LAW SOCIETY TRIBUNAL
HEARING DIVISION
Tribunal File No.: 25H-189
BETWEEN:
Law Society of Ontario
Applicant
- and -
Susan Teresa McGrath
Respondent
Before: Lubomir Poliacik (chair), Sophie Martel, John F. Spekkens
Heard: January 30, 2026, by videoconference
Appearances:
Alexa Ferguson, for the applicant
Wayne Cunningham, for the respondent
Summary:
McGRATH – Interlocutory Suspension – The Lawyer did not oppose the motion – The evidence showed reasonable grounds to believe at least $555,355 was missing from the Lawyer’s trust account and that fraudulent activity had been occurring in her accounts – The panel found there were reasonable grounds to believe there is a serious risk of potential harm to members of the public and to the public interest in the administration of justice and the Lawyer’s licence was suspended on an interlocutory basis.
REASONS FOR DECISION ON A MOTION FOR INTERLOCUTORY SUSPENSION
1Lubomir Poliacik (for the panel):– The Law Society brought a motion for an interlocutory suspension of the licence of Susan Teresa McGrath.
2The motion was not opposed.
3Having reviewed the materials filed by the Law Society and having heard the submissions of the parties, we ordered the interlocutory suspension of Ms. McGrath’s licence, effective immediately, with reasons to follow. These are those reasons.
THE EVIDENCE
4The following summary of the evidence is based on the facts contained in the affidavit of the Law Society’s forensic auditor, Aurora He. Ms. He was not cross-examined. Ms. McGrath did not submit any evidence at the hearing of this motion.
5Ms. McGrath has practised as a sole practitioner in Iroquois Falls, a small northern Ontario community, for approximately 44 years. She has no discipline record.
6On October 9, 2025, the Law Society received a complaint from a beneficiary of an estate for which Ms. McGrath was retained. The allegation is that an interim distribution of $200,000 had not been paid, and Ms. McGrath had advised the beneficiary that her trust account had been compromised and contained insufficient funds to make the payment.
7In a subsequent interview with the Law Society investigator, Ms. McGrath confirmed the information provided by the beneficiary and reported that numerous fraudulent transactions occurred in her trust account from April to September 2025, totalling approximately $555,355 in missing funds. Ms. McGrath advised that she believed her identity had been stolen after providing credentials to someone posing as RBC fraud staff in 2024.
8Ms. McGrath closed and reopened her trust accounts and implemented additional banking safeguards, but the losses continued. She admitted having used familiar passwords despite advice to strengthen them.
9Ms. McGrath disclosed in the interview that her trust reconciliations were not up to date.
10Ms. McGrath was unable to replenish the trust account either personally or through financing. She advised the investigator that she has not filed income tax returns for several years.
11At the time of the interview with the Law Society investigator, Ms. McGrath had not reported the trust account issues to LawPRO. She did so subsequently, but there is no evidence that Ms. McGrath has reported the matter to the police.
12On November 7, 2025, Ms. McGrath provided various banking and trust records to the Law Society. The investigator found the records were incomplete, disorganized, internally inconsistent, and did not reconcile. The records produced remain fragmented and are insufficient to permit a clear understanding of the trust account activity. The investigator also indicated that several requested documents remain outstanding.
13At the Law Society’s request, on November 26, 2025, Ms. McGrath agreed to cease using her trust account.
THE TEST FOR AN INTERLOCUTORY SUSPENSION
14Section 49.27 of the Law Society Act, LSO 1990, c. L.8, authorizes the Hearing Division to make an interlocutory order suspending or restricting a licensee’s licence:
49.27 (1) The Hearing Division may make an interlocutory order authorized by the rules of practice and procedure, subject to subsection (2).
(2) The Hearing Division may only make an interlocutory order suspending a licensee’s licence or restricting the manner in which a licensee may practise law or provide legal services if there are reasonable grounds for believing that there is a significant risk of harm to members of the public, or to the public interest in the administration of justice, if the order is not made.
15Two questions must be addressed when considering whether to make an interlocutory suspension or restriction order:
Are the conditions under s 49.27(2) met?
If so, should the panel make the proposed order? This includes a consideration of whether less restrictive measures would adequately protect the public interest.
16The first question is whether there are reasonable grounds for believing that there is a significant risk of harm to members of the public, or the public interest in the administration of justice if the order is not made.
17The second question is whether an interlocutory order should be made and, if so, which order should be made. If the s 49.27(2) threshold is not met, an interlocutory suspension or restriction order cannot be made. But if the threshold is met, s 49.27 does not require that an order be made even though meeting the threshold is a very important factor. Moreover, if a less restrictive order would adequately protect the public, the less restrictive order should be made.1
18The Law Society is not required to prove Ms. McGrath engaged in professional misconduct. This is left to be determined by a future panel of the Hearing Division in the conduct application.
19In Ejidike, the panel addressed the degree of risk and harm that has to be established before an order can be made:
55To summarize, s. 49.27(2) requires that there be reasonable grounds to believe that there is a serious risk of potential harm to members of the public or to the public interest in the administration of justice. The existence of a serious risk of potential harm need not be demonstrated on the balance of probabilities. The degree of risk need not be very likely or even probable. The potential harm need not be substantial although it must be to members of the public or the public interest.
56Other panels have rightly noted in their reasons that s. 49.27(2) does not set a high bar.
Significant risk of harm to the public
20The evidence shows reasonable grounds to believe that there is at least $555,355 missing from Ms. McGrath’s trust account. The precise amount has not yet been ascertained because Ms. McGrath has not reconciled her trust account since 2021.
21The trust account shortages are not the result of an isolated incident, but rather appear to have taken place over a period of years. There is evidence from the bank staff that fraudulent activity had been occurring in Ms. McGrath’s accounts for three years. This is inconsistent with the Annual Reports Ms. McGrath filed with the Law Society for 2022–2024, in which she did not declare any trust irregularities.
22The bank’s records show that Ms. McGrath expressly approved at least one of the wire transfers that she now asserts were fraudulent.
23We find that the evidence provides reasonable grounds to believe that allowing Ms. McGrath to continue to practise law would pose a serious risk of potential harm to members of the public and to the public interest in the administration of justice.
24There is credible and compelling evidence that Ms. McGrath misappropriated, or at least misapplied and mishandled trust funds. If the factual allegations against Ms. McGrath presented in this motion hearing are established, they would render her liable to a substantial penalty, including a lengthy suspension or loss of licence.
25We conclude that an order suspending Ms. McGrath’s licence is the only means by which the risk to the public and to the administration of justice can be reduced.
ORDER
26For these reasons we made the following order:
Commencing immediately, the respondent’s licence is suspended on an interlocutory basis.
The respondent shall comply fully with the terms of the Law Society’s Guidelines for Lawyers Who Are Suspended or Who Have Given an Undertaking Not to Practise while suspended pursuant to this order.
The costs of this motion are reserved to the panel presiding at the hearing of any application to which the motion relates.
Footnotes
- This summary of the applicable test is adapted from Law Society of Upper Canada v Ejidike, 2016 ONLSTH 69 at paras 8-12.