The Saskatchewan Court of Appeals has reversed a decision from the Law Society of Saskatchewan that would have temporarily suspended a high-profile lawyer.
In October 2020, the law society gave Tony Merchant an eight-month suspension after he sent a letter pressuring a residential school survivor to use her settlement money to pay unrelated legal bills.
The suspension has now been stayed by the court after Merchant appealed the decision.
In the original decision, the society called the letter from Merchant "threatening" and chastised him for withholding more than $21,000 from the woman's settlement payment. The money was used to pay for outstanding legal bills to the firm that were not related to the settlement.
The complaint against Merchant was brought forward by the chief adjudicator of the Independent Assessment Process, who believed Merchant had broken the rules around residential school payments.
However, the appeals court disagreed with the society's ruling and overturned it in a decision released last week.
The panel of three judges ruled that the law society made a mistake in disciplining Merchant.
"The Hearing Committee erred in finding Mr. Merchant guilty of conduct unbecoming of a lawyer," read the decision.
"It misapprehended the law by concluding that directions to pay are assignments."
In the original decision, the law society found that Merchant's letter to the woman amounted to an "assignment" to pay the bill, which is forbidden under the residential school payment system. An assignment is when property is transferred from one person to another.
Conversely, Merchant argued that the letter was only a direction to pay the bill. The appeals court agreed with Merchant.
Merchant also argued that he honestly believed the letter was not breaking the rules of the agreement, which the judges also believed.
Merchant Law Group fought efforts to have the firm return the $21,310 to the woman, but the British Columbia Superior Court ruled that the money was "impermissibly withheld" and directed the firm to pay the money back with interest. Merchant applied to appeal to the Supreme Court of Canada but was denied.
The Merchant Law Group led the class action lawsuit against the federal government that led to compensation for residential school survivors in 2005.
The appeals court judges ruled that Merchant would be able to apply for costs of the appeal from the law society.