..."

Mrs. Steed testified that she and her daughter Margaret Pearson met with the Solicitor at his office several weeks later.In addition to discussing the Solicitor's account, Mrs. Steed testified, she asked who Reid/Dhamalie/Finlason were,and that the Solicitor replied that they were three Jamaicans and that Howard Finlason was his (the Solicitor's) cousin.She testified that the Solicitor added that Reid and Dhamalie had a delivery service and that they did delivery work for the Solicitor.

Mrs. Steed testified that on July 18, 1992 she sent a letter to the Solicitor in which she confirmed an agreement reached at the meeting in the Solicitor's office, that he would forward to her copies of the mortgage documents on the Reid/Dhamalie/Finlason loan, showing the repayment schedule and expiry dates. She added that "as you know Frank, it is my wish to have these investments paid back to me, as soon as possible, as I wish to be in control of my own monies; therefore, the sooner these deals are finalized, the better."

On July 30,1992 the Solicitor wrote to Mrs. Steed and enclosed copies of the mortgages in question,together with certain information concerning the interest rates and quarterly payments.

Mrs. Steed testified that several months later she sought the assistance of her Minister, Ed Zabinsky, and that she and Mr. Zabinsky met with the Solicitor in his office on April 29,1993. She testified that the Solicitor "said to me that he was sorry that he invested my money before he told me about it. He said this in front of my Minister,Mr. Ed Zabinsky,and also he said he was selling an apartment building that he had in Barrie and that at the end of May he would be able to pay me $200,000 towards the reduction of this Reid/Dhamalie/Finlason loan."

Mrs. Steed also testified that she asked the Solicitor to put this promise in writing but that he refused to do so.

Mrs. Steed testified that she offered the mortgage to the Solicitor, but that he said that he was unable financially to take it.

Mrs. Steed testified that the Solicitor never gave her the $200,000 that he promised her in the April 1993 meeting.

Mrs. Steed testified that in June 1993 she retained Lerner & Associates to commence a lawsuit against the Solicitor. She testified that the action was eventually settled. She added that she continues to hold mortgages on the Davenport properties, and that there is a receiver involved in the first mortgage. She testified that she recently had to pay taxes for two years in the amount of $15,000.

In cross-examination Mrs. Steed acknowledged that in her letters to the Solicitor she did not complain that the Solicitor had acted without her authorization in making the 675,000 loan. She also acknowledged that on her examination for discovery in the civil action that she brought against the Solicitor when she was asked about her meeting with the Solicitor at which the Solicitor's authority to invest on her behalf was discussed, she made no mention of there being a 200,000 limit on any single mortgage investment.

She also testified in cross-examination that as a result of the settlement of the law suit she received 225,000 in cash including 150,000 from the Solicitor's daughters and $75,000 from the Lawyers' Professional Indemnity Company.

Mrs. Steed's daughter, Margaret Pearson, was also called as a witness by counsel for the Law Society. Ms Pearson testified that she has a degree from the University of Waterloo, from which she graduated with a major in environmental studies and a minor in business. Upon graduation, she testified, she was hired by the Royal Bank where she was employed for sixteen years. Her responsibilities at the Royal Bank, she testified, included both personnel and finance. She testified that since 1989 she has been employed by her father's company as Vice-President of Finance, in which capacity she oversees investments in connection with her father, among other responsibilities.

Ms Pearson testified that in April 1992, after her mother went to Brantford to see a medical clinic with the Solicitor, her mother called on her for help because she was befuddled. She testified that she assisted her mother to write the letter dated June 19, 1992 that is quoted above. She testified that they inquired about the Reid/Dhamalie/Finlason mortgage because they had never heard of that mortgage before they received the Solicitor's letter of June 11, 1992, which is also referred to above.

Ed Zabinsky was also called as a witness by the Law Society's counsel. He testified that he is a Minister in the Jehovah's Witness' church, and has been in full time service with the Watch Tower Society for 32 years. He added that from 1981 to 1993 he was the Minister in Jeanette Steed's Kingdom Hall.

Mr. Zabinsky testified that on April 29,1993 at Mrs.Steed's request he attended a meeting with the Solicitor and Mrs. Steed at the Solicitor's office.

He testified that the meeting lasted approximately one hour, and that Mrs. Steed was very concerned as to the details of the 675,000 loan, and in getting the 675,000 back as soon as possible. He added that "she wanted to know why did he use the money without her knowledge because the agreement they had was that no investment was to be made until after she consented to it, after knowing all the details of the investment."

Mr. Zabinsky further testified that the Solicitor responded "I realize that I had to get your permission." Mr. Zabinsky also testified that the Solicitor "apologized several times during that conversation for not getting her permission to invest her money".

The Solicitor testified that after the settlement funds (1,357,000 together with a further 500,000 to create the Jeanette Steed Trust) were received into his trust account on November 4, 1991, Mrs. Steed asked if the Solicitor could help her invest the funds and he said that he would. He testified that he explained to her that he knew nothing about "stocks and shares", but knew something about real estate, and that he recommended an investment advisor to her. He testified that Mrs. Steed decided that she wanted 200,000 of her own private funds together with 200,000 from the Trust to be invested in "stocks and shares".

The Solicitor further testified that Mrs. Steed gave him instructions to invest in his discretion in mortgages and loans and also "to go and see what I could find in real estate." The arrangement agreed upon was that if there was something that the Solicitor felt was suitable in real estate, he would then bring her into it so she could inspect it, "but I had full discretion as to the loans and mortgages".

The Solicitor testified that at the time (January 1992) he thought that the $675,000 mortgage loan to Reid, Dhamalie and Finlason on the Davenport Road properties was a suitable investment. He explained that Dexter Reid and Quincy Dhamalie were clients of his who had established a successful delivery business. He further explained that Reid and Dhamalie had been approached by the City of Toronto Planning Department, which wanted to get rid of the non-conforming garage use in the residential area in which the properties were located. He added that City Home, which invested in non-profit, low-cost housing, was interested in the site to build low-cost condominiums.

The Solicitor explained that the property had been re-zoned by lawyers who specialized in that type of work. The re-zoning was conditional upon City Home also purchasing 2035 Davenport Road, which was owned by a Mr . or Mrs. Carnevalli. He testified that that property was valued by the Royal Bank appraisers at $265,000, and that was the property upon which Mrs. Steed ultimately held a first mortgage.

The Carnevalli property had been purchased by Messrs. Reid, Dhamalie and Finlason for 325,000,the Solicitor testified.The Solicitor explained the 60,000 premium above the Royal Bank appraisal on the basis that the combined evaluation of the three properties premised upon re-zoning was double the combined appraisal of the properties separately based upon the previous zoning.

When asked whether he had any discussion with Mrs. Steed about the investment before the $675,000 was advanced the Solicitor responded, "I can't say before, but at about the time, yes ...".

The Solicitor testified that Mrs. Steed had a first mortgage on 2035 Davenport, a house that was purchased for 325,000,and that her mortgage was in the amount of 675,000. On the adjoining property Mrs. Steed had a second mortgage, he testified, which was subject to a prior first mortgage in the amount of $450,000.

The Solicitor testified that at the time the 675,000 was advanced there was an outstanding agreement of purchase and sale between Reid, Dhamalie and Finlason as vendors and City Home as purchasers. He testified that the sale was scheduled to close on April 1, 1992 (within less than three months after the 675,000 mortgage loan). The purchase price was 1,430,000, and the vendors were also to be paid all the architectural, engineering, environmental and development costs they incurred, which were estimated to be in the range of 300,000-$400,000. The Solicitor testified that he thought that the investment was a very good investment because although it was a conditional contract, City Home wanted to make sure it got into the property on April 1 to begin construction.

The Solicitor testified that after Mrs. Steed's $675,000 mortgage was in place, the transaction did not close as scheduled because the Ministry of Housing was not given the funds by the Government of Ontario due to a moratorium affecting all low-cost housing. The Solicitor added that City Home "kept saying to us ... they had such a good position with the Government of Ontario that they felt confident that within three to six months they would still go ahead with the deal once the funding came". However, the Solicitor added, "when the three months or six months was up, the Government of Ontario had been plagued with a lot of complaints from all the low-cost housing people outside Metropolitan Toronto. So, at the next sitting Davenport nor anybody from Metropolitan Toronto had a chance. It was all spread around the Province of Ontario."

As a result, the Solicitor testified, Mrs. Steed's mortgage went into default. The Solicitor testified that thereafter Mrs. Steed engaged a lawyer and brought an action against him, which was settled on the basis that Mrs. Steed was paid $225,000 and "took over the property".

The Solicitor testified that the full discretion that he had to invest in mortgages was revoked only in April 1992 when Mrs. Steed wrote her letter dated April 9, 1992 in which she expected him not to negotiate any more first or second mortgages.

The Solicitor denied that Mrs. Steed had ever instructed him not to invest more than $200,000 in any single mortgage, and added that throughout his meetings with Mrs. Steed and on her examination for discovery in the civil proceeding she made no such suggestion. He agreed that she had instructed him that she did not want to invest in any mortgage with a term longer than two years.

The Solicitor testified that when he met with Mr. Zabinsky and Mrs. Steed on April 29,1993 he did not apologize for investing Mrs. Steed's money without her permission, though he did apologize to her because his investment had not worked out as he had foreseen. He emphasized that if the deal had closed on April 1,1992 there would have been absolutely no problem with the $675,000 mortgage,and that it was the Government's moratorium on funding for non-profit housing that killed the deal.

The Solicitor testified that though it is true that when he and Mrs. Steed went to Brantford he did not have the money in his trust account to invest in the medical clinic, he was still expecting the 675,000 to be repaid with interest the following month, and Mrs. Steed would have been investing only 300,000 in the medical clinic if she had authorized that investment.

The Solicitor also testified that Mrs. Steed never complained about the amount that the Solicitor had invested on her behalf in the Davenport Road project.

The Solicitor acknowledged that though he reported in writing on the $50,000 Lazaridis mortgage in January 1992, "unfortunately, I did not report at the same time in writing on Davenport." The Solicitor explained that this was because he thought the transaction was going to close at the end of March anyway.

In cross-examination the Solicitor testified that by September 1989 the liabilities of Pan American Holdings exceeded its assets by approximately $600,000, and that much if not all of Pan American's debt was owed to other clients of the Solicitor's firm. He also testified that a large portion of that money was owing because he had invested client money in a Pan American project in Holland's Landing.

The Solicitor further testified that he had also invested client money in the Davenport Road project apart from the Ramsbottom, Winters Estate, Antoniuk Estate and Steed funds.

The Solicitor acknowledged that he was concerned about the clients who had a lot of money in the Holland's Landing project when it failed. He testified that Pan American developed both the Holland's Landing and Davenport Road projects, and borrowed money from the Solicitor's clients to develop both. He acknowledged that he hoped that his clients would get the development costs back out of the sale on Davenport. The Solicitor testified that Reid and Dhamalie were never principals of Pan American, but rather that only Mr. Finlason was a principal of Pan American. The Solicitor added that he was himself a member of the development team on the Holland's Landing project, and that the original idea was that everybody who worked on that development would become shareholders of Pan American and donate a third of their fees, and not be paid until the project was sold.

Counsel for the Solicitor called Mark Guslits, an employee of the Daniels Group, to testify. Mr. Guslits testified that his first contact with the Solicitor concerning the Davenport Road project occurred in the summer of 1993. He testified that the Daniels Group expressed interest in the possibility of acquiring the property on behalf of a non-profit group.

Mr. Guslits testified that the potential development foundered for two reasons: first, Alderman Betty Disero was able to arrange for the zoning necessary to convert the property into multiple residential use to be revoked; and second, upon the election of the Conservative Government in Ontario the project was officially cancelled along with every other non-profit project in the Province on June 8, 1995.

The Solicitor's counsel also called David Molyneaux as a witness. Mr. Molyneaux is an architect. He testified that his firm had been instructed by Pan American to prepare documents and undertake discussions with City Home. He testified that as of January 1992 the Davenport Road development "was a promising project".

Mr. Molyneaux testified that he was told that his firm would be paid for its services out of the funds received on closing, which was expected to be in March or April of 1992. He later learned, however, that City Home was not going to complete the deal, presumably because the money was then not going to be available from the Ministry of Housing.

In cross-examination Mr. Molyneaux testified that his recollection was that it was close to the end of January 1992 when he was told that City Home would not be completing the project. He added that it was not presented to him as a fait accompli, though his assumption was that it might be a fait accompli because there was a great deal of "jitteryness" in the industry about the Ministry of Housing money at that particular time and from that time onwards.

The Panel is not satisfied on all the evidence that there was an agreement between Mrs. Steed and the Solicitor that the Solicitor's authority to invest in mortgages was limited to investing 200,000 in any single mortgage. The Panel accepts that as of early to mid-January 1992 when Mrs. Steed's 675,000 mortgage loan was advanced, the Solicitor had a reasonable expectation that the sale to City Home would be completed on April 1, 1992 and that if that occurred Mrs. Steed's mortgage would have been repaid with interest. Further, the Panel is not satisfied that at the April 1993 meeting that Mr. Zabinsky attended, the Solicitor apologized for not obtaining Mrs. Steed's instructions before advancing $675,000 of Mrs. Steed's money on the basis of mortgage security on the Davenport Road properties.

However, bearing in mind that the applicable standard of proof is that the Panel must be satisfied on cogent evidence of clear and convincing weight, the Panel is satisfied that before loaning money on the security of a mortgage on Mrs. Steed's behalf the Solicitor had a duty to communicate the amount and terms of the loan to Mrs. Steed. The Panel is also satisfied to the necessary degree of certainty on all the evidence that the Solicitor failed to do so.

The Solicitor acknowledged in paragraph 114 of the agreed statement of facts that Mrs. Steed advised him that prior to investing in mortgages she wished him to call her and advise her of the essential elements of the investment. Although it is clear both from the agreed statement of facts and from Mrs. Steed's evidence that she gave these instructions not because she anticipated having to veto any prospective investments but rather so that she would know the whereabouts of her funds, Mrs. Steed was nevertheless entitled to instruct the Solicitor not to carry through with a proposed mortgage investment if, after receiving the particulars of the investment, she was uncomfortable in doing so.

In the Panel's view, it is unlikely that Mrs. Steed would have required the Solicitor to inform her of any proposed purchase of real estate, without requiring similar information about any proposed mortgage loan - particularly if, as the Panel has found, no limitation was placed on the size of any such investments.

While it is true that Mrs. Steed was not a particularly sophisticated investor, there is little doubt that she was most interested in where her money was being invested.

Although the Committee is not satisfied that Mrs. Steed placed a 200,000 limit on individual mortgage investments, it accepts Mrs. Steed's evidence that she first learned of the 675,000 loan on June 15,1992,five months after the funds were advanced,and six weeks after the scheduled closing of the sale of the properties to City Home.

In the Panel's view nothing in her April 9,1992 letter is inconsistent with Mrs. Steed's evidence that, prior to that date, the Solicitor was authorized to invest in mortgage loans but only after informing her of the particulars.In her April 9,1992 letter Mrs. Steed terminated the Solicitor's authority to negotiate any mortgages for her portfolio.Her expression of trust in the Solicitor must be considered in the context of the fact that she did not learn of the $675,000 mortgage investment that the Panel finds was unauthorized until almost two months after her April 9,1992 letter.

The Panel was troubled not only by the Solicitor's failure to inform Mrs. Steed of the 675,000 investment before the funds were advanced, but also by the Solicitor's failure to inform her thereafter. It is apparent that the Solicitor reported in writing on both the Lazaridis mortgage, which was in the amount of 50,000, and on the loan to Mrs. Steed's daughter and prospective son-in-law, which was in the amount of 315,000, yet did not report on the 675,000 loan either in writing or (as the Panel has found) orally until June 11, 1992, approximately five months after the loan was advanced. The Panel accepts Mrs. Steed's evidence that during the trip to Brantford, though the Solicitor informed her "about some small loans he had made" and told her they were safe, he did not tell her that he had loaned 675,000 - a large portion of her funds - in the Davenport Road project. By the end of March, when the trip to Brantford took place, the Solicitor had known for some time that the City Home purchase would not be completed on April 1, and the Panel finds (in reliance in part upon Mr. Molyneaux's evidence) that it was at least doubtful that the necessary government funding to complete the transaction would be forthcoming. The inference the Panel draws from the Solicitor's failure to disclose the transaction to Mrs. Steed either before or for several months after the investment was made is that his decision to invest the 675,000 was influenced more by his desire to benefit the clients who had invested in the abortive Holland's Landing project than by a concern for the safety of Mrs. Steed's investment.

The Panel accordingly finds that Particular 2(a) of Complaint D246/93 has been established and that the Solicitor misapplied $675,000 of funds belonging to his client Jeanette Steed.

Particular 2(b) of Complaint D246/93 reads as follows:

"In the period November 4,1991 to December 30,1991,[the Solicitor] transferred $224,745.41 from his trust account to his general account representing fees and disbursements prior to the delivery of a fee billing as required by section 14(8)(c) of Regulation 708 under the Law Society Act.

As mentioned above, Mr. Mark conceded in argument that the Solicitor had transferred funds from his trust account to his general account for fees and disbursements before delivering a fee billing as required by section 14(8)(c) of Regulation 708 under the Law Society Asct.

The Solicitor testified that Mrs. Steed and he had agreed on what fees would be paid out of the money that was coming to her.The Solicitor understood the agreement to have been that $135,000 would be paid out of the funds in trust to him for fees.

The Solicitor added that Mrs. Steed had previously asked him to hold off on taking his fees until her matrimonial dispute was either settled or tried, and that he accommodated her for a period of six or seven months. He added that when the settlement cheques were received from Osler, Hoskin & Harcourt in November 1991 Mrs. Steed told him he should be sure to take his fees out promptly because she appreciated his holding off on billing previously. He testified that he made out the account for $135,000 plus disbursements and GST and transferred that money to his general account, but did not send the account to Mrs. Steed. "I made a mistake," he testified. "I should have sent it out then. But she knew about it."

The Solicitor further testified that towards the end of December 1991 he received a further $74,900 from Mrs. Steed's ex-husband's lawyers in Nova Scotia, and that he made out another account at that time and transferred the funds to his general account, again without sending the account to Mrs. Steed.

The Solicitor further testified that when Mrs. Steed's daughter Mrs. Pearson became involved she and Mrs. Steed questioned the amount that had been paid to the Solicitor for fees.The Solicitor explained the disagreement on the basis of a misunderstanding concerning whether the Solicitor would be entitled to keep party-and-party costs in addition to the agreed upon fee.As the difference was approximately 60,000,the Solicitor testified, he and Mrs. Steed and Ms Pearson agreed to "split the difference",and he rebated 30,000 together with $2,100 for GST to Mrs. Steed. He prepared and delivered an account corresponding to this compromise agreement at that time, in July 1992.

Based upon the Solicitor's evidence and his counsel's concession during argument, the Panel finds that Particular 2(b) is made out in that the Solicitor transferred $224,745.41 from his trust account to his general account for fees and disbursements prior to the delivery of the fee billing as required by Section 14(8)(c) of Regulation 708 under the Law Society Act.

Complaint D189/93 - Particular 2(a) - Alleged Misapplication of $35,000 From Ruth Ramsbottom

The Law Society alleges in paragraph 2(a) of Complaint D189/93 that:

"on or about May 21, 1992 [the Solicitor] misapplied $35,000 more or less, from his client Ruth Ramsbottom"

(b) Agreed Statement of Facts

In one of the agreed statements of fact that the Panel admitted into evidence, the parties agreed as follows:

The Solicitor was retained by Floyd Ramsbottom in connection with a motor vehicle accident which occurred in January 1985. Mr. Ramsbottom died suddenly of a heart attack on March 21, 1991 during his sleep. The Solicitor continued the action on behalf of his wife, Ruth.

Ruth Ramsbottom is 56 years of age.She has only a grade ten education.

Mr. and Mrs Ramsbottom met the Solicitor when he became a co owner of an apartment building at 114 Holland Street West, Bradford, Ontario, where the Ramsbottoms were the superintendents. During the course of their employment, the Ramsbottoms met the Solicitor on several occasions prior to their retainer of him to act in respect of the motor vehicle accident.

The Ramsbottom litigation settled on or about May 11, 1992. On May 21, 1992 the Solicitor deposited settlement funds of 167,482.71 into his mixed trust account. Of this amount 95,000 was disbursed to the firm of Osler, Hoskin & Harcourt to settle Go Transit's subrogated claim; and, 13,902.50 was taken by the Solicitor as fees. A further 239.91 was paid to Jeanette Steed as loan interest. This loan from Jeanette Steed was made on May 15, 1992 for the purpose of allowing the Solicitor to withdraw money for fees in the amount of 17,300.18 which he did on the same day, as evidenced by his client trust ledger attached as Exhibit 5 to this agreed statement of facts. The Solicitor took a further 11,902.60 on account of fees on May 21, 1992 and a further amount of $2,000 on June 2, 1992.

The Solicitor did not seek Mrs. Ramsbottom's authority to borrow the funds referenced in paragraph 5 above to pay his fees, nor did he ever advise either Mrs Steed or Mrs. Ramsbottom of his intention to do so.In fact the Solicitor has never told Mrs. Ramsbottom of the loan from Mrs. Steed.The Solicitor also admits that he did not send Mrs.Ramsbottom an account for the monies withdrawn as fees although the Law Society auditor did find an original account in the Solicitor's file during the course of his audit,a copy of which is attached as Exhibit 6 to this agreed statement of facts.

The Solicitor advised Mrs. Ramsbottom by telephone on the 8th day of May,1992 that the gross offer for her was 52,225.00 to settle her husband's litigation, that his fees in the matter would be approximately 12,000.00 and that would net her $40,000.00 or a little more, which terms she approved and authorized as evidenced by the Memorandum dated the 12th day of May,1992 as Exhibit 7 and confirmed by reporting letter dated the 13th day of May,1992,a copy of which is attached as Exhibit 8 to this agreed statement of facts.

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