A couple who lost $3.6 million lawyer Javad Heydary disappeared are entitled to garnishment from his liability insurance policy — but will have to renounce any claims against three lawyers formerly employed by him, the Court of Appeal for Ontario ruled yesterday. They will get well under the $3.6 million they lost.
In November 2013, Heydary disappeared after claims were filed by Hasan and Samira Abuzour, a Mississauga couple, for $3.6 million he had been holding in trust for them. Heydary was later declared dead. Soon after his disappearance, the Abuzours successfully obtained two court orders requiring the payment of the funds from the trust account held by Heydary’s company, Heydary Hamilton. But the money was not forthcoming, and Heydary and Heydary Hamilton were found in contempt of court.
In March, 2014, the Abuzour’s lawyer sent a demand letter to three lawyers formerly employed by Heydary — Jeff Landmann, Darren Smith, and Yan Wang — threatening to sue them “unless a resolution is reached” regarding the missing funds.
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Last October, Superior Court Justice Michael Penny awarded the sum remaining in Heydary’s $1-million coverage under LawPRO’s innocent-party insurance to the Abuzours. According to the terms of the policy, LawPRO is entitled to use some of the money to investigate and defend claims that might arise against a lawyer ensured by it.
The three lawyers then filed a motion to set aside or vary the order, arguing the payout would leave them without coverage in case the Abuzours sued them.
But in February, Penny ruled against the motion.
The lawyers appealed the decision, and in April LawPRO successfully obtained an order to stay the garnishment order pending a decision in the lawyers’ appeal.
In yesterday’s ruling, the three-member Court of Appeal panel ruled to allow the appeal and vary the motion judge’s order, adding a requirement that the Abuzours “should provide a release as a condition of the payment to them of the garnished insurance policy limits.”
Explaining the panel’s decision, the ruling states: “This situation is unusual in that the initial orders for payment out of the Heydary Hamilton trust accounts were not based on negligence, omissions, errors or fraud covered by the policy. It is the failure to comply with these orders which arguably gives rise to an insured loss.”
But the most important factor in the panel’s decision, the ruling states, is that, despite their refusal to release the lawyers from future claims against them for the missing money, the Abuzours were unable to provide any grounds for a possible lawsuit against them.
“The respondents at oral argument were unable to articulate any basis upon which the respondents might advance a claim against the appellants relating to the money which has vanished,” wrote Justice Gladys Pardu for the panel.
“I am left with the impression that the respondents’ refusal to execute a release in favour of the appellants is a tactical one, designed to extract funds from innocent parties who do not have the means to defend themselves. The losses suffered by the respondents must be devastating, but there is no basis shown to visit Heydary’s misconduct on the appellants.”
Commenting on the decision, Brian Radnoff, counsel for the three lawyers, says, “My clients, who were also innocent victims of Mr. Heydary, are pleased they will not lose their insurance coverage for a claim that was asserted against them.”
The Abuzour’s lawyer could not be reached for comment.
