In a recent decision of the Supreme Court of British Columbia, Samarakoone v. The Law Society of British Columbia, 2025 BCSC 492, the Court took the rare step of awarding special costs against the Law Society of British Columbia (the LSBC) in a judicial review of an investigation and disciplinary action against a member. Additionally, instead of remitting the matter back to the LSBC for reconsideration, the Court issued a declaration that the member did not breach the Law Society Rules in question. While an award of special costs is unusual, it is particularly rare for such an award to be made against a professional regulatory body.
Case overview
The petitioner, Priyan Samarakoone, is a sole practitioner who underwent an audit by the LSBC’s Trust Assurance Department from July to October, 2022. During the course of the audit, the LSBC became concerned with alleged non-compliance of client identification and verification requirements under two Law Society Rules, Rules 3-102 and 3-104. Both alleged breaches arose from the same financial transaction on June 10, 2020, where Mr. Samarakoone, received funds as part of a settlement from a foreclosure proceeding.
Following the completion of the trust audit, the LSBC commenced an investigation into Mr. Samarakoone’s conduct. Letters and requests for information and documents were exchanged between Mr. Samarakoone and LSBC investigators. As part of this inquiry process, Mr. Samarakoone provided key information, including that the source of the funds deposited into his trust account was the trust account of another Vancouver law firm.
Following the investigation, Mr. Samarakoone received correspondence from the Deputy Chief Legal Officer of the LSBC advising him of the LSBC’s assessment of the matter. The letter advised that Mr. Samarkoone had breached the Law Society Rules by failing to have an agreement or arrangement in writing with an agent for the purpose of verifying the client’s identity, as required by Rule 3-104. This correspondence further noted that the matter had been referred to the Executive Director for consideration of an administrative penalty, if satisfied on a balance of probabilities that there had been a breach. As aptly noted by the Court, during both the investigative correspondence and penalty correspondence, at no time was Mr. Samarakoone provided with an opportunity to present submissions on why an administrative penalty should not be assessed.
Following this, Mr. Samarakoone received a Notice of Penalty from the LSBC, advising that the Executive Director had assessed an administrative penalty of CA$5,000. Mr. Samarakoone subsequently appealed to the Discipline Committee of the LSBC, which confirmed the decision of the Executive Director. In making this finding, the Discipline Committee did not reference the exemption created by Rule 3-101, which creates an exemption to the client identification and verification requirements under Rules 3-102 and 3-104, when funds are received from another lawyer’s trust account.
The Court reviewed the matter on a standard of reasonableness, considering both the outcome of the decision and the reasoning process that led to it. This included an assessment of whether the administrative penalty process was procedurally fair and whether the decision itself was reasonable.
On the issue of procedural fairness, the Court took significant issue with the LSBC’s failure to provide any opportunity, during the investigation and prior to the determination of the administrative penalty, for Mr. Samarakoone to make submissions on whether a penalty should be imposed. While the LSBC submitted that this could have been done after the Notice of Penalty had been issued, the Court rejected this proposition, stating: “such an opportunity, after the critical question had already been decided against the petitioner, would not comply with the basic requirements of procedural fairness.”[1] This failure to provide an opportunity for submissions on the central issues in question amounted to a breach of procedural fairness that would normally be remedied by referral of the matter back to the LSBC. However, in light of the Court’s findings on reasonableness, it elected not to remit the matter.
In considering the reasonableness of the decision, the Court found that that the decision was “clearly unreasonable” based on “a fatal misapprehension of the evidence and an erroneous interpretation of the statutory framework.”[2] The transaction, which formed the basis for the LSBC’s findings of a breach of Rules 3-102 and 3-104, was clearly exempt under Rule 3-101, which created an exemption for funds received by way of another lawyer’s trust account. By the second day of the hearing, the LSBC’s own counsel admitted that the June 10, 2020 transaction was exempt from the client identification and verification rules. However, the LSBC subsequently argued that Mr. Samarakoone’s own statements in the course of the investigation amounted to admission of a breach and that a second transaction where Mr. Samarakoone released the funds to his client should be treated as a breach. These submissions were rejected by the Court.
Regarding the remedy, the Court noted that given the circumstances of the findings and the clear exemption under the Law Society Rules, remitting the case back to the LSBC would serve no useful purpose. The Court instead declared that Mr. Samarakoone did not breach the Law Society Rules in respect of the June 10, 2020 transaction.
In making a determination on costs, the Court noted that as a general rule, costs are not awarded against a tribunal even if a petitioner is successful. However, the Court noted that “the entire investigation and subsequent finding of a breach of the Rules was based on a fundamentally flawed premise” with the LSBC having “ignored its own statutory provisions concerning exempt transactions.”[3] The Court also noted that after the LSBC’s own counsel’s admission that the transaction was exempt, counsel sought to defend the decision under review on the basis of admissions by Mr. Samarakoone and a different financial transaction. This continuation of the LSBC’s position that the petition should be dismissed, even after acknowledgement of the mistake, was found to warrant “at least mild judicial rebuke in the form of a costs award.”[4] To that end, special costs were awarded against the LSBC to Mr. Samarakoone in the amount of CA$5,000.00.
Key takeaways
A key takeaway from this decision is the Court’s concerns regarding the process undertaken by the LSBC. Professionals under investigation should be aware of the process, applicable rules and procedures, especially in relation to possible investigative inquires and the ability to respond to allegations. Counsel experienced in defence of professional regulatory investigations can assist professionals throughout this process to ensure that they are aware of their procedural rights throughout an investigation and disciplinary proceeding.
Furthermore, professionals under investigation and throughout a disciplinary proceeding should take care with respect to any statements that may later be construed as possible admissions. As seen in this case, despite the clear exemption that applied, the LSBC later attempted to use Mr. Samarakoone’s own statements to have his petition for review dismissed.
Dentons’ Litigation and Dispute Resolution group has expertise assisting professionals with regulatory investigations and disciplinary proceedings. If you have questions about this case or require assistance with your professional regulator, please contact the authors, Morgan Camley or Ryan Bernard.
[1] Samarakoone v. The Law Society of British Columbia, 2025 BCSC 492 at para 69.
[2] Samarakoone v. The Law Society of British Columbia, 2025 BCSC 492 at para 72.
[3] Samarakoone v. The Law Society of British Columbia, 2025 BCSC 492 at para 92.
[4] Samarakoone v. The Law Society of British Columbia, 2025 BCSC 492 at para 95.
