Law Times

Page 4 OctOber 31, 2016 • Law times www.lawtimesnews.com Tribunal says wife handled legal files Lawyer must give up licence for misconduct BY ALEX ROBINSON Law Times T he Law Society of Up- per Canada has asked a Toronto lawyer to sur- render his licence after a tribunal found he had abdicat- ed responsibilities to his wife — leading to the misappropriation of $373,000 and the misapplica- tion of $530,000. The tribunal found that John Paul Dillon, who was called to the bar in 1976, had allegedly failed to supervise his law prac- tice from 1997 to 2013 and had given control of real estate files to his wife and law clerk, Rose- mary, who was not a lawyer. "The Lawyer's misconduct consisted of his total abdication of all financial responsibility for his practice and failure to edu- cate himself to the point where he could actively review and su- pervise RD's actions," Frederika Rotter, the chairwoman of the tribunal panel, wrote in the de- cision. The panel found that Dillon had given control over all ad- ministration, account activity and records, as well as real estate files and transactions, to his wife. He also gave her access to his electronic registration diskette — or Teranet key — for real es- tate transactions, the decision said. Dillon first came to the at- tention of the law society when he was spot-audited in 2012. He failed to provide records to the law society for review and, as a result, the regulator referred his case to its investigations wing the following year. The law society then received multiple complaints concerning a number of real estate transac- tions for which Dillon had been retained. One complaint against Dil- lon concerned two transactions a family friend had retained him on. When the family friend re- financed her home in 2012, the mortgage advance funds she was meant to receive, which went through Dillon's office, were misapplied to another transac- tion, the decision said. She did not receive the money she was owed until a month later with funds that were misapplied from another transaction. That same year, the fam- ily friend sold her home and re- tained Dillon to pay out the first mortgage, but she was later ad- vised by her bank that the pay- ment had been missed. The fam- ily friend then retained another lawyer and the title insurer paid out a discharge on the mortgage. Rosemary used the missing funds from that transaction in order to pay out another mort- gage transaction, as well as to pay out a bequest from the estate of a client who had died. In order to hide these transactions, she created a falsified client ledger, the decision said. Another complaint con- cerned Dillon's failure to pay the land transfer tax on the purchase of a property in Toronto. Dillon, who has not prac- ticed law since the investigation started in 2013, opened a home- based practice in 1996 after the firm for which he worked, Hold- en Day Wilson LLP, folded. He was a civil and commercial liti- gator, but he started a real estate practice in 1997. Rosemary exclusively dealt with the couple's finances, which were tight in the years after the practice opened. She also dealt with all the computer-related aspects of the practice, as Dillon was "computer illiterate." She had control over Dillon's bank accounts, including a trust account, and as such, prepared cheques, requisition letters and directions, which Dillon re- viewed and signed. When the real estate practice was started, Rosemary obtained a key for the Teranet electronic system on behalf of Dillon and proceeded to register transac- tions on it, according to the de- cision. Non-lawyers are not al- lowed to access the system and lawyers cannot give access to any third party. In an interview with an in- vestigator, Dillon's wife said the misuse of money started as a gradual thing. She admitted she used trust funds from clients' ac- counts to pay off money owed to other clients' accounts. When the law society con- ducted its investigation, there was approximately $373,000 missing from the trust account. She said she never let her hus- band know and that she shred- ded all letters from the law soci- ety, hiding their contents from Dillon because of health issues he suffered. As a result, Dillon was not even aware of the law society investigation into misappropri- ated funds until his lawyer told him just before his first inter- view with a law society investi- gator, according to the decision. In his own interview with investigators in 2013, Dillon de- nied any dishonesty on his part and said he was "blown away" when he learned there was such a shortage in the trust account. Dillon said he did not know what a Teranet key was and that he had never completed an electronic registration on the system. Dillon said Rosemary might have forged his signature on documents and described her actions as a "Ponzi scheme" in which she had stolen from him and his clients. He also said he would have called the police when he was alerted to what Rosemary had done in 2013 if she was not his wife. The couple sold their home in the fall of 2013 in order to try to repay outstanding deficiencies, and also separated. The tribunal determined that Dillon's conduct amounted to "an almost total abdication of professional responsibilities which goes to the core of the Lawyer's ability to practice." Counsel for the law society, Suzanne Jarvie, argued that Dil- lon's conduct was at the "very high end of seriousness in the spectrum of abdication," and that his licence should be out- right revoked. The tribunal, however, determined that Dil- lon should be allowed to surren- der his licence given the circum- stances. "The Lawyer is not dishonest. He was shocked and dismayed by what RD had done," wrote Rotter. When reached, Dillon's law- yer, Michael Figol, declined to comment on the decision. 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