Delay in administrative law proceedings will rise to an abuse of process whenever the reliability of the evidence in the proceeding is adversely impacted. This happens when witnesses admit that the passage of time has adversely impacted their ability to recall material aspects of the case, when witnesses are unable to recall the identity of witnesses who are said to have observed an allegation material to the case - such as an allegation of leering and oggling, witnesses are unable to remember when the alleged incident took place and the trier of fact itself is unable to make findings of fact of when the acts subject to the hearing took place or worst yet when witnesses admit that at the time of the occurrence there was no intention to "complain" and therefore they failed to secure evidence which may have supported their claims. In those circumstances Blencoe mandates that the proceedings ought to be stayed as an abuse of process.
The Law Society Hearing Panel recently had occasion to apply Blencoe in a recent case. In that case the proceedings were not stayed because the hearing panel made an express finding that the reliability of the evidence was not adversely impacted and the lawyer's ability to make full answer and defence was not compromised.
Interestingly, the decision in Savone is currently under appeal. By decision dated March 25, 2015 the Law Society Tribunal's Appeal Division chaired by respected criminal law counsel, Mr. Mark Sandler granted Mr. Savone a stay of the penalty and costs order pending the resolution of his appeal. Here are some excerpts from the stay pending appeal decision.
[4] At the hearing, Mr. Savone moved for a stay based on inordinate delay coupled with alleged prejudice. The hearing panel found that there had been inordinate delay, but denied the existence of prejudice justifying a stay. Mr. Savone contends that the hearing panel committed reversible error in declining to stay the proceedings.
[5] He also contends that the hearing panel committed errors of law and errors of mixed fact and law in its determination the he knowingly assisted in fraudulent real estate transactions.
[6] After hearing from counsel, and reviewing the motion record, including the notice of appeal, I am satisfied that the appeal is not a frivolous one....
[7] Mr. Savone has demonstrated that he would suffer irreparable harm if a stay pending appeal were not granted. The Law Society did not cross-examine Mr. Savone on his evidence in this regard. Revocation would shut down his practice and, in the particular circumstances, poses considerable challenges to a later resumption of practice. In so concluding, I recognize, based on the testimony of Mr. Savone's own expert (coupled with Mr. Savone's acknowledgement that he never reviewed the statements of adjustment), that some findings of misconduct are ultimately likely on a best case scenario for Mr. Savone. However, I cannot say at this stage that a lengthy suspension is the inevitable result of this appeal, such that revocation pending appeal would not amount to irreparable harm. After all, Mr. Savone contends, inter alia, that the entire proceedings should have been stayed and that the findings should all be set aside, based on a lack of access to relevant documents. These are two of the grounds of appeal that I cannot dismiss as frivolous.
Accordingly, the question of whether the initial hearing panel properly considered and applied the law set down by the Supreme Court of Canada in Blencoe v. B.C. Human Rights Commission [2000] 2 S.C.R. 307 is pending adjudication by the Appeal Division. This is a significant appeal.
Interestingly, the decision in Savone is currently under appeal. By decision dated March 25, 2015 the Law Society Tribunal's Appeal Division chaired by respected criminal law counsel, Mr. Mark Sandler granted Mr. Savone a stay of the penalty and costs order pending the resolution of his appeal. Here are some excerpts from the stay pending appeal decision.
[4] At the hearing, Mr. Savone moved for a stay based on inordinate delay coupled with alleged prejudice. The hearing panel found that there had been inordinate delay, but denied the existence of prejudice justifying a stay. Mr. Savone contends that the hearing panel committed reversible error in declining to stay the proceedings.
[5] He also contends that the hearing panel committed errors of law and errors of mixed fact and law in its determination the he knowingly assisted in fraudulent real estate transactions.
[6] After hearing from counsel, and reviewing the motion record, including the notice of appeal, I am satisfied that the appeal is not a frivolous one....
[7] Mr. Savone has demonstrated that he would suffer irreparable harm if a stay pending appeal were not granted. The Law Society did not cross-examine Mr. Savone on his evidence in this regard. Revocation would shut down his practice and, in the particular circumstances, poses considerable challenges to a later resumption of practice. In so concluding, I recognize, based on the testimony of Mr. Savone's own expert (coupled with Mr. Savone's acknowledgement that he never reviewed the statements of adjustment), that some findings of misconduct are ultimately likely on a best case scenario for Mr. Savone. However, I cannot say at this stage that a lengthy suspension is the inevitable result of this appeal, such that revocation pending appeal would not amount to irreparable harm. After all, Mr. Savone contends, inter alia, that the entire proceedings should have been stayed and that the findings should all be set aside, based on a lack of access to relevant documents. These are two of the grounds of appeal that I cannot dismiss as frivolous.
Accordingly, the question of whether the initial hearing panel properly considered and applied the law set down by the Supreme Court of Canada in Blencoe v. B.C. Human Rights Commission [2000] 2 S.C.R. 307 is pending adjudication by the Appeal Division. This is a significant appeal.
LAW SOCIETY HEARING PANEL
Citation: Law
Society of Upper Canada v. Luigi
Savone, 2014 ONLSHP 0022 Date: February 20, 2014
File No.: LCN91/11
BETWEEN:
The Law Society
of Upper
Canada,
Applicant v.
Luigi Savone, Respondent
Before:
Mary Louise Dickson, Q.C (chair)
Ross F. Earnshaw
Sarah B. Walker
Heard: July 4, September 4 and
10, 2013, in Toronto,
Ontario Counsel:
Sean
Dewart
and Tim Gleason, for the applicant
Christopher A. Moore, for
the respondent
Summary:
SAVONE –
Motion to stay or dismiss application for delay – The Lawyer became the subject of a Law Society investigation
into real estate transactions in January
2007 – The hearing before the hearing
panel commenced in March 2013 – While the delay was
inordinate, the delay caused no
prejudice to the fairness of the hearing
and did not diminish the Lawyer’s
ability to mount a full answer and
defence – A stay or dismissal was
not necessary.
REASONS FOR DECISION ON MOTION FOR A STAY OR
DISMISSAL OF THE APPLICATION FOR DELAY
[1] Ross F.
Earnshaw (for the panel):– In this Application, the Law Society of Upper Canada (Law Society) alleges that Luigi Savone (the Lawyer) knowingly participated
in mortgage fraud.
These reasons relate to
the Lawyer’s motion for an order staying or dismissing
this Application as a result of
alleged delay by the Law Society
in bringing the
matter to a hearing.
[2] The evidence on the motion consisted of affidavits sworn by
various witnesses and the transcripts of
cross-examinations on
those
affidavits. During his opening on
the
first day of the hearing, Christopher
Moore, counsel for the Lawyer,
advised the panel that it was
his intention that the panel should hear all of the evidence
in respect of
the
Application and rule on the motion at
the
end of the hearing. Counsel for the Law Society
reserved his right to
file responding materials in respect
of the motion following completion of
the
evidence at the hearing, but
did not otherwise object. The
panel agreed to proceed
in this
fashion and the hearing went forward. The parties made both written and oral
submissions.
CHRONOLOGY
[3] The Application relates to real
estate transactions that took place between
February 2000 and 2003.
[4] By January 15, 2007, Paul Macphail, a Law Society
investigator, was
assigned to
investigate the Lawyer because of
information that came to light during the investigation of another lawyer. On January
31, 2007, the Lawyer became
aware that he was under
investigation. Mr. Macphail
advised the Lawyer on that date by telephone and letter that he was investigating allegations that the Lawyer may have participated in fraudulent real
estate and/or mortgage transactions. The letter
required the Lawyer to provide files and other information.
[5] In February
2007, the Lawyer retained Mr. Christopher
Moore as his counsel. Beginning in
that month, Mr. Moore commenced communications
with the Law Society both
by telephone and by correspondence.
[6] On February 21, 2007, the Lawyer responded
to the request in
the
January 31, 2007 letter by sending Mr.
Macphail seven
boxes
containing approximately 74 separate
files.
[7] On May 17,
2007, the Law
Society received
an anonymous letter by facsimile
transmission. The letter suggested that the Law Society investigator “return
for a visit to Mr. Savone’s
office and review all
of the Lalonde
files.” [Emphasis in original.]
The anonymous letter was not disclosed to the Lawyer at
the
time.
[8] By letter
dated June 21, 2007, Mr. Macphail
asked the Lawyer to supply additional
files
including “all of your original
client files for any matters where you
acted for Art Lalande, his family members or any companies in which he or his family have an
interest.”
[9] Around this time, Mr. Macphail left the Law
Society and the file was reassigned
to Pamela Pereira. The files in response
were delivered in early August 2007.
[10] At this point,
the documentary
record becomes sparse. Ms. Pereira testified that during this period
she was reviewing the
Lawyer’s files, preparing summaries of the transactions
disclosed by those files, obtaining and reviewing title abstract documents, corporate searches and the like. However, dockets of these efforts are
not available and the record is
regrettably sparse. Ms.
Pereira, in her evidence, had no independent recollection of
when
specific investigative measures
were taken.
[11] On February 19, 2009, the Law Society
returned the
files
to the Lawyer.
[12] Commencing about July 2010,
the
documentary record resumes. The Law Society obtained various parcel register documents,
title abstracts and corporate searches during July
and August 2010. From the perspective of
the
Lawyer and his counsel, however, there was an unexplained hiatus in communications
for a period of nearly three years.
[13] By letter dated August 26, 2010, Ms. Pereira asked the Lawyer to attend for
an interview at the Law
Society in Toronto. This correspondence prompted Mr. Moore
to
inquire which
of the 94 files that had been delivered to the Law
Society by the Lawyer would be the subject of the interview.
[14] By letter dated
September 1, 2010, Ms. Pereira
notified Mr. Moore of the 12 real estate transactions
about which she intended to
question the Lawyer during the interview. Ms. Pereira interviewed the
Lawyer on October 18, 2010, in the presence
of Mr. Moore.
[15] Ms. Pereira completed her investigation and prepared an Investigation
Report dated November 25, 2010, in which she outlined her findings and analysis of
the
transactions and
made a recommendation to the Law
Society that a
conduct
proceeding be
initiated.
[16] In December 2010, the matter was transferred
to Discipline Counsel and, after a conduct
proceeding was approved
by the Proceedings Authorization Committee, a Notice of Application was issued
on September 22, 2011 and served
upon the Lawyer. Disclosure provided by the Law Society to Mr. Moore contained
the anonymous letter of
May 17, 2007, of which the Lawyer had not previously
been aware.
[17] In September 2011, Mr. Patrick Lafrange passed away. Mr. Lafrange was
another lawyer practising
in the city of Ottawa who had been
on the opposite side of several of the
transactions about which the panel heard during the course of the testimony during the hearing.
His
death, of
course, eliminated the possibility of his providing oral testimony at the
hearing or, indeed, being available to either counsel for the Law
Society or counsel for the
Lawyer for any purpose whatsoever.
[18] Following the
service of the Notice of Application, it appears
that there were a number of procedural motions and hearings pertaining to matters of disclosure, venue and the like before the
hearing commenced before this panel
on March 4, 2013.
THE LAW
[19] It is common ground that the seminal case
on the question of whether delay will warrant a finding
of abuse of process at common law is Blencoe v. British Columbia (Human Rights Commission), [2000] 2
S.C.R. 307. In Blencoe, the Supreme Court
of Canada articulated two grounds upon which delay in an
administrative context may justify a
stay of proceedings.
These grounds are:
a)
Where inordinate or clearly unacceptable delay impugns the fairness of the hearing1; or,
b)
Where the delay, although not affecting the fairness of
the
hearing, is
inordinate and causes
significant psychological harm to the [Lawyer] or attached
a stigma to the [Lawyer’s] reputation, such that the
administrative process would be
brought
into disrepute if
the
hearing proceeded.2
[20] Blencoe confirms that in some cases, delay
in an administrative tribunal may lead to a
violation of the Canadian
Charter of Rights and Freedoms. The Lawyer
does not make a Charter argument and the Charter has not been addressed by
this panel. Moreover,
during his oral submissions on
September 4, 2013, counsel for the Lawyer conceded that
there had been no evidence
of significant psychological
harm to the Lawyer, nor any stigma
attached to the
Lawyer’s reputation as a result of delay. Consequently, the
considerations of the panel have focused
on the onus that lies on the Lawyer to demonstrate
that:
a)
The delay in this case was inordinate or clearly unacceptable;
and,
b)
The delay would impact adversely on the fairness of
the
hearing.
Inordinate Delay
[21] Although counsel for
the Lawyer was at pains to point out the amount of
time
that had elapsed
between the dates upon which the impugned real estate
transactions were conducted
and subsequent
events in the proceedings as
a measure of delay, this panel
1Blencoe
at para. 101
2Blencoe
at para. 115
does not accept that the delay should
be measured from the time of
the
impugned transactions. Rather, it is appropriate
to measure delay from the moment that the Law Society investigator was alerted to
the possibility that an investigation of the Lawyer was warranted.
Hence, the date from which measurement of
delay
begins in this case
is January 15, 2007. One need only
make reference to the well-established concept of “discoverability”
to conclude that the
Law Society ought not
to be held responsible for
delay in investigating and prosecuting
an application about which
it cannot have had the slightest
knowledge.
[22] Guidance is
to be found in para.
122 of the Blencoe
decision:
The
determination of whether a
delay
has become inordinate depends on the nature
of the case and its complexity,
the facts and issues, the purpose and nature of the
proceedings, whether the respondent contributed to the delay or
waived the
delay, and other
circumstances of the case. As previously mentioned, the determination
of whether a delay is
inordinate is not based
on the length of the delay alone,
but on contextual factors, including the nature of the various rights at
stake in
the proceedings, in
the attempt to
determine whether the community’s sense of fairness would be
offended
by the delay.
[23] It is difficult to distill from this paragraph or,
indeed, from previous decisions
of other panels
cited by
counsel during argument, any “hard and
fast” rule of application
to any
particular case in order to decide whether delay
has been “inordinate.” While
guidance may be derived
from this extract from
Blencoe and a review of other
cases, in the final analysis,
each case must be decided
on its own
particular facts.
[24] The panel has
undertaken its analysis of the delay in the instant case,
keeping in mind that the Lawyer bears
a heavy burden to meet the test for obtaining
a stay. As
explained in
Blencoe at para. 120:
In order to find an abuse of process, the court
must be satisfied that, “the damage to the public interest in the fairness of the administrative
process should the proceeding go ahead would exceed the harm to the public interest in the
enforcement of the legislation if the proceedings
were halted” (Brown and Evans,
supra, at p. 9-68). According to L’Heureux-Dube J.
in Power, supra, at p. 616, “abuse
of process” has been characterized
in the jurisprudence
as a process tainted to such a
degree that it amounts to
one of the clearest of cases. In my opinion, this
would apply equally to abuse of process
in
administrative proceedings.
For there to
be abuse of process, the proceedings
must, in
the
words
of L’Heureux-Dube J., be “unfair to the point that
they are contrary to the
interests of justice” (p. 616). “Cases
of this nature will be extremely rare” (Power, supra, at p. 616). In the administrative
context, there may be abuse
of process where conduct is
equally oppressive.
[25] Counsel for the Lawyer referred to the Report to Convocation
by the Honourable W.
David
Griffiths dated September 25,
2000. In the words of counsel, “Justice Griffiths was
tasked with providing recommendations to
avoid systemic delay
in the investigation
and prosecution
of solicitors by the Law Society
which could result in serious prejudice to such
solicitor’s ability to make
full answer and defence.”
He submitted that one of the conclusions
of Justice Griffiths in this Report was that the inexperience
of the investigation
staff contributed to the problems
of timely investigation
and prosecution,
alleging that Ms. Pereira met the definition of “inexperienced
investigation staff” set out
by Justice Griffiths because she had limited experience in the full cycle of
investigative work, including testifying at hearings.
[26] Counsel for the Lawyer also
relied on
the
fact that in March 2005, Convocation was made
aware of the emergence of mortgage fraud as a significant
issue requiring
the devotion
of resources by way of
staff, training and expertise. He stated that the Law
Society had acted to
create an Investigation Task Force in November 2004 to address concerns about timeliness and effectiveness in the investigation process, noting that the
Task Force delivered its
Report on May 25, 2006. The Report of
the
Task Force essentially confirmed the
recommendations in the Report
of Justice Griffiths, and the two Reports
together provided “ample
warning to the Law
Society as
to the
need to devote resources by way of staff,
training and expertise
in order to address
mortgage fraud investigations in a timely and effective manner so
as to ensure fairness.”
The Lawyer argues that the recommendations in the Report
of Justice Griffiths and the Investigation
Task Force were “almost completely and totally ignored.”
[27] Counsel for the Lawyer relies on the following paragraphs in the decision of Law Society of Upper Canada v. Eugenio Totera, 2013 ONLSHP 9:
[25] …One of the most fundamental duties of
the
Society as
a self-governing body is to govern
in the public interest and,
if it wishes to remain
a self-governing body,
it has to be prepared to spend
the
money to carry out the most
fundamental of its
obligations –
that of ensuring that the
investigation of those of its
licensees suspected of wrongdoing are investigated and, if warranted, prosecuted without
delay.
[26] A formal
Report to Convocation on the question of mortgage
fraud was provided to
it in March of 2005. Individual benchers were aware of
the problem long
before then. Warnings were given about mortgage fraud in LawPro publications in 2001 and 2002. In April 2002
the
Society created a
Mortgage Fraud
Team. In 2004 LawPro published another bulletin The Many
Faces of Fraud. There was
plenty of time to
ramp up the investigative process to the level required to properly satisfy its mandate but that does
not appear to have happened.
…
[31] While
it took some time
to
gather and analyse the information, the mortgage
fraud matters under investigation were not particularly complex. They all follow a
general pattern calling for
similar investigations and analysis. The Mortgage
Investigation Unit, with
four years experience, must have
been fully aware of the
problems by 2006.
[32] But this should not
take three years. Again the problem was systemic. Too much work
for
too few people.
[33] It cannot
be said that Mr. Totera contributed
to the delay. He co-operated fully and
asked the Society to complete its investigation on several
occasions.
[28] The panel notes
that the Totera decision is under appeal and
that Mr. Totera led extensive evidence of
significant psychological harm arising from the delay. The latter factor
renders it distinguishable from the present case in relation to the effect
of the delay. The
panel also had the evidence
of Pamela Pereira, Zeynep Onen and Stephen McClyment. The substance of their evidence,
taken as a whole, was
that the Law Society had taken
to heart the recommendations of
both the Griffiths Report and the Task Force but had been inundated with an unprecedented
influx of mortgage
fraud cases, all of which involved
detailed and time-consuming
investigative efforts by
an overworked complement of staff. The panel
accepts that the
investigative staff, in general, and Ms. Pereira, in particular, worked with diligence and
industry in the face of
a monumental and overwhelming
case load. No criticism is
levelled against them whatsoever.
The panel further accepts that the
Law Society Investigation Department was organized to deal
as efficiently as
possible with incoming cases
and
to address the most
egregious of those cases in priority to others.
It is a classic case of allocation of scarce resources; however, the fact remains that for a
period of approximately three years, from
the summer of 2007 until the summer
of 2010, evidence of any material
effort in respect the
Lawyer’s file is sparse to the point of near
non-existence.
[29] The panel notes
that there was a lapse
of time from September
2011, when the Notice
of Application was issued,
until March 4, 2013, when the hearing
commenced. We do not
consider that this lapse
of time constitutes
a part of the delay about which the Lawyer may complain
since the proceeding from the date of issuance
and service of the Notice of Application was conducted in accordance with
the
Rules of Practice and Procedure and the time
was
consumed by
normal procedural matters, many of
which
were initiated by Mr.
Moore on behalf of the Lawyer
in his attempt to afford
to his client a full answer
and defence.
[30] We have, therefore, concluded that the delay to be measured is that which extends from the summer of 2007 until the summer of 2010, a period of approximately
three years.
[31] It cannot be said
that the Lawyer contributed to the delay during the period under
consideration by the panel. He responded
promptly to all requests for files and information,
and he co-operated fully with all aspects of the investigation in respect of which his participation was required, including
his attendance
for the interview
conducted by Ms.
Pereira in the autumn of
2010.
[32] There are various and somewhat
inconsistent Law Society
Hearing Panel
decisions addressing
the difficult question of delay in the context of
regulatory
proceedings. As the
panel observed in Law
Society of Upper Canada v. Matthew Joseal Igbinosun, 2011 ONSLHP 15
at para. 62:
…In our view, a
member of the public would expect the Law
Society to deal with a misconduct
allegation in
a timely fashion and, in this respect, society’s interests and the interests of
the
professional who is the subject of
the
conduct hearing is the
same; namely, in having the hearing within a
reasonable time. What that
reasonable time is,
and when a delay becomes intolerable in a
regulatory setting,
must
be determined on the particular
facts of the case.
[33]
In Law Society of Upper Canada v. Karen
Cunningham, 2010 ONLSHP 96, the panel concluded
that a five-year delay was
not inordinate. In contrast, in Law Society of Upper
Canada v. Davies Bagambiire, 2012
ONLSHP 122, the panel concluded
that a 43-month period of
inactivity
was inordinate,
reasoning as follows:
[25] What
is most striking in this case are the two periods of complete inactivity on the
file by the Law
Society totaling 43 months of delay in which it
had no communication with the
Lawyer and took
no
steps in furtherance of
the investigation. The Law
Society is entitled to prioritize its cases
and
must economize its limited resources,
as it did in this case.
However, it is also mandated to act in the public
interest and in a timely, open
and
efficient manner (Law
Society Act, s. 4.2).
[26] We find the actions
of the Law Society in pursuing this investigation were sporadic,
lurching from periods of
complete inactivity to aggressive demands on the
Lawyer requiring immediate
responses. The investigation
of matters which the Law Society
itself has classified as
less serious took
nearly eight years, with
periods of inactivity totaling nearly five years.
We find it hard
to see how the Law
Society has fulfilled its mandate by delaying for years at a time the investigation into the Lawyer's practice.
By delaying the determination of whether professional misconduct
has actually occurred, the Law Society has failed in its responsibility to protect the
public and to act
in a
timely
manner.
[27] We find the delay
in this case meets the threshold
of being inordinate. Most significant are the lengthy
periods in which there was no action taken on the case and
no communication with the Lawyer.
During those periods of
inactivity the Lawyer,
who had substantively
complied with the Law Society
demands for
records, would have
been unaware of whether he remained under investigation or whether there continued
to be any
concerns with his professional conduct.
[34] We prefer the reasoning
of the panel
in
Bagambiire, which in our view is
more consistent with the Supreme Court’s
decision in Blencoe. The determination of whether a delay is inordinate
is not based on the length of
the
delay alone, but on
contextual factors,
including the nature
of the various rights at
stake in proceedings. In our view, the period
of inactivity here of approximately
three years is inordinate because by delaying the
determination of whether professional
misconduct had actually
occurred, the Law
Society failed in
its responsibility to protect
the public and to act
in
a timely, open and efficient manner.
Is Inordinate Delay
Alone
Enough to
Justify the
Stay Order Being
Sought?
[35] Mr. Moore argued on behalf of the Lawyer
that the Blencoe
decision, carefully analyzed, supports the
contention that
there may be rare circumstances
where delay
alone
is enough
to infer the necessary prejudice to permit a
stay
to be granted without actually
turning to an analysis of
whether prejudice has occurred. He submitted that the instant case
is
one of the rare
cases where the delay has been so egregious that
what he described as the “first
branch” of the Blencoe decision applies and would justify a stay order
in
and of
itself.
[36] Mr. Moore
directed the panel
to a careful consideration
of the reasons for
decision of LeBel J.,
dissenting
in part, in Blencoe. He also
placed heavy reliance on the reasons of the
hearing panel in Igbinosun, supra. Despite Mr.
Moore’s able arguments, the
panel has concluded that
to grant
a stay of proceedings without considering whether the delay has resulted in prejudice to the fairness of
the
hearing process generally, or
to
the ability
of the Lawyer to make full answer
and defence specifically, would be an error in principle. The majority decision in Blencoe
governs this situation and
requires that
there must be proof of significant prejudice
resulting from the
delay. As
stated at para. 101:
In my view, there are appropriate remedies available in the administrative law context
to deal with state-caused delay in human
rights proceedings.
However, delay, without more, will not warrant
a stay of proceedings as an abuse of process at common law.
Staying proceedings for the
mere passage of time would be tantamount
to imposing a judicially created limitation
period (see: R. v. L.
(W.K.), [1991] 1 S.C.R. 1091, at p. 1100; Akthar v. Canada (Minister of
Employment and Immigration), [1991] 3 F.C. 32 (C.A.). In the administrative law context, there must
be proof of significant prejudice which results from an
unacceptable delay. [Emphasis added]
Has the Delay Caused Significant Prejudice?
[37] Where delay
in and of itself is not enough to justify a
stay
of proceedings but inordinate delay exists, then there
must be actual prejudice
in the ability of the Lawyer to make full answer and
defence. To result in a
stay,
inordinate delay must prejudice the ability
to
have
a fair hearing, typically because of its effect on
the
evidence. Guidance can be found in Blencoe at
para. 102:
There is no doubt that the principles of natural justice and the duty of
fairness
are part of every administrative
proceeding. Where delay
impairs a party's ability to answer the
complaint against him
or her, because, for example, memories have faded, essential
witnesses have died
or are unavailable, or
evidence has been lost,
then administrative delay may
be invoked to impugn the validity
of the administrative proceedings
and provide a remedy…
[38] In his written
submissions on this motion, Mr. Moore
has
helpfully compiled a
list
of the factors
he alleges constitute the basis
for a finding of prejudice to the fairness of this proceeding.
An excerpt from his written
submissions at para. 58 reads:
a)
Mr. Lafrange has passed away;
b)
All of the mortgages in issue have
been discharged and there is (sic) no longer any
lender files available to review;
c)
The
anonymous letter dated May 17, 2007 was not disclosed to Mr. Savone
until more
than 4 years after it was received by the Law Society;
The
anonymous letter dated May 17, 2007 was not disclosed to Mr. Savone
until more
than 4 years after it was received by the Law Society;
d)
The transactions in question took place between 8 and 11 years
prior to the Application being
issued;
e)
The awareness of mortgage fraud is considerably
different today
than
it was at the time of the transactions;
f)
There is no ability
to access any of the files of either of the lawyers that represented
the purchasers and lenders with respect
to
the transactions in issue;
g)
Due to the passage of time the quality of
available evidence has
diminished.
[39] We will
review these
items in
order to comment on each
one separately.
[40] In three of the transactions, solicitor Patrick Lafrange acted for the purchaser and the lender.
The Lawyer acted for the vendor in each of these transactions. Mr. Lafrange
passed away in September 2011,
before
the Notice
of Application was issued.
[41] The theory of
the
Lawyer is that Mr. Lafrange had a
duty
to his lender clients to notify them
about the features
of the transactions which are said by the Law
Society to constitute
indications of fraud. It is important to note that, to the extent that this theory
of the Lawyer depends upon the files maintained by Mr. Lafrange, there can be no complaint.
Mr. Moore brought a motion
designed to compel
the disclosure files from
Mr. Lafrange which were said to
be in the possession of the investigative
team at
the
Law Society.
This motion was lost and
an appeal was taken to
the Divisional Court, which dismissed the appeal. Consequently the only possible ground of complaint is that Mr. Lafrange was
not available to give oral
testimony.
[42] Had Mr. Lafrange
been alive and able to attend at the hearing, the extent
to which his evidence could have assisted in any way is questionable.
First, he would have been bound by the principles of solicitor-client privilege
that precluded him from providing
evidence concerning communications regarding the seeking and delivery of legal advice
to his lender clients. Even if that hurdle could be
overcome, the argument that proceeds from the
assumption that Mr. Lafrange may have made full disclosure
to his lender clients
of the questionable features of the transactions in question could be
of no assistance. Mr. Moore said that if the lender, possessed of
such knowledge, had decided
to proceed with the mortgage transactions nonetheless, “there
can have been no fraud.”
The complete answer to this is that the lenders, themselves, would have engaged
in an unlawful transaction had they advanced loans on
transactions described in the submissions
as “no money
down deals”, as to proceed in
such
circumstances would
contravene the legislation
by which they
are bound.
[43] We note that the solicitor who represented
the purchasers and lenders in respect of
several of the impugned transactions in which the Lawyer acted for the vendor was Douglas Sutherland. It is telling that Mr. Sutherland, although available, was not called to give evidence in support of the theory of the
case advanced by Mr. Moore.
[44] The panel finds that the death
of Mr. Lafrange has worked no prejudice to the fairness of this
hearing.
b)
All of
the mortgages in issue have been
discharged
and there is (sic) no longer any
lender files available to review
[45] This category of alleged prejudice proceeds
from
the premise
that the contents of
the lender files are essential to the evidentiary
record upon which the panel must decide
whether mortgage fraud has occurred. Although there
has
been some debate about this in
earlier cases decided by
Law
Society hearing panels on the subject of
mortgage fraud, that
debate has been laid to rest by the decisions
of the Appeal Panel,
most recently in Law
Society of Upper Canada v. Francis Peter Yungwirth, 2013 ONLSAP
24. Faced with essentially the same
argument in that case, the appeal panel stated:
[60] Fourth,
the hearing panel misdirected itself as to the need for the Society to lead evidence from the alleged participants
in dishonesty and fraud. The
suggestion that the
Society should be
expected to call the alleged fraudsmen to prove dishonesty
or fraud is unwarranted.
The appeal panel's observations
in Law Society of Upper Canada v. Norman
Silver, 2012 ONLSAP 4 (adopted in Law
Society of Upper Canada v. Michael Andrew Osborne, 2013 ONLSAP
14) have application here:
[12] Though the hearing panel's findings are unchallenged,
we do
not
wish to be taken
as endorsing some of the
propositions set out in the hearing panel's
reasons if applied to the proof
of mortgage fraud more generally. In
our respectful view, the
failure to call the participants
in subject transactions, particularly those alleged to have been complicit in fraud, need
not make it impossible
or even difficult to
prove that transactions are fraudulent, based on documentary evidence. Indeed,
a number of
“red flags” were
easily identified here that were not dependent on viva
voce evidence from participants in the transactions. Nor should it be said,
as a general
proposition, that lenders must necessarily testify that they were defrauded when the documentary evidence demonstrates circumstantially
that mortgage transactions were designed
to extract monies (often to individuals who were not
parties to the transactions)
without disclosure to the lenders of
the
fundamental features of
those transactions. For
example, it may well be
unnecessary for a lending institution
to verify that
it might not have closed
a transaction had it known about
the purported escalation of
the property's
value. This would be
particularly true if the
lender specifically instructed its lawyer in
writing to provide
it with that information.
[46] If, on the other hand, Mr. Moore
intended by
this
argument to say that he would have liked
to have the lender files in order to support his theory that
the
lenders knew
all about the aspects
of the transactions that the Law Society considered to be suspicious and yet advanced the funds
under their mortgages in any event,
the panel cannot give credence to
the complaint for the same reason set out above; namely, that the lenders, themselves, would
have engaged in an unlawful transaction
had they advanced loans on transactions
described in the submissions
as “no money
down deals”, as to proceed in such
circumstances would contravene
the legislation by which they are bound.
[47] The panel finds that the absence of lender files has worked no prejudice to the fairness of this
hearing.
c)
The anonymous letter dated May
17, 2007 was not disclosed to Mr. Savone until more than 4
years after it was received by the
Law Society
[48] In our view, the Lawyer has shown no prejudice to the fairness of the hearing resulting from
the delay in disclosing this letter. In oral argument,
the Lawyer’s counsel argued, essentially, that the Lawyer might
well have done
something different
had he been aware of the anonymous letter earlier. He could neither articulate what that might have been
nor how it had worked any prejudice to the fairness of
the hearing. This is not sufficient to establish real, actual prejudice within the meaning of Blencoe.
[49] The panel
finds that the failure to
promptly disclose the anonymous letter has worked no prejudice to the fairness of this
hearing.
d)
The transactions in question took place between 8 and 11
years
prior to the
Application being issued
[50] It is difficult
to ascertain from either the
written or the oral submissions of Mr. Moore
on behalf of the Lawyer
what prejudice he alleges will impact adversely on
the
fairness of
the hearing because the transactions
took place between eight
and 11 years prior to the issuance of
the Notice of Application.
[51] To the
extent that this alleges a fading memory of
the
Lawyer with respect to the particulars
of the impugned
transactions, particularly those introduced into evidence as similar
fact evidence, the panel notes
that
in Blencoe, the court
upheld the decision of Justice Lowry of the British
Columbia Supreme Court. He referred to similar claims as
“vague assertions that fall
far
short of establishing
an inability to prove facts necessary to respond
to the complaints.” Commenting on this statement, Justice Bastarache said, at para. 104, “[p]roof
of prejudice has
not been demonstrated
to be
of sufficient magnitude
to impact on the fairness of the hearing.”
The hearing
panel in Bagambiire, supra,
addressed a similar
argument in this fashion at
para. 33:
Faded or fading memories are to be expected in any investigation
of dated allegations. However, for us to find that this, in itself, is sufficient prejudice to stay proceedings would come perilously close to creating a limitation period
where none exists,
which the
Supreme Court cautions against
in Blencoe.
[52] The record is completely devoid of any suggestion that the Lawyer attempted to identify or call
witnesses from the lending institutions, from amongst the purchasers and
vendors that he
represented or from other
counsel who may
have been involved in
the impugned transactions. There is a
requirement to demonstrate actual, real
prejudice and not merely to
make
vague assertions of possible
prejudice.
[53] The panel finds that the time that elapsed since the transactions
in question has worked no
prejudice to the fairness of
this hearing.
e)
The awareness of
mortgage fraud is considerably
different today than it was at
the time of
the
transactions
[54] This point is appropriate to a consideration by
the
panel of the merits of
the
Application when it comes to consider whether the Lawyer knowingly
participated in a
mortgage fraud, which is not addressed in these reasons for decision. When
applied to the concept
of prejudice, however, it
is tantamount to stating
that the Lawyer has suffered prejudice because
the Hearing Panel and the Law Society are better equipped to detect fraud in today’s
environment
than they would
have been if the Application
had been
commenced in
a more timely fashion
and prosecuted before such
a level of awareness had been achieved. Viewed in this light,
the submission
is patently
untenable.
[55] The panel finds that the
increased awareness of
mortgage fraud in the present day
environment
has worked no
prejudice to the fairness of
this hearing.
f)
There is no ability to access any of
the files
of either of the lawyers
that represented the purchasers
and lenders with respect to
the
transactions in issue
[56] The lawyers
who represented
the purchasers and lenders
in
the vast majority of
the impugned transactions were Mr. Lafrange and Mr. Sutherland. We
have
dealt under
item a), above, with the files of Mr. Lafrange, pointing out that a
disclosure motion regarding
his files was dismissed and that the dismissal was upheld by the Divisional Court. That same
disclosure motion pertained as well to the files of
Douglas Sutherland
and was
subject to the same
result.
[57] It follows
that the absence of lawyer files
has worked no prejudice to the fairness of
this hearing.
[58] Nothing in this heading of alleged prejudice to the fairness of the hearing raises
anything which has
not been canvassed fully in respect of
headings a)
through f), disposed of above.
The
Lawyer has not met
the high onus which lies on him to establish
that inordinate delay has so prejudiced the fairness of the hearing, so
diminished the ability of
the Lawyer to mount full
answer and defence, that a stay
or dismissal of the hearing
is necessitated.
CONCLUSION
[59] For all these reasons, we find that the Application
should not
be dismissed as an abuse of process. The motion is
dismissed.
[60] The panel
has dealt only with the evidence and issues relevant to the motion. Nothing stated in these reasons involves a
consideration of the
merits of the
Application.
