Tribunal : Law Society of Ontario Failed in its Duty to Accommodate Lawyer

In a recent decision of the Law Society Tribunal (“Tribunal”),-  Law Society of Ontario v. Burtt, 2018 ONLSTH 63 - panelist Larry Banack dismissed an application by the Law Society of Ontario (“LSO”) seeking a finding that one of its lawyer  licensees had committed professional misconduct.  Mr. Banack found that the lawyer’s alleged misconduct, i.e. his failure to cooperate with a Law Society investigation was the direct result of a disability and that the Law Society had not discharged its legal obligation to accommodate the lawyer’s disability to the point of undue hardship.

Interestingly, despite evidence that many lawyers who are the subjects of LSO’s disciplinary proceedings are suffering from a mental illness such as depression which can amount to a disability under the Ontario Human Rights Code (the “Code”), Mr. Banack found that the circumstances of this case were “highly unusual”.  His findings were largely based on the particular facts of the case, i.e. that the LSO knew that the lawyer was suffering from a disability that resulted in him “freezing” and therefore was unable to provide a written response to the LSO’s request for communication.

In this case, Mr. Burtt admitted that he had not responded in writing to the LSO.  However, Mr. Burtt asserted that he was not capable of providing written responses, as demanded by the LSO, by reason of a documented disability that caused him to “freeze” when confronted with the investigation.  The defence that was asserted by Mr. Burtt resulted from a previous discipline proceeding in 2015.  As a result of that proceeding, the LSO with the consent of Mr. Burtt, commissioned and received two psychological reports.  Those reports were contained in the LSO’s file and both reports concluded that Mr. Burtt was suffering from a psychological condition which negatively affected his ability to respond to the LSO within specified time frames. 

In the previous matter, Mr. Burtt had been reprimanded and ordered to comply with a psychiatric treatment plan which remained in effect up until the date of the hearing before Mr. Banack.  In making his finding against the LSO, Mr. Banack relied on testimony from an LSO investigator that not only had he not read the two psychological reports that were contained in the LSO’s file but had only learned of them on the morning of the hearing. 

The Code prohibits discrimination with respect to membership in a trade or occupational association on specified grounds, one of which is disability.  In a previous case – Law Society of Upper Canada v. Czernik (2010 ONLSHP 122) – the Tribunal held that:  “The Law Society and the Tribunal are subject to the Code and must apply the duty to accommodate where there is a proven disability at play.  A failure to fulfill professional obligations that is caused by a disability must be accommodated by the Law Society and the Panel”.      The LSO was required to accommodate Mr. Burt to the point of undue hardship.  Mr. Banack found that he was satisfied that the record before him was sufficient to make the findings as to the scope and content of the LSO’s duty to accommodate.  Not only did Mr. Burtt tell the LSO about the prior disciplinary proceedings and the psychological reports, the decisions were publicly available on CanLII and it was part of his LSO file. 

In addition, the information available to the LSO’s investigators from their own observations of Mr. Burtt, his conduct and his communications with them ought to have been enough to alert them to consider the existence of a condition which required accommodation.  Mr. Banack found that the difference in this case, as compared to many before the Tribunal, was that Mr. Burtt had responded to the LSO on a timely basis and as Mr. Banack found, was to be contrasted with the ‘typical” response of the licensees in similar circumstances which included evasion, denial, obfuscation and disregard of professional obligations.  In this unusual case, the investigators engaged with an apparently cooperative licensee in lengthy conversations in which he disclosed a prior proceeding and medical reports, offered promises of cooperation and did not seek to avoid or fail to communicate with them.  He simply failed to follow through on his commitments.

All of this should have alerted the LSO’s investigators that the situation called for alternative thinking which by any other name amounted to accommodation.  The issue then became one of whether the accommodation afforded by the LSO, i.e. providing additional time for Mr. Burtt to respond to it was sufficient in the circumstances.  Mr. Banack found that it was not.  He found that in the “highly unusual” circumstances of this licensee who was known to be suffering from a disability that resulted in freezing but engaged in protracted dialogue with the investigators, the burden was on the investigators to at least canvass what alternative approach might have fulfilled their objectives.  In other words, that was no engagement in the express thought process of inquiry concerning the need for or scope of accommodation that was required. 

In this case, it was impossible for Mr. Burtt to comply with the LSO’s requirement of written cooperation.  The LSO had alleged that Mr. Burtt “failed to cooperate with the Law Society investigation by failing to provide a prompt and complete response to written requests made by the Law Society’s investigators”.  Mr. Banack reviewed rule 7.1-1 of the Rules of Professional Conduct, and held that a requirement to respond in writing is not found in either the rules or the notice of application.  In other words, the LSO could have accommodated Mr. Burtt’s disability by allowing him to respond orally to their inquiries and to attend at his office to obtain the information that it needed.  He concluded that the LSO had failed to satisfy its onus of demonstrating what considerations, assessments and steps were undertaken to accommodate Mr. Burtt “to the point of undue hardship”.   

In dismissing the LSO’s application, Mr. Banack concluded that Mr. Burtt’s disability was the cause of his inability and failure to provide a written response to the investigator’s demands.  Mr. Burtt did not fail to comply with his regulatory obligations but only failed, by reason of his disability, to comply with the manner to which compliance was demanded. 

Regards,

Blair

Law Society Ordered to Pay $1.3 Million in Costs

Law Society of Upper Canada v. DeMerchant, 2017 ONLSTA 5

 

In this case, the Appeal Division of Ontario's Law Society Tribunal, ordered the Law Society of Upper Canada (“LSUC”) to pay $650,000 each to Beth DeMerchant and Darren Sukonick, two lawyers at Torys LLP who were successful in defending themselves against professional misconduct allegations brought by the LSUC.  The LSUC had alleged that the lawyers had acted in a conflict of interest while working on the sale of Conrad Black’s Hollinger Group of Companies.  Both lawyers have since retired from the practice of law.

 

The legal saga lasted 11 years and ended with the Appeal Division of the Tribunal finding that the hearing should never have taken the nearly 140 days that it took.  The Tribunal found the Law Society bore the lion’s share of responsibility for its length.  The LSUC’s definition of the issues, its approach to examination and its lack of focus on the legal test for conflicts of interest were the largest factors in a hearing whose time and costs were grossly disproportionate to the issues at stake.   In the end the Appeal Division found that approximately 110 hearing days were wasted and were not necessary. 

 

The LSUC first learned of an issue between Torys and Hollinger International Inc. from a Globe and Mail article in 2005.  It instituted an investigation into the lawyers' professional conduct.  The allegations included that the lawyers may have acted in a conflict of interest. 

 

In November of 2008, the LSUC concluded that there had been a conflict of interest which impacted the lawyers' ability to represent the legal interests of their clients.  The LSUC’s Proceeding Authorization Committee (“PAC”) then authorized an application for professional misconduct against the lawyers.

 

A hearing panel of the LSUC tribunal held that the proceedings were not unwarranted and that there was a significant public interest in the issues and that it was appropriate for the LSUC to conduct an investigation. 

 

These findings were overturned by the Appeal Division in part.   It held that there were multiple issues that both individually and combined warranted PAC’s decision to commence the application.  There was no evidence of bad faith nor was the application doomed to fail. 

 

However, the Appeal Division criticized the LSUC harshly on the conduct of the hearing. 

 

It held that typically allegations of conflict of interest would, if proven, likely have led to no more of a short suspension.  The LSUC attempted to prove that the lawyers’ conflict had manifested itself in misjudgments in their work for the corporations that resulted from preferences for the interests of executives of the corporations.  The theory of the LSUC's case was that the lawyers should have taken steps when working on the transactions to protect the public companies from exploitation by the executives.  These were serious allegations but importantly did not form part of the legal test for conflict of interest.

 

The hearing started on April 26, 2010 and completed on December 13, 2012, after nearly 140 days of hearing.  The hearing panel found that after the lawyers had presented their expert evidence about general practice in the corporate bar, the proceedings became unwarranted and the LSUC should have re-evaluated its case. 

 

On appeal, the Appeal Division found that continuing after the lawyers’ expert evidence was not the fundamental problem.  A valid legal theory of conflict of interest continued to exist but the problems with the case and how the LSUC conducted the hearings started long before that.

 

The Appeal Division found that the time taken by the LSUC to present its case was unprecedented in the history of LSUC discipline proceedings.  It began with a four day opening statement, conducted cross-examinations of the lawyers for more than 40 hearing days.  It found that the LSUC had acted unreasonably and caused costs to be wasted throughout the hearing by disregarding the need for the proceedings to be proportionate to the issues at stake in their seriousness; failing to focus its evidence in cross-examination on the test for conflict of interest; conducting argumentative cross-examinations of unprecedented length and detail that added little to the analysis and were not justified by the issues at stake in the case; and taking issue with detailed aspects of the lawyers’ work in a complex and specialized area of practice with no expert or other evidentiary support.

 

The tribunal held that it was important to explicitly acknowledge in its reasons the stress the proceedings had put on the lawyers given the pall that hung over their careers for longer than it should have, the months they spent in the hearing room dealing with these allegations and the evident strain of so many days on the witness stand under cross-examination. 

 

In addition, it found that the LSUC had wasted costs without reasonable cause throughout the hearing.  Its conduct at the hearing was entirely disproportionate to what was at stake.  The LSUC did not focus on the key elements of the test for conflict of interest.  Cross-examinations focused on unimportant details, were repetitive and argumentative.

 

In calculating the costs, the Appeal Division found that the lawyers should be awarded costs of approximately 110 hearing days.  Counsel representing the lawyers had practiced for over 20 years and the hourly rate for lawyers with that level of experience under the LSUC’s current tariff was $350.  This resulted in an award of $650,000 each (as opposed to the $1.8 million that they were seeking).   The LSUC also awarded the lawyers costs of the appeal of $17,500.

 

In March of 2017, the lawyers commenced an action against the LSUC claiming over $2 million in damages for misfeasance in public office, negligent investigation, abuse of process, malicious prosecution and libel.  There will be much to follow on this case.  

Regards,

Blair

 

Lawyer Suspended For Making Imprudent Loan

A panel of the Divisional Court of Ontario’s Superior Court of Justice (Justices Marrocco, Nordheimer and Whitaker) dismissed an appeal brought by a lawyer who had been suspended from practicing law by a Law Society of Upper Canada Appeal Panel.  The panel found that the lawyer had engaged in conduct unbecoming a lawyer.  [See Cengarle v. Law Society of Upper Canada 2014 ONSC 1884]

 

The appeal arose as a result of the lawyer’s position as the executor of an estate.  He became the executor in 1988.  At the time, the value of the estate was approximately $250,000.

 

In 1991, the lawyer advanced a loan of $118,000 from the assets of the estate to a long-standing employee of his law firm.  The Law Society’s Hearing Panel found that the loan was advanced in order to permit the employee to placate a client of the lawyer’s firm for money’s that the client had lost on a loan to another client of the firm.  The client blamed the lawyer’s employee for the loss and made certain threats if she was not repaid the money.  The Hearing Panel found that the client’s threats where the motivation for advancing the loan. 

 

Not only did the loan represent about 50% of the value of the estate, it was initially unsecured.  Although, at a later point the loan became partially secured, at no point in time was the loan ever fully secured.

 

The loan was repaid in 2007.  Both the principal and the interest were paid to the estate over this period of time.

 

At the initial hearing, the Hearing Panel concluded that the lawyer had engaged in conduct unbecoming a lawyer and that he had breached his fiduciary duty as the executor of the estate by making an imprudent and unsecured investment, i.e. the loan.

 

The Appeal Panel upheld the Hearing Panel’s decision and went further, finding that the lawyer had breached section 27 of the Trustee Act.  That section provides that a trustee:  “...must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments.” .

 

The Divisional Court upheld the decision of the Appeal Panel.  Associate Chief Justice Marrocco, writing for the court, held that the standard of review applicable to the issues was one of “reasonableness”.  He held that the Trustee Act is a statute closely connected to the Law Society’s disciplinary function and engages the frequent situation of a lawyer acting as an executor or trustee.  The Appeal Panel’s application of the Trustee Act in deciding whether a lawyer has engaged in conduct unbecoming of a lawyer is one that is entitled to deference from the court. 

 

The Divisional Court held that just because the loan was repaid with interest, did not mean that the test in section 27 of the Trustee Act had been met.   What was important is whether, at the time of making the loan, the lawyer complied with the provisions of the Trustee Act.   The test in section 27 is measured against the reasons and analysis undertaken at the time that the investment decision was made.

 

In this case, there was no overall investment strategy in operation.  Secondly, the investment amounted to approximately half of the value of the assets of the estate.  Thirdly, the investment was not justified by any offsetting investments.  To the contrary, the making of the loan was entirely dictated by the lawyer’s desire to assist his employee and to placate his client.

 

Accordingly, the lawyer’s appeal was dismissed and the Hearing Panel’s order of suspension of the lawyer from practicing law for a period of 30 days was re-instated. 

Regards,

Blair

Second Chance for Lawyer Ordered to Pay Costs Personally?

Rule 57.07 of Ontario's Rules of Civil Procedure gives the court (including a Master of the court) discretion to award costs of a proceeding against a lawyer and to require the lawyer to pay the costs personally. Specifically, the rule provides that where a lawyer for a party has caused costs to be incurred without reasonable cause or to be wasted by undue delay, negligence or other default, the court may make an order, (a) disallowing costs between the lawyer and the client or directing the lawyer to repay the client money paid in respect of costs; (b) directing the lawyer to reimburse the client for any costs that the client has been ordered to pay to another party; and (c) requiring the lawyer personally to pay the costs of any party.   Such an order may be made by the court on its own initiative or on the motion of any party to the proceeding but the court has no discretion to make such an order unless the lawyer is given a reasonable opportunity to make representations to the court. 

In the case of Haider Humza Inc. v. Rafiq [2012] ONSC 6161, Master Dash of the Ontario Superior Court of Justice ordered the plaintiff's lawyer, Murray Teitel, to personally pay the defendant's lawyer costs in the sum of $3,000 for conduct which Master Dash defined as "sharp practice".  Master Dash held, among other findings, as follows: 

In my April 23rd endorsement I had contemplated costs personally against Mr. Teitel for the earlier motion, but elected not to do so. ... This time a line has been crossed.  Mr. Teitel has breached his duty to another lawyer not to take steps without fair warning and to take advantage of Mr. Datt's (the other lawyer) mistake.  He lulled Mr. Datt into believing the costs would be paid in accordance with the order and on time, while taking steps to frustrate that payment by informing the Ministry without any warning to Mohammed or Mr. Datt until after payment was made to the Ministry.  The decision not to warn was his decision alone.  Even if I am wrong and he acted on his client's instructions, a lawyer should not take instructions from a client that would cause him to breach his professional obligations to another lawyer.  It appears that no lesson had been learned from my criticism of the plaintiff's scorched earth policy set out in my earlier endorsement.  It has instead been taken to a new level.  Mr. Teitel has engaged in share practice and is no longer entitled to the benefit of the doubt.  A message must be sent that the court will not abide such behaviour.  This is an appropriate case for the costs award to be made personally against the plaintiff's lawyer. 

Mr. Teitel sought leave of a single judge of the Superior Court of Justice to appeal the Master's order to another judge of the Superior Court.  In granting leave, Justice Morgan held that the Master had exceeded his jurisdiction in what amounted to making a determination under the Rules of Professional Conduct that Mr. Teitel had engaged in sharp practice.  The judge held that it is one thing to use a phrase such as "sharp practice" in the way that it is commonly used - meaning an aggressive tactic that is disapproved of by the court.  It is another thing for a Master, sitting in motions court and writing an endorsement on a question of costs, to cite a specific provision of the Rules of Professional Conduct to analyze a lawyer's conduct in reference to the terms of that rule and to make a specific finding that the lawyer has breached the rule. 

Justice Morgan held that under the Law Society Act only a discipline panel of the Law Society has jurisdiction to make a determination that a lawyer has breached the Rules of Professional Conduct.  Such a determination was not one that the Master could make.  The judge held that in his view, Master Dash's venture into an area that was not in his jurisdiction needs to be revisited by an appellate court given its centrality to his assessment of costs against Mr. Teitel.  Accordingly, Justice Morgan granted Mr. Teitel leave to appeal from Master Dash's order. 

While I make no comment on Mr. Teitel's conduct or whether it constituted sharp practice, it seems surprising that although the rule empowers a Master to make findings of "negligence or other default" when awarding costs against a lawyer personally, Justice Morgan didn't appear to consider whether conduct that may amount to professional misconduct (regardless of whether a finding of professional misconduct was made) fell within the meaning of "other default".   

Regards,

Blair

Law Society Reinstates Multiple Repeat Offender

A Law Society of Upper Canada disciplinary panel reinstated Yaroslav Mikitchook’s licence last week after hearing evidence of psychological issues that include self-defeating personality disorder. At a hearing last week, Yaroslav Mikitchook convinced the LSUC to terminate the indefinite licence suspension imposed on him after his seventh finding of professional misconduct.“We understand he has been seeing a psychiatrist approximately twice a week, and it is our understanding that will continue,” said panel chair Paul Schabas. The panel relied on psychological reports indicating that Mikitchook suffers from obsessive-compulsive disorder as well as self-defeating personality disorder, also known as masochistic personality disorder. “They concluded Mr. Mikitchook made the errors he did for psychological reasons,” Schabas said. Counsel for the law society and the hearing panel agreed that Mikitchook’s progress in therapy represented a material change of circumstances. Mikitchook’s lawyer, David Cousins, said his client had attended approximately 140 therapy sessions. “The picture has changed for him to the point where he is now ready to return to practice,” Cousins said.

Last January, the law society deemed Mikitchook had once again engaged in professional misconduct, the seventh such finding since the early 1990s. Among the allegations, the panel heard evidence he had delayed issuing a statement of claim for a client’s 1999 auto accident until 2004. He also failed to issue a statement of claim for the same client in a separate 2005 collision. When the client terminated the retainer, Mikitchook failed to pass the file on to his new lawyer or respond to repeated correspondence, the ruling said. When a complaint against Mikitchook was filed, he neglected to respond to the LSUC. He then failed to show up for his disciplinary hearing, instead choosing to go on a holiday with his wife, documents show. Counsel for the law society argued last year the lawyer was “ungovernable,” constituted an “unacceptable risk to the public,” and should be disbarred.

At last week’s hearing, the panel heard evidence of Mikitchook’s lengthy disciplinary history. In 1992 and twice in 1994, the LSUC found him to have engaged in professional misconduct for failing to communicate with and misleading clients and failing to respond to the law society. His penalties escalated from reprimands and fines to a six-month suspension in 1994. In 1997, the law society ruled he had misappropriated funds in trust, a breach later shown to be due to bookkeeping inadequacies. As a result, he received a three-month suspension. The LSUC then suspended him for the third time in 2001 for professional misconduct in breaching a Convocation order. Similar complaints against Mikitchook on behalf of clients led to further misconduct proceedings in 2008.

The lawyer then submitted psychiatric evidence to the panel indicating he had two underlying personality disorders that drove him to behaviour that undermined his own career. “The self-defeating personality disorder causes people to be involved in self-sabotage,” said a law society ruling. Two psychiatrists conducted interviews and tests with the lawyer and submitted they didn’t feel he was ungovernable but rather that he lacks the normal ability to deal with complaints about his professional conduct. “He becomes paralyzed and is unable to respond in a normal way, leading to escalation,” the ruling said. In response, Mikitchook received another three-month suspension, after which the law society prohibited him from practising law except under the supervision of another licensed lawyer for five years. It also ordered him to engage in a course of therapy. However, Mikitchook then apparently ignored a subsequent notice of application related to the most recent misconduct proceedings and missed his panel hearing.

A letter from the lawyer’s psychiatrist described that oversight as “another example of his pattern of automatically turning a blind eye to situations he experiences as unpleasant rather than addressing them head on.” Dr. Norman Doidge, a psychiatrist who submitted a report to the panel, indicated Mikitchook was driven to do too much in his practice. “A core psychological conflict for Mr. Mikitchook leads him to repeatedly overextend himself to clients, without retainers, working many hours for free, and becoming inevitably overwhelmed and fed up,” Doidge wrote. “At times, he cuts off work on a file without having attended to the necessary communication with the client to maintain a healthy lawyer-client alliance.” As a result, a disciplinary panel suspended Mikitchook indefinitely until he could provide medical evidence that he is able to practise law. It also ordered him to engage in ongoing therapy and practise only under a plan of supervision for five years once the suspension ended.

In Doidge’s most recent report to the panel, he and two other psychiatrists agreed that Mikitchook is ready to return to the practice of law under supervision and is highly unlikely to run into further problems with clients and the governing body. The report indicated the lawyer would not be inclined to “put his head in the sand” and concluded “it would be psychiatrically beneficial for him to resume practice and contribute to the community with his legal skills. ”Counsel for the law society didn’t oppose the motion to terminate the suspension. “He’s shown insight into his difficulties,” Janice Duggan said. The panel accepted the motion. Cousins indicated his client has kept up with continuing legal education programs over the course of his suspension and has the support staff in place to return to his practice. As well, Mikitchook’s previous mentor has agreed to help implement a plan of supervision, he said.

Regards,

Blair