Monday, 02 December 2013 08:01 | Written By Yamri Taddese Javad Heydary
A lawyer affiliated with the Heydary brand of law firms says he’s “very upset and disappointed” after the Law Society of Upper Canada took control of business activities at the firms last month.
The move came after Heydary Hamilton Professional Corp. failed to respond to a judge’s order for the return of $3.6 million held in trust for clients. Mark Hayes of Heydary Hayes Professional Corp., says he was “certainly surprised . . . very upset and disappointed. It was a great shock for everyone.” His firm is a separate entity from Heydary Hamilton.
On Nov. 26, Superior Court Justice Julie Thorburn made an ex parte order to strip the Heydary law firms of their control and possession of all “practice-related materials or client property of any kind whatsoever.”
The order also allowed the law society to enter the Heydary offices during business hours to search and to take possession of documents including client files, trust
funds, corporate records, and electronic data. The judge gave the LSUC wide discretion to do what it sees fit at the law firms, including winding down their businesses. The order comes after Heydary Hamilton chairman and
managing director Javad Heydary and his directors didn’t respond to an earlier endorsement asking them to return funds held in trust for former clients Samira and Hasan Abuzour.
The $3.6 million in question is part of a settlement owing to the couple after Heydary Hamilton represented them in a commercial dispute. The Abuzours received the first two instalments of their $5.1-million settlement, their lawyer Ray Thapar says, but the third and last payment of $3.6 million never made it to them. The $3.6 million has been in the Heydary Hamilton trust account since April 2013, according to Thorburn’s Nov. 14 endorsement on the return of the funds. None of the allegations have been proven in court.
Of the $3.6 million, $1.5 million was in 24 separate bank drafts, says Thapar, head of commercial litigation at Simmons da Silva + Sinton LLP and counsel for the couple in their action against Heydary. Thapar notes Heydary was “suspicious of the nature and legitimacy of the drafts” and suggested his suspicion was the cause for the delay.
“I would say my client has made about 11 requests for his money,” says Thapar. “The law firm first took the position that, ‘Look, we need to allow the draft to clear before we release the funds,’” he adds. “But you and I do banking all the time. These are not cheques; they’re bank drafts. How long does that take to clear?”
On Nov. 14, Thorburn issued a consent order asking Heydary Hamilton to at least release the $2.1 million that wasn’t in bank drafts to the clients by 5 p.m. the next day. That hour came and went. But the money never arrived, according to Thapar, who says Heydary left the country that same evening.
In an endorsement on Nov. 20, Thorburn said it was “clear” that Heydary was aware of the order when he left town. “I am advised that Mr. Heydary left for Dubai and then Iran on the evening of Friday, November 15th, after my November 14th order was to have been complied with and trust funds transferred to the applicants,” wrote Thorburn. “It is clear that Mr. Heydary was aware of my November 14th order.”
Heydary’s departure came as a surprise to Hayes, who notes he’s “as in the dark as you are about what exactly happened and where Heydary has gone.”
Counsel for another Heydary Hamilton lawyer, Darren Smith, confirmed Smith had received the order and sent it to Heydary, the judge said, noting Heydary had said he “would be dealing with the matter himself.”
When a lawyer who works with Heydary called the firm’s bank regarding the $2.1 million, she was told “no trust funds belonging to the Abuzours was there,” according to Thapar.
According to Thorburn’s endorsement, the lawyer who called the bank was also told Heydary is the only person who has the authority to withdraw those funds.
The endorsement also says Heydary’s counsel, David Shiller, made numerous attempts to contact his client to no avail. Thorburn gave Shiller permission to remove himself as counsel of record if he wishes.
Shiller didn’t respond to a request for comment. Law Times couldn’t reach Heydary either.
Thapar’s clients are bringing a contempt application against Heydary Hamilton and its directors for breach of Thorburn’s Nov. 14 order. “Heydary PC’s counsel refused to provide the court with any explanation or circumstances as to why Heydary PC failed to comply with the November 14 order, despite repeated requests from Justice Thorburn for an explanation,” the applicant’s factum states.
“Justice Thorburn provided Heydary PC’s counsel an opportunity to speak to its client to find out why the November 14 order had not been complied with. Heydary PC’s counsel refused to disclose or provide the court with any explanation and stated that it cannot provide an explanation as its obligation was to protect Heydary PC.”
The contempt hearing was adjourned to Nov. 29 when all parties, including the law society, were to appear before the judge to seek any necessary changes to the ex parte order. As for Hayes, he expects the law society will allow him to transfer client files to a separate law firm, Hayes eLaw LLP.
The developments follow a Law Times story on Nov. 11 in which Heydary Hamilton touted a new model of affiliated boutique law firms. The Heydary law firms, all of which are separate legal entities from Heydary Hamilton, include Heydary Hayes, Heydary Green Professional Corp., Heydary Elliott Professional Corp., and Heydary Samuel Professional Corp.
“Heydary Green PC is a separate law firm that is carrying on business as usual,” said Michael Cochrane of Heydary Green. “We are serving our clients. The issues currently being reported are confined to Heydary Hamilton.”
Update, Dec. 2: On Friday, Thorburn found Heydary in contempt of court. The court has yet to determine the sentence.