Supreme Court won’t hear Merchant Law Group’s appeal to keep residential school settlement money

Canada’s highest court has denied a bid by Regina- based Merchant Law Group (MLG) Thursday declining to hear an appeal in a case where more than $20,000 of a residential school survivor’s compensation was retained by the firm to settle outstanding legal bills.

Survivor J.S was awarded $93,000 Jan. 2014 under the Indian Residential Schools Settlement Agreement’s (IRSSA) Independent Assessment Process (IAP).

MLG had, since 2000, acted for the woman and her son in both their IAP claims and in other unrelated legal matters.

When the firm received the IAP compensation money for J.S. in trust, they raised the possibility of legal action if she failed to instruct the firm to withhold $21,310.83 to pay for the previously incurred legal bills.

During the routine fee review conducted on each IAP file, the adjudication secretariat took note of the deduction for the previous legal bills and MLG was told to pay that money back.

A 2006 Supreme Court of British Columbia decision, Article 18 of the IRSSA and the Financial Administration Act, all prohibit assignments. Because IAP claimants were considered especially vulnerable lawyers were expressly forbidden to assign any part of IAP compensation.

MLG believed it could make an argument that this case was an exception to that prohibition.

MLG filed a request for direction in October 2014 to retain part of the award to settle the debts. A B.C. court denied the request in 2016 and the law firm ordered to repay the money to J.S.

Read the B.C. decision here: MLG

The court found the assignment was “impermissible” and ruled the firm was “not entitled to retain the funds.” MLG was ordered to return the cash to J.S with interest.

With Thursday’s ruling that it won’t hear MLG’s appeal of that B.C. court decision. The case comes to an end.

When contacted, Tony Merchant of MLG declined to comment.

IAP Chief Adjudicator “pleased” with decision.

“I am pleased that the SCC has allowed the decision of the BC Court of Appeal to stand,” wrote Dan Shapiro, the Chief Adjudicator of the IAP in an emailed statement.

“The lower Court decision affirms that compensation awarded to claimants under the IAP cannot be assigned, as this would deny claimants the benefits to which they are entitled under the Settlement Agreement.”

He added that the Court’s decision is consistent with case law, IAP decisions and “special clauses in our adjudicators’ fee rulings.”

Shapiro provided direction to lawyers representing IAP clients in this document.

He added that the decision ensures all compensation paid under the IAP will reach claimants apart from approved legal fees and taxes.