Forget v. Law Society of Upper Canada [Indexed as: Forget v. Law Society of Upper Canada]

58 O.R. (3d) 142

[2002] O.J. No. 422

Docket No. 500/00

Ontario Superior Court of Justice

Divisional Court

Blair R.S.J., Day and Marchand JJ.

February 5, 2002

Professions -- Barristers and solicitors -- Discipline -- Convocation's prior determination that solicitor was dishonest for purposes of approving grant under Compensation Fund does not create apprehension of institutional bias sufficient to disqualify Law Society from proceeding with disciplinary hearing.

A party which suffered financial loss as a result of the applicant solicitor's actions made a claim against the Lawyers' Fund for Client Compensation ("the Compensation Fund"). Convocation sanctioned a payment to the aggrieved party on the ground that the loss was a consequence of the applicant's dishonesty. The respondent Law Society subsequently initiated disciplinary proceedings against the applicant as a result of the same actions by the applicant, seeking a finding of professional misconduct by reason of the misapplication of trust funds and the breach of an escrow agreement. The applicant brought an application for judicial review, arguing that the Law Society was disqualified from disciplining him on the ground that the earlier determination of dishonesty constituted a pre-judgment of the disciplinary issue and therefore gave rise to a reasonable apprehension of bias.

Held, the application should be dismissed.

The Law Society Act, R.S.O. 1990, c. L.8 delegates both a disciplinary and a compensation function to the Benchers in Convocation. The functions are separate and distinct. Where a statute provides for overlapping functions on the part of an administrative body, the exercise of those functions is within its jurisdiction and, in and of itself, does not give rise to a reasonable apprehension of bias. There was nothing in the act of the respondent in pursuing its disciplinary proceedings against the applicant which went beyond the performance of the duties imposed upon it by the Act or which amounted to an overextension of the overlapping functions. The absence of an oral hearing during the compensation process, or the failure of the Assistant Secretary to the Compensation Fund to pass along the applicant's denial of dishonesty to the Review Sub- Committee, could not have any effect on the applicant's ability to receive a fair hearing before the Hearing Panel in the discipline proceedings. The applicant was a discharged bankrupt, and any claim by the respondent against him for the amount paid to the aggrieved party was extinguished unless the applicant was guilty of a "fraud, embezzlement, misappropriation or defalcation" (s. 178(1)(d) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3). However, the connection between the disciplinary hearing and the recovery, if any, against the applicant was too tenuous and indirect to give rise to an impediment to the respondent proceeding with the disciplinary proceedings.

APPLICATION for a judicial review of an initiation of disciplinary proceedings.

Duncan v. Law Society of Alberta (Investigating Committee) (1991), 1991 ABCA 107, 79 Alta. L.R. (2d) 228, 80 D.L.R. (4th) 702 (C.A.); Ringrose v. College of Physicians and Surgeons of Alberta, 1976 172 (SCC), [1977] 1 S.C.R. 814, 1 A.R. 1, [1976] 4 W.W.R. 712, 9 N.R. 383, 67 D.L.R. (3d) 559; W.D. Latimer Co. v. Bray (1974), 1974 698 (ON CA), 6 O.R. (2d) 129, 52 D.L.R. (3d) 161 (C.A.), apld Other cases referred to Brosseau v. Alberta Securities Commission, 1989 121 (SCC), [1989] 1 S.C.R. 301, 65 Alta. L.R. (2d) 97, 57 D.L.R. (4th) 458, 93 N.R. 1, [1989] 3 W.W.R. 456, 47 C.R.R. 394n (sub nom. Barry and Alberta Securities Commission Re); Committee for Justice and Liberty v. Canada (National Energy Board), 1976 2 (SCC), [1978] 1 S.C.R. 369, 68 D.L.R. (3d) 716; Law Society of Upper Canada v. French, 1974 24 (SCC), [1975] 2 S.C.R. 767, 49 D.L.R. (3d) 1, 3 N.R. 410 Statutes referred to Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, s. 178(1) (d) Law Society Act, R.S.O. 1990, c. L.8, s. 34 [as am.], 51 [as am.]

Charles C. Mark, Q.C., for applicant. William E. Donegan, for respondent.

The judgment of the court was delivered by

BLAIR R.S.J.: --

Overview

[1] This case has its roots in the misapplication of funds in a lawyer's trust account.

[2] The issue it raises is whether the Law Society of Upper Canada is able to discipline a lawyer after its Lawyers' Compensation Fund has already authorized a reimbursement to an injured party for losses sustained as a result of conduct on the part of the lawyer which was determined, in that context, to be "dishonest". Is the Law Society disqualified from disciplining the lawyer on the ground that the earlier determination of dishonesty constitutes a pre-judgment of the disciplinary issue and therefore gives rise to reasonable apprehension of bias?

[3] In April 2000, the respondent Law Society initiated disciplinary proceedings against the applicant lawyer, seeking a finding of professional misconduct by reason of the misapplication of funds and the breach of an escrow agreement.

[4] Mr. Forget commenced this application for Judicial Review in August 2000. The following March he moved before a single judge of the Divisional Court for an injunction restraining the Hearing Panel from proceeding to hear the matter pending the determination of the application by this court. Jennings J. dismissed that motion, but in August 2001, the Hearing Panel itself decided -- after hearing argument on the point -- that it would adjourn the hearing on the merits until after this application had been considered by the Divisional Court.

[5] The application for Judicial Review was heard on September 27, 2001.

[6] I would dismiss the application for the following reasons.

Facts

[7] The applicant is a solicitor, called to the Bar in 1991.

[8] In 1997, he was acting for Bay-Walsh Ltd. and two individual clients, Terry Clause and Frank Marino, who were involved with Bay-Walsh. Bay-Walsh was engaged in a variety of land transactions in Thunder Bay. One of those transactions was the potential purchase of the Circle Inn, a hotel Bay-Walsh intended to convert into a franchise outlet. Another project involved the construction of renovations and leasehold improvements to a new restaurant called "Moxies" which was being opened in a local mall by a partnership known as Vandelay Industries.

[9] Bay-Walsh had a contract with Vandelay in connection with the restaurant project. As part of that contract, Vandelay transferred the sum of $250,000 (later increased to about $330,000) to Mr. Forget's trust account, to be used to pay contractors and suppliers in connection with the Moxies renovations. The $250,000 was transferred on or about November 5, 1997.

[10] Bay-Walsh was planning to fund the purchase of the Circle Inn partially by cashing certain securities it owned. On November 3 or 4, the applicant was notified by the broker for Bay-Walsh that the sum of $200,000 was to be transferred from the company's brokerage account to his trust account. At about this time, however, the closing of the Circle Inn purchase was postponed pending further negotiations regarding Federal Business Development Bank financing. Messrs. Clause and Marino suggested that the moneys be used instead to fund a loan which Marino proposed to make to a Mr. Patrick Coccimiglio.

[11] On Mr. Clause's instructions, Mr. Forget then transferred the sum of $200,000 to another trust account for Mr. Marino, who then loaned the moneys to Mr. Coccimiglio.

[12] The applicant did not verify that the funds -- which were to have been wired from the sale of the securities owned by Bay-Walsh -- had been received before making the transfer to the Marino account, and in fact they never arrived. The moneys eventually loaned to Mr. Coccimiglio came from the Vandelay trust moneys. As a result of the shortfall in Mr. Forget's trust account, Vandelay suffered a loss.

[13] In a statement made to the Lawyers' Professional Indemnity Company ("LPIC") and released to the Law Society's staff at the Compensation Fund, the applicant noted that because he did not want to upset Messrs. Clause and Marino, he agreed to use the funds held for Vandelay to make the transfer for the Coccimiglio loan until the receipt of the securities moneys, which he thought was imminent. He believed the Vandelay trust moneys would only be in a shortfall position for a short period of time, and that if Bay-Walsh did not repay the money held for Vandelay, Bay-Walsh would finish the Moxies project at its own cost.

[14] Mr. Forget reported the loss to LPIC. LPIC refused to respond to the claim on the basis that it was a loss resulting from a deliberate act amounting to dishonesty and not from negligence. In due course, Vandelay made a claim against the Lawyer's Fund for Client Compensation (the "Compensation Fund" or "Fund"). On November 26, 1999, Convocation sanctioned the payment of $91,500 to Vandelay. It did so on the ground that the loss was a consequence of dishonesty.

[15] Although there was no oral hearing in connection with the Compensation Fund payment, there was a lengthy exchange of correspondence between the applicant and Ms. Heather Werry, the Assistant Secretary to the Fund, in which Mr. Forget set out his position. He consistently rejected the allegation of dishonesty, insisting instead that what had happened was a matter of mismanagement or negligence. Ms. Werry advised him that for purposes of a grant under the Fund"dishonesty" did not necessarily mean fraud. She told Mr. Forget that she would advise the Review Sub-Committee that he disputed the allegations of dishonesty. It does not appear that she did so, however.

[16] Ms. Werry recommended that the grant be paid. After reviewing the facts and circumstances, she concluded her two- page report to the Review Sub-Committee with the following summary:

While I have no evidence the solicitor benefited from his breach of trust, he breached it knowingly. As it was a deliberate act, LPIC is denying coverage. I am satisfied the claimant has suffered a loss in consequence of dishonesty. While there may not be a solicitor client relationship there was a clear breach of trust in connection with the law practice in accordance with the Law Society Act.

[17] The two Benchers on the Review Sub-Committee who originally considered the claim against the Compensation Fund were split in their views. In such circumstances, a claim is referred to the Chair of the Compensation Fund Committee for review. In this case, the Chair approved the grant. Convocation accepted the recommendation.

[18] Ms. Werry's recommendation memorandum to the Review Sub- Committee did not refer to the applicant by name. Indeed, neither the members of the Compensation Review Sub-Committee, nor of the full Compensation Fund Committee, nor the Benchers in Convocation, were at any time aware of the identity of the solicitor involved. He was referred to simply as "Solicitor #48" (In Good Standing), a number that has no relationship to his Law Society membership number.

[19] The applicant made a voluntary assignment in bankruptcy in January 1999. He received an absolute discharge from bankruptcy in October of that year.

The Positions of the Parties

The applicant

[20] On behalf of the applicant, Mr. Mark submits that Convocation has already made a ruling on the dishonesty of Mr. Forget by granting compensation to the party affected by the loss, and that this ruling creates a situation of "institutional bias" against him, since the Hearing Panel must be chosen from members of Convocation. One "instrumentality of Convocation" (the Compensation Fund Committee) having approved compensation on an implicit finding of dishonesty on the applicant's part, another instrumentality (the Discipline Hearing Panel) is irretrievably tainted by that finding, thus giving rise to a disqualifying reasonable apprehension of bias with respect to the disciplinary proceedings against Mr. Forget.

[21] These arguments are bolstered by the contention that the respondent has a monetary interest in finding the solicitor dishonest, and is therefore automatically disqualified from judging him. Under the provisions of the Law Society Act, R.S.O. 1990, c. L.8, as amended ("the Act"), s. 51(7), the Law Society is entitled to claim against the solicitor for the [$91,500] paid to the aggrieved party. Since Mr. Forget is a discharged bankrupt, however, that claim is extinguished unless by s. 178(l)(d) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, the misapplication was a "fraud, embezzlement, misappropriation or defalcation".

The respondent

[22] On behalf of the Law Society, Mr. Donegan argues that the application should be dismissed because:

(a) the dual functions of compensation and discipline have been conferred on the Law Society by statute and the respondent cannot be exceeding its jurisdiction by performing the functions assigned to it by statute;

(b) the Law Society has no financial interest in finding the applicant guilty of professional misconduct; and further,

(c) the applicant has adequate alternative remedies to Judicial Review pursuant to the rights of appeal under the Law Society Act, and the administrative process under that Act should not be fragmented.

Law and Analysis

[23] The Law Society Act delegates both a disciplinary function and a compensation function to the Benchers in Convocation. The functions are separate and distinct.

[24] Part II of the Act deals with lawyers' conduct (or, more accurately, with lawyers' misconduct). It contains an elaborate mechanism of investigator procedures, complaints resolution procedures and hearing panel procedures for addressing professional misconduct, a lawyer's capacity to practise and a lawyer's professional competence. A Proceedings Authorization Committee, comprised of Benchers who do not sit on Hearing Panels, oversees the authorization of various applications by the Law Society. Subsections (1) and (2) of s. 34 [of] the Act state:

34(1) Conduct application -- With the authorization of the Proceedings Authorization Committee, the Society may apply to a Hearing Panel for a determination of whether a member or student member has contravened section 33 [i.e., has engaged in professional misconduct or conduct unbecoming a barrister or solicitor].

(2) Parties -- The parties to the application are the Society, the member or student member who is the subject of the application, and any other person added as a party by the Hearing Panel.

[25] Part II contains provisions governing the hearing before the Hearing Panel and establishes an Appeal Panel of Benchers and an appeals procedure from a decision of the Hearing Panel. There is an appeal from the decision of the Appeal Panel to the Divisional Court.

[26] The Lawyers Fund for Client Compensation was originally established in 1953. It is continued under Part III of the present Act. The relevant provisions are:

51(1) The Compensation Fund is continued as the Lawyers Fund for Client Compensation.

(1.1) Same -- The Society shall maintain the Fund and shall hold it in trust for the purposes of this section. [1998, c. 21, s. 25(1)]

(2) Composition of Fund -- The Fund shall be made up of,

(a) all money paid by members of the Society under subsection (3);

(b) all money earned from the investment of money in the Fund;

(c) all money recovered under subsection (7); and

(d) all money contributed by any person. [R.S.O. 1990, c. L.8, s. 51 (2); 1998, c. 21, s. 25 (2)]

(3) Fund levy -- Every member, other than those of a class exempted by the by-laws, shall pay to the Society, for the Fund, such sum as is prescribed from time to time by the by- laws. [R.S.O. 1990, c. L.8, s. 51 (3); 1998, c. 21, s. 25 (3)]

(5) Grants -- Convocation in its absolute discretion may make grants from the Fund in order to relieve or mitigate loss sustained by any person in consequence of dishonesty on the part of any member in connection with such member's law practice or in connection with any trust of which the member was or is a trustee, although after the commission of the act of dishonesty the member may have died or ceased to administer the member's affairs or to be a member. [R.S.O. 1990, c. L.8, s. 51 (5); 1998, c. 21, s. 25(5)]

(7) Subrogation -- If a grant is made under this section, the Society is subrogated to the amount of the grant to any rights or remedies to which the person receiving the grant was entitled on account of the loss in respect of which the grant was made against the dishonest member or any other person, or, in the event of the death or insolvency or other disability of the member or other person, against the personal representative or other person administering the estate.

(9) Reimbursement from bankrupt's estate -- Where a grant has been made under this section and the dishonest member has been declared a bankrupt, the Society is entitled to prove against the bankrupt's estate for the full amount of the claim of the person to whom the grant was made and to receive all dividends on such amount until the Society has been reimbursed the full amount of the grant.

(10) Delegation of powers to committee or referee or both -- Convocation may delegate any of the powers conferred upon it by this section to a committee of Convocation and, whether or not Convocation has made any such delegation, it may appoint any member as a referee and delegate to the member any of the powers conferred upon it by this section that are not delegated to a committee.

(11) Reports -- Where Convocation has delegated any of its powers under this section to a committee or to a referee, the committee or referee, as the case may be, shall report as required to Convocation but, where there is a delegation to both a committee and a referee, the referee shall report as required to the committee. [R.S.O. 1990, c. L.8, s. 51 (7-11)]

(11.1) Summons -- For the purposes of this section, the Secretary may require any person, by summons,

(a) to give evidence on oath or affirmation at a hearing before Convocation, a committee or a referee; and

(b) to produce in evidence at a hearing before Convocation, a committee or a referee documents and things specified by the Secretary.

[27] The Compensation Fund functions separately from the Law Society discipline process and from the Society's insurance coverage, which is currently administered by LPIC. Convocation has delegated to the Compensation Fund Committee the powers conferred by s. 51, by by-law.

[28] It is apparent from the foregoing that the provisions of Part II of the Act dealing with conduct and discipline contain specific "natural justice" safeguards including, amongst other things, the requirement that Convocation hold a hearing. On the other hand, there is nothing in the provisions of s. 51 relating to the Compensation Fund which requires that a hearing take place, although the reference in s. 51(11) to the power to summon individuals to testify at a hearing before Convocation implies that a formal hearing could take place. In this case, Mr. Forget was not afforded an oral hearing in the Compensation Fund decision-making process.

[29] A grant from the Fund was approved, based on the applicant's "dishonesty". The question, therefore, is whether or not Convocation's prior determination that the applicant has been dishonest, for purposes of approving a grant under the Fund, creates an apprehension of institutional bias sufficient to taint the disciplinary role of Convocation and disqualify the Law Society from proceeding with the application before the Hearing Panel.

[30] In my opinion, it does not.

[31] There is ample authority for the proposition that where a statute provides for overlapping functions on the part of an administrative body, the exercise of those functions is within its jurisdiction and, in and of itself, does not give rise to a reasonable apprehension of bias -- or "institutional bias", as it is sometimes called in such circumstances: see Ringrose v. College of Physicians and Surgeons of Alberta, 1976 172 (SCC), [1977] 1 S.C.R. 814 at p. 823, 67 D.L.R. (3d) 559, per de Grandpré J.; W.D. Latimer Co. v. Bray (1974), 1974 698 (ON CA), 6 O.R. (2d) 129, 52 D.L.R. (3d) 161 at p. 172 (C.A.), per Dubin J.A.; Duncan v. Law Society of Alberta (Investigating Committee) (1991), 1991 ABCA 107, 80 D.L.R. (4th) 702 at p. 717, 79 Alta. L.R. (2d) 228 (C.A.), per Foisy J.A.

[32] Duncan v. Law Society of Alberta (Investigating Committee) involved a factual situation very similar to that of the present case. It was alleged that the solicitor had misappropriated property received from the complainant as a client. After pursuit of a civil remedy had proved futile, the complainant renewed his claim against the Alberta Law Society's Assurance Fund. The Benchers approved the claim. Subsequently the Law Society initiated disciplinary proceedings against the solicitor, who challenged the proceedings on the basis of institutional bias. He argued the Benchers of the Society had already predetermined the issue when they approved the complainant's claim against the Assurance Fund.

[33] The majority of the Court of Appeal ruled that the case was one of overlapping function, authorized by statute, and that the facts did not give rise to a reasonable apprehension of bias. Writing for the majority, Foisy J.A. concluded that the dual proceedings were different in scope, procedure and object, albeit arising from the same conduct, and that the Assurance Fund decision was not tantamount to a predetermination of the disciplinary complaint. In doing so, he reviewed the relevant authorities emanating from the Supreme Court of Canada on the subject of reasonable apprehension of bias and overlapping functions assigned by legislatures to administrative tribunals, including Committee For Justice and Liberty v. Canada (National Energy Board), 1976 2 (SCC), [1978] 1 S.C.R. 369, 68 D.L.R. (3d) 716, Law Society of Upper Canada v. French, 1974 24 (SCC), [1975] 2 S.C.R. 767, 49 D.L.R. (3d) 1, and Ringrose, supra.

[34] At pp. 719-20 D.L.R., after reviewing a number of authorities, Foisy J.A. said:

In Ringrose, de Grandpré, J. for the majority stated at pp. 567-8:

As decided by this court in The Law Society of Upper Canada v. French (1974), 1974 24 (SCC), 49 D.L.R. (3d) 1, [1975] 2 S.C.R. 767, 3 N.R. 410, no reasonable apprehension of bias is to be entertained when the statute itself prescribed overlapping of functions. . . . [balance of citation omitted]

The binding principle to be taken from these cases is that where a statute specifically authorizes procedures involving overlapping functions, which otherwise might give rise to a reasonable apprehension of bias, then if those procedures are followed without over-extension, they are not subject to review. Laskin C.J.C. in Ringrose refers to the need to have something beyond institutional bias in order to establish reasonable apprehension of bias where authorized by statute. He states that the enabling provisions may permit overlapping of functions, but that this overlapping should not be over- extended. Here there is no suggestion on the facts of an overextension of statutory authority.

This was reiterated in Brosseau v. Alberta Securities Commission (1989), 1989 121 (SCC), 57 D.L.R. (4th) 458, [1989] 1 S.C.R. 301, 35 Admin. L.R. 1, where L'Heureux-Dubé J., writing for the court, stated at p. 464:

In order to disqualify the Commission from hearing the matter in the present case, some act of the Commission going beyond its statutory duties must be found.

In this case the impugned proceedings are authorized by the Legal Profession Act, R.S.A. 1980, c. L-9, as amended [S.A. 1981, c. 53]. It is a statutory duty of the Law Society to ensure hearings of disciplinary complaints are carried out by one or more benchers, in accordance with the provisions of the Act. It is, in addition, the duty of the Law Society to pass rules for handling of claims against the Assurance Fund. . . .

(Italics added)

[35] Mr. Mark argues that a decision of the Alberta Court of Appeal is not binding on this court, and submits that we should follow the reasoning of Bracco J.A. in dissent. Bracco J.A. was of the view that the Benchers had already predetermined the matter which would come before them in the disciplinary proceedings against Mr. Duncan, that they had therefore crossed "the line of demarcation in determining whether reasonable apprehension of bias exists", and that this was sufficient to preclude them from proceeding. The thrust of his dissent is found in the following two passages from his reasons, supra:

At p. 708 D.L.R.:

Here the benchers in carrying out their duty in considering a claim against the Assurance Fund, decided the primary and governing basis of such claim, namely, that its member solicitor misappropriated his client's property. That very same issue is subsequently referred to the investigating committee, a member of the benchers. In the scheme of the disciplinary proceedings an appeal lies to the benchers, who have already made the decision, namely that Duncan misappropriated his client's property. That decision was not incidental and of no consequence. It was a considered decision, and the essential foundation of the granting of the claim against the Assurance Fund.

And at p. 712 D.L.R.:

There may be instances when the same course as followed by the Law Society in this case would not give rise to the complaint of unfairness. In this case, in my respectful view, it is difficult, if not impossible, to say that the benchers' decision that Duncan did misappropriate his client's property is an investigative or preliminary finding. It was a considered and final determination, the consequences of which required the benchers to reimburse the complainant's loss, in whole or in part, at the discretion of the benchers. The disciplinary matter concerns the identical circumstances. The benchers bear the responsibility of decision in both instances. Thus, in my view, the problem in this case is not statutory overlapping. It is not a matter of the benchers having prior information. In my view it is clearly a case of predetermination.

[36] While the concerns raised in the dissent of Bracco J.A. are legitimate concerns, I am nonetheless persuaded that the majority decision in Duncan is the preferable approach, and I accept its reasoning as dispositive of this case. It is consistent with the following statement of Dubin J.A. in W.D. Latimer Co. v. Bray, supra, at pp. 172-73 D.L.R., approved by the Supreme Court of Canada in Brosseau v. Alberta Securities Commission, 1989 121 (SCC), [1989] 1 S.C.R. 301, 57 D.L.R. (4th) 458, at pp. 310-11 S.C.R.:

Where by statute the tribunal is authorized to perform tripartite functions, disqualification must be founded upon some act of the tribunal going beyond the performance of the duties imposed upon it by the enactment pursuant to which the proceedings are conducted. Mere advance information as to the nature of the complaint and the grounds for it are not sufficient to disqualify the tribunal from completing its task.

[37] I am also of the view that there is nothing in the act of the respondent Law Society in pursuing its disciplinary proceedings against Mr. Forget which goes "beyond the performance of the duties imposed upon it by the enactment pursuant to which the proceedings are conducted", or which, in the language of Foisy J.A. in Duncan, amounts to "overextension" of the overlapping functions.

[38] Mr. Mark raises a number of issues in this regard on behalf of the applicant. He argues that the entire Law Society process has been tainted from the very beginning, as a result of Ms. Werry's failure to convey Mr. Forget's denial of dishonesty to the Compensation Fund Review Sub-Committee at the time of her recommendation of approval of the grant based upon dishonesty. This was compounded by the fact that there was no oral hearing in the course of the Compensation Fund process at which the applicant could make his case before the Committee. In addition, Mr. Mark submits that the Law Society is irretrievably compromised in the circumstances because Convocation has an interest in finding the applicant guilty of professional misconduct based on dishonesty. The contention is that such a finding will buttress the respondent Society's ability to recover on its subrogated claim on the ground that the claim survives Mr. Forget's discharge from bankruptcy by reason of s. 178(1)(d) of the Bankruptcy and Insolvency Act, which states:

178(1) An order of discharge does not release the bankrupt from

(d) any debt or liability arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity.

[39] I do not think these arguments can prevail in the circumstances.

[40] The compensation and disciplinary proceedings contemplated by the Law Society Act have a different purpose, involve different parties and standards of proof, and are treated differently in the Act itself. Part III, in which the Compensation Fund provisions are found, contains none of the elaborate investigative, resolution and hearing procedures found in Part II dealing with lawyers' conduct. By virtue of s. 51(5), Convocation is authorized "in its absolute discretion" to make grants from the Fund. The process is left to it, and, as indicated, the responsibility has been delegated to the Compensation Fund Committee and the separate staff which support the work of that Committee.

[41] Although there was no oral hearing during the compensation process, Mr. Forget was able to, and did, make fulsome written submissions regarding his position. No one requested, and no one is arguing there should have been, oral hearings for compensation purposes.

[42] I do not see how the absence of an oral hearing during the compensation process, or even how Ms. Werry's failure to pass along the applicant's denial of dishonesty to the Review Sub-Committee, can have any affect on the applicant's ability to receive a fair hearing before the Hearing Panel in the discipline proceedings. Those factors, at best, only feed the argument that by reason of its approval of the grant from the Compensation Fund, based upon the applicant's dishonesty, the Law Society has already pre-determined the issue for disciplinary purposes. As has already been noted, however, the existence of dual overlapping functions which otherwise might give rise to a reasonable apprehension of bias, is not in itself disqualifying where the statutory procedures are followed without overextension: Duncan v. The Law Society of Alberta (Investigative Committee), supra.

[43] The argument that the Law Society has a monetary interest in the outcome of the disciplinary proceeding has a patina of force to it, but does not bear up on analysis. It is true that a judgment founded on fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity, survives a bankruptcy discharge. However, it is far from clear that the applicant's situation falls into such a category, or that a finding of "dishonesty" for purposes of a grant from the Compensation Fund would support a finding under s. 178(1)(d) of the Bankruptcy and Insolvency Act. The Law Society Act does not suggest that such is the case. Subsection 51(7) preserves the Society's subrogated rights against the estate of the bankrupt member, and s. 51(9) safeguards the right to claim against the bankrupt member's estate and to receive dividends, like any other creditor. Although both provisions make reference to "the dishonest member", neither indicates that the Society's claim is of the sort that survives the bankruptcy.

[44] In my opinion, the connection between the disciplinary hearing and the recovery, if any, against the discharged bankrupt is too tenuous and indirect to give rise to an impediment to the Law Society's proceeding with its disciplinary proceedings. In situations where members of the Society have misapplied trust funds, there may well be frequent occasions where the Fund pays and the member makes an assignment in bankruptcy. I do not mean to suggest that Mr. Forget did anything of the sort in this case, but it cannot be that a member can avoid disciplinary proceedings by the expedient of going bankrupt, because the same argument as that raised by the applicant could be made in any such case.

Conclusion and Disposition

[45] In view of the above conclusions, it is not necessary to deal with the respondent's submissions respecting pre-maturity of the application and alternative remedies.

[46] For the foregoing reasons, then, I would dismiss the application for Judicial Review and remit the disciplinary proceedings to the Law Society Hearing Panel for determination on the merits.

[47] If counsel cannot agree with respect to costs, we will receive brief written submissions in that regard within 20 days of the release of these reasons.

Application dismissed.