Tuesday, January 26, 2016

Law Society of Upper Canada v. Luigi Savone 2014 ONLSHP 0022: Blencoe v. B.C. Human Rights Commission Applied

     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.


Citation: Law Society of Upper Canada v. Luigi Savone, 2014 ONLSHP 0022 Date:  February 20, 2014
File  No.: LCN91/11


The Law Society of Upper Canada, Applicant v.
Luigi Savone, Respondent


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


Text Box: 2014 ONLSHP 22 (CanLII)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.


[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.


[3]   The  Application  relates  to  real estate  transactions  that  took  place  between February 2000  and 2003.

[4]  By  January 15,  2007,  Paul  Macphail,  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  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.

Text Box: 2014 ONLSHP 22 (CanLII)[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.

Text Box: 2014 ONLSHP 22 (CanLII)[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.


[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  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  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

Text Box: 2014 ONLSHP 22 (CanLII)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  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  tdecide  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  courmust  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

Text Box: 2014 ONLSHP 22 (CanLII)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 timely  and  effective  manner  so  as  to  ensure  fairness.” ThLawyer 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  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  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.

Text Box: 2014 ONLSHP 22 (CanLII)[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:

Text Box: 2014 ONLSHP 22 (CanLII)In our view,  member  of the  public  would  expect the  Law Society to  deal with  a misconduct allegation in 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  reasonable  time.  What  that reasonable time is, and when delay  becomes  intolerable  in  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  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  timely,  open  and  efficient  manner.

Is Inordinate  Delay Alone  Enough  to Justify  the Stay Order  Being Sought?

Text Box: 2014 ONLSHP 22 (CanLII)[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  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  stay  order  in  and  of  itself.

[36] Mr. Moore directed the  panel  to  careful  consideration  of  the  reasons  for  decision  of  LeBel J., dissenting  in  part,  in  BlencoeHe  also  placed  heavy  reliance  on the  reasons  of the hearing panel  in  IgbinosunsupraDespite  Mr.  Moore’s  able  arguments,  the  panel  has concluded that to grant  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  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  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  stay,  inordinate  delay  must  prejudice  the  ability  to have  fair  hearing,  typically  because  of  its  effect  on  the  evidenceGuidance   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 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  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  (sicno  longer  any lender  files   available   to review;

c)                 Text Box: 2014 ONLSHP 22 (CanLII)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.

a)                                        Mr. Lafrange  has  passed away

[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  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

Text Box: 2014 ONLSHP 22 (CanLII)to proceed with the  mortgage  transactions  nonetheless,  “there  can  have  been  nfraud.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  (sicno  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,  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

Text Box: 2014 ONLSHP 22 (CanLII)example, it  may  well  be  unnecessary  for  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  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  Blencoethe  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:

Text Box: 2014 ONLSHP 22 (CanLII)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  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  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  consideration  by  the  panel of the  merits  of the  Application  when  it  comes  to  consider  whether  the  Lawyer knowingly participated  in  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 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  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.

g)                                   Due  to the  passage of time  the  quality  of available   evidence  has  diminished

[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.


[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.

[61]        The  issue  of costs  of the  motion  will be  addressed  in the  reasons for  decision of the panel to be released  in  respect of the  hearing of this application on the merits.