Law Society of BC Receives “Mild Rebuke” from the BC Supreme Court

On judicial review, a sole practitioner lawyer is found not to have breached the Law Society of BC’s Rules pertaining to client identification verification.

Administrative law – Decisions reviewed – Law Societies – Judicial review – Natural justice – Procedural requirements and fairness – Standard of review – Reasonableness – Barristers and solicitors – Penalties

Samarakoone v. Law Society of British Columbia, [2025] B.C.J. No. 470, British Columbia Supreme Court, March 19, 2025, M. Tammen J.

Mr. Samarakoone, a lawyer, applied for judicial review of a decision of the Law Society of British Columbia (“LSBC”) imposing a $5000 administrative fine for a breach of the Law Society Rules pertaining to client identity verification (“CIV”).

The petitioner was a sole practitioner who underwent a LSBC audit which revealed, according to the LSBC, a failure of Mr. Samarakoone to verify the identity of a client who was not present in B.C., contrary to Law Society Rules 3-102 and 3-104. As part of its efforts to address money laundering, the LSBC enacted rules that require a lawyer who is providing legal services in respect of a financial transaction to confirm the identity of a client and to obtain information about the source of the money. Where the client is not present before the lawyer nor present in Canada, the Rules, as they then read, required that the lawyer retain an agent in the client’s jurisdiction to obtain the information pertaining to the client’s identity. An exception to these requirements, however, is found at Rule 3-101, where a lawyer receives money paid from the trust account of another interjurisdictional lawyer.

Mr. Samarakoone had obtained funds in his trust account for a client residing in Texas regarding the foreclosure of her former family home in Vancouver from another lawyer’s trust account. The LSBC found a breach of the CIV rules and imposed a $5000 fine. The LSBC did not invite submissions from Mr. Samarakoone at any stage during the investigation or penalty process.

On judicial review, the Court found that Mr. Samarakoone was not afforded procedural fairness because he was deprived of his right to be heard before the decision was rendered against him. Throughout the investigation, the LSBC did not alert Mr. Samarakoone of his right to make a submission about whether he breached the Rules, nor what penalty ought to be imposed.

The Court also found the LSBC decision to be unreasonable and based on a “fatal misapprehension of the evidence and an erroneous interpretation of the statutory framework” (para. 72). The LSBC failed to acknowledge or consider the fact that that the transaction was exempt from the CIV rules pursuant to Rule 3-101 since Mr. Samarakoone had received the funds from another lawyer’s trust account. The Court was “mystified’ how this “basic fact was completely overlooked or ignored throughout the proceedings” (para. 9).

The Court then considered whether the appropriate remedy would be to remit the matter back to the LSBC for reconsideration. When the Court alerted the parties to the fact that the exception in Rule 3-101 applied, the LSBC submitted that a different financial transaction in the audit may have violated the Rules and submitted that the matter should be remitted back to the LSBC. Justice Tammen declined to do so, finding that it would be the “height of unfairness” if he were to permit the LSBC to re-cast its case by focusing on a different financial transaction (para. 88). The Court found that this was one of the rare cases where it should substitute the appropriate finding because it was inevitable that Mr. Samarkoone would be found to have not breached the Rules.

Moreover, the Court awarded Mr. Samarkaoone $5000 in special costs, finding that the LSBC engaged in conduct that required a judicial rebuke in the form of a costs award.

This case was digested by Rachel Wood of Harper Grey LLP and first published in the LexisNexis® Harper Grey Administrative Law Netletter and the Harper Grey Administrative Law Newsletter.  If you would like to discuss this case further, please feel free to contact her directly at [email protected].