Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20210422 DOCKET: C67732

Fairburn A.C.J.O., Pepall and Roberts JJ.A.

BETWEEN

The Law Society of Ontario Applicant (Respondent)

and

Jeremy Dov Diamond Respondent (Appellant)

Counsel: Brian H. Greenspan and Naomi M. Lutes, for the appellant Leslie Maunder, for the respondent

Heard: November 9, 2020 by video conference

On appeal from the order of the Divisional Court (Justices Harriet E. Sachs, Maria T. Linhares de Sousa and Julie A. Thorburn), dated May 29, 2019, with reasons reported at 2019 ONSC 3228, dismissing an appeal from an order of the Law Society Tribunal Appeal Division, dated August 1, 2018, with reasons reported at 2018 ONLSTA 11, affirming an order of the Law Society Tribunal Hearing Division, dated September 21, 2017, with reasons reported at 2017 ONLSTH 191.

Fairburn A.C.J.O.:

A. Overview

[1] In the fall of 2016, the Law Society of Ontario started an investigation into the appellant’s law firm, focussing on the firm’s structure and referral fee practices. Over a period of many months, the Law Society asked the appellant to produce various documents and information required for the ongoing investigation. There was a great deal of back-and-forth communication between the appellant’s counsel at the time and the Law Society. However, the requested documents and information were not fully produced until approximately eight and a half months after the initial request was made.

[2] The Law Society eventually commenced an application before the Law Society Tribunal Hearing Division (the “Hearing Division”), alleging that the appellant engaged in professional misconduct by failing to “reply promptly and completely” to the Law Society’s requests, thereby breaching r. 7.1-1 of the Law Society’s Rules of Professional Conduct. This rule invokes a lawyer’s duty to cooperate with the Law Society when a response is requested. Ultimately, the Hearing Division concluded that the appellant had failed to adhere to his obligations under r. 7.1-1 of the Rules of Professional Conduct.

[3] Following the finding of professional misconduct, the Hearing Division ordered that the appellant be reprimanded, which was recognized as “the usual penalty where a failure to co-operate has been remedied by a full response by the time of the scheduled hearing.” In addition to the reprimand, the appellant was ordered to pay $25,000 in costs to the Law Society.

[4] The decision of the Hearing Division was later affirmed by the Law Society Tribunal Appeal Division (the “Appeal Division”), and the Appeal Division decision was upheld by a panel of the Divisional Court. Therefore, this appeal constitutes the third level of review.

[5] The appellant argues that, while there may have been failings regarding the form of his communications with the Law Society, he did not fail to cooperate with the regulatory body. Accordingly, the appellant maintains that the history of this matter is more properly characterized as a “failure to communicate” than a “failure to cooperate” with the Law Society.

[6] The appellant contends that the finding that he failed to cooperate arises from an erroneous understanding of the concept of “good faith”. He submits that the Divisional Court erred in upholding and endorsing a far too narrow interpretation of “good faith”, one that imposes a purely objective test on the duty to cooperate. This is said to wrongly result in the creation of an absolute liability offence. The appellant argues that had a proper approach been taken to the question of good faith, one focussed on both subjective and objective criteria, he would not have been found guilty of professional misconduct.

[7] For the reasons that follow, I would dismiss the appeal.

B. The Regulatory Context

[8] Rule 7.1-1 of the Law Society’s Rules of Professional Conduct lies at the heart of this appeal. It requires the following:

A lawyer shall reply promptly and completely to any communication from the Law Society in which a response is requested. [Emphasis added.]

[9] On October 17, 2016, the Law Society investigator sent a letter to the appellant and made requests for documents and information needed for an investigation into the structure and referral fee practices of the appellant’s law firm. On that date, among other things, the Law Society investigator asked for copies of the appellant’s general receipts journal and general monthly bank statements. A further request letter was sent on December 13, 2016. Later, in a third letter dated February 14, 2017, the Law Society investigator requested, among other things, copies of certain cancelled cheques, deposit slips, and the appellant’s general disbursements journal. Without exception, the requested items fell within the parameters of those documents required to be kept by licensees: see By-Law 9, ss. 18.5-18.6 and 18.10, made pursuant to the Law Society Act, R.S.O. 1990, c. L.8.

[10] In the months that followed the initial and subsequent requests, there was a significant amount of back-and-forth communication between the appellant’s counsel and the Law Society that included fourth and fifth formal request letters, sent on March 28, 2017 and April 3, 2017 by the Law Society to the appellant for records. Eventually, on May 10, 2017, almost seven months following the original request, the Law Society commenced an application before the Hearing Division, pursuant to s. 34(1) of the Law Society Act, alleging that the appellant engaged in professional misconduct in contravention of s. 33. Specifically, the Law Society alleged that: (a) the appellant failed to maintain some of the required books and records in full compliance with s. 18 of By-Law 9; and (b) he did not cooperate fully with the Law Society’s investigation into his professional conduct by failing to produce the requested information and documentation.

[11] Eventually, all requested records were produced by late June and early July 2017, approximately eight and a half months after the Law Society’s initial request. Having the requested documentation in hand, the Law Society withdrew the first allegation respecting the failure to maintain books and records in compliance with s. 18 of By-Law 9. This left the second allegation involving the failure to cooperate fully with the Law Society’s requests as the sole matter to be determined by the Hearing Division.

C. The Reasons Below

(1) The Hearing Division’s Reasons

[12] The Vice-Chair of the Hearing Division (the “Vice-Chair”) provided comprehensive reasons for why he concluded that the appellant had engaged in professional misconduct by breaching r. 7.1-1 of the Rules of Professional Conduct. Having extensively reviewed the evidence, including the general back-and-forth communications between the appellant’s counsel and the Law Society, the Vice-Chair came to specific conclusions in relation to six categories of records formally requested by the Law Society in five letters sent on and between October 17, 2016 and April 3, 2017. Regarding five of those categories of documents, the Vice-Chair found that the appellant failed to cooperate with the Law Society.

(a) General Receipts Journal and General Disbursements Journal

[13] On October 17, 2016, the Law Society investigator initially asked the appellant for copies of his general receipts journal for the period of October 2013 to October 2016. Later, on February 14, 2017, the Law Society investigator made a similar request respecting copies of the appellant’s general disbursements journal. After a review of the evidence, the Vice-Chair determined the following:

[I] conclude that there was no excuse for the [appellant’s] failure to provide the documentation required by By-Law 9, ss. 18(5) and (6), long before July 4, 2017 [the date all the necessary records were generated]. It should not have taken four written requests, spanning over eight months, to obtain the information required by s. 18(5) [the general receipts journal] and by the Law Society’s investigator. It should not have taken two written requests, spanning almost five months, to receive the information required by s. 18(6) [the general disbursements journal], and by the Law Society’s investigator.

[14] The Vice-Chair then indicated that there should have been “no mystery about the requirements of the By[-L]aw” and that the appellant “knew or should have known” about his obligations to comply with the By-Law. As noted by the Vice Chair, “The sequence of requests and responses represented a ‘cat and mouse game’ that has no place in the relationship between licensee and regulator.”

(b) General Monthly Bank Statements

[15] On October 17, 2016, the Law Society investigator requested that the appellant provide general monthly bank account statements for the period of October 2013 to October 2016. The appellant used two general accounts: one with CIBC and the other a TD line of credit. Again, there was repeated back-and-forth communication between the appellant’s counsel and the Law Society respecting these bank statements. In the end, it took eight months to fully complete this request in what the Vice-Chair described as “four tranches.”

[16] While the requested bank statements for the CIBC account were provided “without excessive delay”, the requested bank statements for the TD line of credit involved a “muddier sequence of compliance”. These TD bank statements were not fully provided until June 22, 2017. Ultimately, the Vice-Chair concluded that the Law Society’s request respecting the bank records was straightforward in nature and “should have been fully answered long before eight months had passed.” In fact, while acknowledging that the delay in providing the CIBC bank statements was “not excessively long”, the Vice-Chair noted that “it should not have been difficult to provide these documents … within the four week deadline that was set by the Law Society in its first request letter.”

(c) Cancelled Cheques

[17] When the requested general monthly bank statements and general receipts journal were not provided, the Law Society made additional requests. On February 14, 2017, the Law Society investigator made a request for a more granular form of documentation, including cancelled cheques relating to the CIBC and TD general accounts for the period of October 1, 2013 to October 31, 2016. This request was designed to provide the underlying information that would have been reflected in the bank statements and general receipts journal had they been provided. The Law Society investigator set an initial deadline of March 3, 2017 to provide these cancelled cheques. This deadline was later extended to March 30, 2017.

[18] On April 7, 2017, the appellant’s counsel asked, during a phone call, whether the Law Society could narrow the request or pay the costs to obtain the cancelled cheques. While the Law Society investigator said that she would need to obtain instructions on this point, she ultimately never responded to this request, and the appellant’s counsel never asked for this again. Instead, the Law Society’s request for the cancelled cheques was repeated on May 29, 2017, with a new deadline of June 19, 2017. The cheques were then ordered and paid for by the appellant on June 12, 2017 and ultimately produced on June 22, 2017.

[19] The Vice-Chair concluded that the appellant’s request that the Law Society pay to obtain the cancelled cheques was not appropriate, particularly because it would involve the regulator diverting membership dues to the appellant’s bank to obtain records that the appellant was obligated to keep. Therefore, the Law Society’s failure to respond to the appellant’s request was irrelevant and did not factor into the assessment as to whether the appellant cooperated with the Law Society.

[20] Ultimately, the Vice-Chair concluded that the appellant’s failure to cooperate “crystallized” in his response on April 7, 2017 to the Law Society’s February 14, 2017 request. As licensees have an obligation to maintain these types of records, the cancelled cheques should have been provided promptly.

(d) Deposit Slips

[21] Like the request for the cancelled cheques, when the Law Society hit a wall in terms of obtaining the general receipts journal and general monthly bank statements, the investigator sought more granular information on February 14, 2017, including deposit slips from the bank account into which the appellant deposited the referral fees he received. The Law Society investigator set a deadline of March 3, 2017 to provide the requested deposit slips, which was the same deadline as to provide the cancelled cheques.

[22] On March 10, 2017, the appellant initially advised the Law Society that he did not retain deposit slips and therefore could not provide the requested documentation. However, following a discussion with his bookkeeper some three months later in June 2017, the appellant discovered he did have copies of some of the deposit slips. The deposit slips from October 2013 to October 2016 were finally provided to the Law Society on June 22, 2017, although a few could not be located. Again, while these documents were required to be maintained pursuant to s. 18(10) of By-Law 9, it took over four months to provide copies to the Law Society. The Vice-Chair concluded that there was unreasonable delay in providing the documents as requested.

(e) Conclusion

[23] In the end, the Vice-Chair concluded that the appellant had breached r. 7.1-1 of the Rules of Professional Conduct, and therefore committed professional misconduct, by failing to provide a prompt and complete response to all of the above requests made by the Law Society.

(2) The Appeal Division and the Divisional Court

[24] The appellant challenged the Vice-Chair’s decision. The Appeal Division held that the Vice-Chair’s conclusions, in relation to all of the above categories of documents, were reasonable. The Divisional Court, in turn, upheld the Appeal Division’s decision. I will discuss the reasons of the Appeal Division and the Divisional Court in further detail below.

D. Analysis

(1) Overview of the Appellant’s Position

[25] The appellant argues that, properly approached, determining whether someone has breached r. 7.1-1 of the Rules of Professional Conduct by failing to “reply promptly and completely to any communication from the Law Society in which a response is requested” requires an assessment of the licensee’s good faith efforts.

[26] The appellant submits that the Divisional Court erred by upholding and endorsing a far too narrow interpretation of the concept of good faith, one that is strictly fixated upon delay and what a licensee ought to know about their record-keeping obligations. The appellant contends that such a purely objective approach erroneously reverses the burden of proof and leaves no room for honest mistakes, lapses in judgment, confusion, and accidents.

[27] According to the appellant, the determination of good faith requires consideration of both subjective and objective criteria, focussing on the licensee’s conduct and motivations. Indeed, the appellant encourages this court to find that anything less than something akin to a “clear refusal to cooperate” should fall short of the mark in terms of finding professional misconduct by breaching r. 7.1-1 of the Rules of Professional Conduct.

[28] By only focussing upon objective criteria, the appellant contends that the Divisional Court, and the Appeal Division and Hearing Division before it, erroneously ignored the “almost uninterrupted exchange of communications” between his counsel and the Law Society, whereby attempts were made to cooperate with the Law Society in meeting its demands. While the appellant acknowledges that he may have exhibited signs of confusion at times, he never refused to cooperate with the Law Society. He maintains that, had the Divisional Court, and the Appeal Division and Hearing Division before it, not applied such an erroneously restrictive approach to the concept of good faith, he would not have been found guilty of professional misconduct by failing to cooperate.

[29] For the reasons that follow, I do not agree.

[30] While the appellant is correct that both subjective and objective criteria must be considered in determining whether there has been a failure to cooperate, in my view, there is no need to establish a “clear refusal to cooperate” with the Law Society, in the sense of an outright refusal to cooperate, before a finding of professional misconduct can be made. Any such approach would distort the test and undermine the self-regulating nature of the profession.

[31] As I will explain, the test for failing to cooperate is well-established and needs no alteration. It is both a subjective and objective test, one that takes into account all of the circumstances, including a licensee’s good faith efforts to respond promptly and completely, when determining whether a licensee’s conduct amounts to professional misconduct. As I will also explain, this is precisely how the Vice-Chair approached his task and what the Appeal Division and Divisional Court focussed upon when upholding the Vice-Chair’s conclusions.

(2) Standard of Review

[32] The decisions below pre-date the Supreme Court of Canada’s decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, 441 D.L.R. (4th) 1.

[33] It is uncontested that, since Vavilov, where the legislature has provided for an appeal from an administrative decision to a court, the reviewing court is to apply appellate standards of review to the decision: Vavilov, at para. 37; Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235. Here, there was an appeal from the Appeal Division to the Divisional Court under s. 49.38 of the Law Society Act. Had the appeal to the Divisional Court been decided post-Vavilov, instead of applying a reasonableness standard of review, the Divisional Court would have looked to the standards of review described in Housen. Under Housen, the reviewing court is to apply a standard of correctness to questions of law, while a standard of palpable and overriding error is to be applied to questions of fact and questions of mixed fact and law where the legal principle is not readily extricable: Vavilov, at para. 37; Housen, at paras. 8, 10, 33 and 36.

[34] In reviewing the Divisional Court’s decision, this court essentially “steps into the shoes” of the Divisional Court: Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, [2013] 2 S.C.R. 559, at paras. 45-46; Longueépée v. University of Waterloo, 2020 ONCA 830, 153 O.R. (3d) 641, at para. 47. In doing so, the “appellate court’s focus is, in effect, on the administrative decision”: Agraira, at para. 46, citing Merck Frosst Canada Ltd. v. Canada (Health), 2012 SCC 3, [2012] 1 S.C.R. 23, at para. 247. In this case, the administrative decision is the decision of the Appeal Division upholding the decision of the Hearing Division.

[35] The parties do not agree upon the appellate standard of review to be applied in this case.

[36] The appellant says the correctness standard of review should be applied, emphasizing that his main objection on appeal rests with an alleged overarching extricable error of law pertaining to the legal approach for ascertaining whether a licensee has acted in good faith when responding to the Law Society’s requests. In contrast, the Law Society indicates that the standard of review is palpable and overriding error, as determining what amounts to good faith is a question of mixed fact and law with no extricable legal issue.

[37] I agree that the appellant’s primary position is focussed upon a pure question of law, involving the parameters of the legal test to be applied when assessing a licensee’s alleged failure to cooperate with the Law Society pursuant to r. 7.1-1 of the Rules of Professional Conduct. This question of law is reviewable on a standard of correctness: Vavilov, at para. 37; Housen, at para. 8.

[38] However, as will be seen, I do not accept that there was an extricable error of law. The test for assessing a failure to cooperate was correctly identified by the Hearing Division, the Appeal Division, and the Divisional Court.

[39] Therefore, the question of whether the appellant engaged in professional misconduct in the circumstances of this case, the real crux of this appeal, is a clear question of mixed fact and law, one reviewable on a standard of palpable and overriding error.

(3) The Correct Test for Determining a Failure to Cooperate

[40] I will start by explaining how the Hearing Division, Appeal Division, and Divisional Court explained the test to be applied when determining whether a licensee has failed to cooperate with the Law Society’s requests. I will then explain why I would not accept the appellant’s suggestion that the Hearing Division, Appeal Division, or Divisional Court got the test wrong.

(a) The Legal Test as Described Below

[41] Close to the outset of the Vice-Chair’s reasons, he explained that he perceived his task as “largely to make findings of fact, drawing inferences where appropriate from the overall context and dealings between the parties, and to apply the well-established legal principles in order to determine whether the [appellant] complied promptly and completely to the Law Society’s requests.” He then went on to summarize those “well-established legal principles”, with the Vice-Chair noting that “[t]he parties agreed on the applicable jurisprudence”.

[42] The Vice-Chair placed particular emphasis upon two decisions in setting out the test for determining whether a licensee has failed to cooperate: Law Society of Upper Canada v. Ghobrial, 2014 ONLSHP 5, and Law Society of Upper Canada v. Boissonneault (May 23, 2008), Toronto, CN04/08 (Law Society of Upper Canada Hearing Panel). The Vice-Chair quoted from both decisions, including a passage from para. 8 of Ghobrial that references the “straightforward” nature of evaluating whether a licensee committed professional misconduct by failing to cooperate with the Law Society’s requests. The Vice-Chair set out the following passage from para. 8 of Ghobrial, emphasizing the need to take all of the circumstances into account when determining good faith efforts:

The issue is whether the licensee received correspondence requesting a reply, and acted in good faith to provide a complete and prompt response. The question of whether the response was complete and prompt must be determined by the adjudicator based on all the circumstances, including how the requests were expressed and what was required in order to fulfil them. [Emphasis added.]

[43] The Vice-Chair also quoted from para. 8 of Ghobrial in relation to the fact that the assessment of good faith efforts and failing to provide a prompt response to the Law Society is not informed by “merely missing a deadline”. In other words, mere delay does not, on its own, amount to failing to provide a prompt response. Rather, all of the circumstances must be considered.

[44] The Vice-Chair went further and, through quoting from Boissonneault, explained how the question of good faith can be determined. The passage from Boissonneault, as cited by the Vice-Chair, makes clear that, whatever “nuances” might be involved in the term “cooperate”, its meaning is “simple” in the context of a licensee’s relationship with the Law Society, requiring that the licensee “shall be, in relation to the [Law] Society in its supervisory and investigatory functions, honest, open and helpful” (emphasis added). See also Law Society of Upper Canada v. Cucci, 2012 ONLSHP 131, at para. 21; Law Society of Upper Canada v. Gray, 2011 ONLSHP 198, at para. 78; Law Society of Upper Canada v. Rosenthal, 2011 ONLSHP 103, at para. 86; Law Society of Upper Canada v. Leahy, 2014 ONLSTH 104, at para. 18; Law Society of Upper Canada v. Gavris, 2015 ONLSTH 144, at para. 8.

[45] The Appeal Division also embraced the Ghobrial and Boissonneault decisions as reflective of the correct legal approach to determine if a licensee has cooperated in providing prompt and complete responses to the Law Society. The Chair of the Appeal Division (the “Chair”), who authored the Appeal Division’s decision, reinforced the critical component of operating in “good faith” relative to the Law Society and emphasized that “there is not necessarily misconduct merely because the licensee did not provide the documents quickly.”

[46] Indeed, the Appeal Division suggested that embedding the words “good faith” into the assessment recognized that a licensee would not necessarily be found guilty of professional misconduct merely on the basis of failing to meet the Law Society’s timelines. According to the Appeal Division, if factors beyond the licensee’s control resulted in the inability to respond to the Law Society, then a finding of professional misconduct may not result. Even so, as noted by the Chair, “[g]ood faith is more than an absence of bad faith”, because “[t]o act in good faith, the licensee must be honest, open and helpful to the Law Society in fulfilling its regulatory functions”.

[47] The Appeal Division also specifically adverted to the record-keeping requirements imposed upon licensees. The Chair pointed out the Appeal Division’s view that a failure to comply with or to be aware of one’s record-keeping obligations as a licensee could not constitute a “good faith explanation” for delay. If such ignorance by a licensee could constitute good faith, then it would be “inconsistent with the purpose of the duty to co-operate”.

[48] The Divisional Court also weighed in on the importance of good faith to the failure to cooperate analysis. Like the Appeal Division, the Divisional Court emphasized that “[g]ood faith is more than an absence of bad faith.” Drawing on jurisprudence applying s. 24(2) of the Canadian Charter of Rights and Freedoms by way of analogy, Sachs J. made the following observation:

One of the factors that a court must consider in deciding whether to admit evidence that was obtained in a manner that violated the Charter is the seriousness of the Charter-infringing state conduct. Evidence that the police were acting in “good faith” may “reduce the need for the court to disassociate itself from the police conduct.” However, the court also made it clear that ignorance of Charter standards or negligence cannot be equated with good faith. Similarly, in the duty to co-operate context, a lawyer cannot be found to have acted in good faith to provide a complete and prompt response when the basis for their delay is their ignorance of their professional obligations or their negligence in making the efforts they are required to make to provide the requested information promptly. [Citations omitted; emphasis added.]

[49] I do not accept the suggestion that Sachs J. was comparing state conduct considered within the context of the application of s. 24(2) of the Charter with the conduct of lawyers considered within the context of Law Society proceedings. Rather, Sachs J. turned to s. 24(2) jurisprudence to make the simple, yet analogous observation that the absence of bad faith, in whatever environment, does not necessarily equate to good faith. Light can in fact penetrate between those two concepts.

[50] In the end, the test for determining a failure to cooperate with the Law Society’s requests, as espoused by the Hearing Division, the Appeal Division, and the Divisional Court, focusses on the determination of a licensee’s good faith efforts to cooperate with the Law Society. While articulated slightly differently by the Hearing Division, the Appeal Division, and the Divisional Court, the following considerations emerge from these decisions: (a) all of the circumstances must be taken into account in determining whether a licensee has acted responsibly and in good faith to respond promptly and completely to the Law Society’s inquiries; (b) good faith requires the licensee to be honest, open, and helpful to the Law Society; (c) good faith is more than an absence of bad faith; and (d) a licensee’s uninformed ignorance of their record-keeping obligations cannot constitute a “good faith explanation” of the basis for the delay.

(b) The Correct Test was Identified

[51] The appellant claims that the decisions demonstrate a strictly objective approach to the question of good faith. I do not agree. As just reviewed, each decision relied upon long-standing authorities, as accepted by the parties below. Those authorities insist upon a consideration of all of the circumstances, including whether the licensee acted in an honest, open, and helpful way.

[52] Therefore, contrary to the appellant’s position, the legal test articulated by the Vice-Chair, and then later on review, is one that permits a consideration of all the facts, looked at through both a subjective and objective lens. There is nothing about this approach that excludes consideration of the licensee’s conduct, including but not limited to whether the licensee was honestly mistaken or confused or suffered from a mere lapse in judgment. While the Vice-Chair in this case found no such confusion, honest mistake, or lapse in judgment, instead finding a “cat and mouse game” as it related to some of the requested documents, his ultimate conclusions do not mean that he got the legal test wrong.

[53] The appellant also objects to the Appeal Division’s proposition, as reinforced by the Divisional Court, that “[i]t would be inconsistent with the purpose of the duty to co-operate to find that a licensee’s failure to comply with or to be aware of their record[-]keeping obligations was a good faith explanation for a delay.” The appellant maintains that such a narrow perspective improperly conflates the licensee’s record-keeping requirements with the test for failing to cooperate.

[54] In support of this proposition, the appellant analogizes to Groia v. Law Society of Upper Canada, 2018 SCC 27, [2018] 1 S.C.R. 772, at para. 95, where the majority concluded that it would unjustifiably tarnish a lawyer’s reputation to “allow a law society to find a lawyer guilty of professional misconduct on the basis of incivility for something the lawyer, in the law society’s opinion, ought to have known or ought to have done” (emphasis in original). The appellant focusses on this passage from Groia in advancing the argument that, where a lawyer is mistaken about his record-keeping obligations, he will not “by necessary implication [be] in breach of his duty to cooperate where the alleged non-cooperation arises from honest confusion or miscommunication.”

[55] Groia has no bearing on the issue in this case. As Sachs J. pointed out in her reasons for the Divisional Court, Groia grappled with the question of whether a lawyer could be found guilty of professional misconduct involving incivility, in the face of having made a genuine mistake about the law. The Supreme Court majority concluded in Groia, at para. 91, that “inquiring into the legal merit of a lawyer’s position to conclude that his or her allegations lack a reasonable basis would discourage lawyers from raising well-founded allegations, impairing the lawyer’s duty of resolute advocacy” and “the client’s right to make full answer and defence.”

[56] The duty to cooperate has nothing to do with these important overarching policy considerations. In the context of this case, there is nothing wrong with the idea that a licensee should not be able to rely upon the ignorance of their record-keeping obligations as a demonstration of a “good faith explanation” for failing to completely and promptly respond to the Law Society’s requests. A licensee’s responsibilities in respect of record-keeping are clearly spelled out under By-Law 9. So too is the form in which records must be kept, including the need to “ensure that a paper copy of the [financial] record may be produced promptly on the [Law] Society’s request”: By-Law 9, s. 21(2).

[57] If a licensee could simply say to the regulator, “I cannot produce the record promptly or completely because I did not know about my record-keeping obligations and made no reasonable effort to find them out”, and this response could constitute a “good faith explanation”, it would undermine the very purpose of the duty to cooperate. Quite simply, ignorance of one’s professional obligations cannot subsist as a demonstration of good faith; they do not go hand in hand.

[58] In any event, I would pause here to make the observation that the Vice-Chair found as a fact that, at least when it came to the requested general receipts journal, the appellant confirmed in an interview with Law Society representatives on March 30, 2017, over five months after the general receipts journal was initially requested, “what he must have known all along: that he had the records containing the most important information that is required by By-Law 9, s. 18(5).” While the Vice-Chair later went on to say that “there was no mystery about the requirements of the By[-L]aw, and [the appellant] knew or should have known of the contents of the By[-L]aw and his obligation to comply with it”, I see nothing controversial in that statement. With the privilege of being admitted to a self-regulated profession comes the responsibility to know one’s obligations.

[59] Finally, the appellant argues that a failure to cooperate should not be made out on anything short of “clear, convincing and cogent evidence” of a “significant departure from acceptable professional standards” and a “clear refusal to cooperate”.

[60] There is no debate in this case about whether evidence led in support of a finding of professional misconduct must be clear, convincing, and cogent in nature: Re Bernstein and College of Physicians and Surgeons of Ontario (1977), 76 D.L.R. (3d) 38 (Ont. Div. Ct.), at p. 76. Like all matters of proof, it must meet these criteria.

[61] Nor does the Law Society dispute what was said by this court in Barrington v. The Institute of Chartered Accountants of Ontario, 2011 ONCA 409, 279 O.A.C. 148, at para. 122, leave to appeal refused, [2011] S.C.C.A. No. 367, that “any departure from the standards of the profession must be so significant that it constitutes professional misconduct”. The key is that failure to cooperate with the Law Society, once found, in fact constitutes a “significant departure from acceptable professional standards”. As the Hearing Division observed in Ghobrial, at para. 10, failing to cooperate is “properly stigmatized as professional misconduct if the licensee failed to act responsibly and in good faith to promptly provide the necessary information.” In other words, the label of professional misconduct is only given to a failure to cooperate – the failure to act responsibly and in good faith in responding to Law Society requests – because this type of conduct constitutes a significant departure from the acceptable standards of the profession.

[62] This leaves to be addressed the appellant’s suggestion that professional misconduct arising from a breach of r. 7.1-1 of the Rules of Professional Conduct should only be found upon a “clear refusal” by the licensee to cooperate. In support of this proposition, the appellant relies upon Reid v. College of Chiropractors of Ontario, 2016 ONSC 1041 (Div. Ct.), at paras. 80-81. Dr. Michael Reid was a chiropractor who was found guilty of a number of counts of professional misconduct, including failing to cooperate with the College of Chiropractors of Ontario’s investigation. Among other issues, the Divisional Court addressed whether the undisputed facts supported the finding of a failure to cooperate.

[63] While it is true that the Divisional Court in Reid, at para. 81, referred to the need for a “clear refusal to cooperate with the investigation” in order to make out a failure to cooperate with disciplinary investigations, I agree with the Law Society’s characterization of this term as being nothing more than “descriptive” in nature. In the context of that case, while Dr. Reid initially refused to cooperate with the investigator, he did so on the incorrect legal advice of a paralegal. Once Dr. Reid was informed by the investigator of his requirement to cooperate, he became cooperative. It is against that factual backdrop that the Divisional Court concluded that Dr. Reid had not failed to cooperate. In my view, the appellant’s position can find no support in Reid.

[64] In any event, to inject a “clear refusal to cooperate” test into the framework of r. 7.1-1 of the Rules of Professional Conduct – one that demands proof of an outright refusal to cooperate – would far overshoot the mark. While there must be clear, convincing, and cogent evidence of professional misconduct, to suggest that a finding of professional misconduct under r. 7.1-1 of the Rules of Professional Conduct must turn on a “clear refusal to cooperate” – something akin to the licensee outright refusing to cooperate with the Law Society – would set the standard too high, rendering it susceptible to a purely subjective test. Any such approach would stand in opposition to the laudable goals underlying the self-regulated legal profession.

[65] It is critical to keep the nature of this self-regulated environment in mind when considering the legal issue in this case. The core of the work of self-regulated law societies is the need to protect the interests of the public: Law Society of New Brunswick v. Ryan, 2003 SCC 20, [2003] 1 S.C.R. 247, at para. 36; Pearlman v. Manitoba Law Society Judicial Committee, [1991] 2 S.C.R. 869, at pp. 886-88. As David A.A. Stager and Harry W. Arthurs wrote in Lawyers in Canada (Toronto: University of Toronto Press, 1990), at p. 31, as cited in Ryan, at para. 36, “The privilege of self-government is granted to professional organizations only in exchange for, and to assist in, protecting the public interest with respect to the services concerned”.

[66] The reputation of the legal profession rests on the public’s confidence that self-regulation is taken seriously by the legal profession. This can only occur where the legal profession has at hand effective and efficient tools by which to achieve accountability among its members. This is fundamental to the health and vibrancy of the legal profession.

[67] Returning to the duty to cooperate, r. 7.1-1 of the Rules of Professional Conduct is designed to ensure that there is a complete response and no inordinate delays in investigations by the self-regulated authority. It requires nothing more than prompt and complete responses when requested, which are essential to moving investigations forward. Delays in doing so can only serve to shake the public’s confidence in the Law Society’s self-regulatory authority: see Law Society of Upper Canada v. Baker, 2006 ONLSHP 21, at para. 6; Law Society of Upper Canada v. Wysocky, 2009 ONLSHP 77, at paras. 89-90. As the Law Society points out in their factum, the “reputation of the ability of the profession to self-regulate would quickly be diminished if the obligation to cooperate could be subverted by a ‘cat and mouse game’ (as described by the Hearing Panel), that fell short of a clear refusal.”

[68] It is against all of that backdrop that the test for failing to cooperate, finding its foundation in Ghobrial and Boissonneault, must be considered. In my view, the test appropriately has both subjective and objective components. It is for the Law Society to prove the failure to cooperate – the absence of good faith dealings with the Law Society – on a balance of probabilities. In coming to that determination, the Hearing Division will consider all of the evidence and circumstances informing whether the licensee was or was not, in relation to the Law Society in its supervisory and investigatory functions, honest, open, and helpful.

(4) The Test was Properly Applied

[69] There is nothing in the Vice-Chair’s reasons that suggests he applied a strictly objective test to his findings or turned the failure to cooperate into an absolute liability offence. To the contrary, he adhered to the correct legal test as described above, took into consideration all of the circumstances, including the back-and-forth communications between the appellant’s counsel and the Law Society, and simply concluded that the appellant had failed to cooperate.

[70] At its core, the appellant is really objecting to the Vice-Chair’s conclusions, including the conclusion that he did not act in good faith. The appellant says that, through his counsel, he worked diligently to respond to the Law Society’s requests. For instance, he emphasizes that there is an “almost uninterrupted exchange of communications” in the record, as he repeatedly sought clarification from the Law Society and remained engaged with the Law Society throughout the investigation. He underscores the efforts he made to comply, including explaining why certain documents were taking longer to produce, asking for clarifications, and offering to provide the Law Society with the authorization to pay to obtain the cancelled cheques.

[71] The appellant points out that each request made by the Law Society was responded to promptly. While the Law Society may not have liked all of the responses, they were genuine responses that, at their highest, may show some confusion on the part of both of the Law Society and the appellant, but not a failure to cooperate. The appellant argues that this is best demonstrated through the fact that, once the confusion was cleared, all the requested documents were produced. This is said to underscore how everything the appellant did was in good faith.

[72] Respectfully, the difficulty with this argument is that the Vice-Chair, without legal error, came to a very different conclusion. He reviewed the law correctly. He made extensive findings of fact. Ultimately, he came to the conclusion that, based upon those facts, the appellant had not acted in good faith when responding to the Law Society. This is perhaps most clearly articulated by the Vice-Chair when he concluded, in relation to the general receipts journal and the general disbursements journal, that the appellant had engaged in a “‘cat and mouse game’ that has no place in the relationship between licensee and regulator.” This type of game stands as the antithesis of good faith dealings or, put another way, of honest, open, and helpful dealings.

[73] These were conclusions available to the Vice-Chair on the record before him. It cannot be said that a palpable and overriding error was made.

E. Disposition

[74] I would therefore dismiss the appeal.

[75] On consent of the parties, I would order the appellant to pay costs in the amount of $15,000 to the Law Society, inclusive of disbursements and applicable taxes, which includes costs for the appeal and the motion for leave to appeal.

Released: April 22, 2021 Fairburn A.C.J.O. I agree. S.E. Pepall J.A. I agree. L.B. Roberts J.A.