COURT FILE NO.: 579/04
DATE: 20050613
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
LANE, JENNINGS AND MOLLOY JJ.
B E T W E E N:
ROBERT CHARLES WATT
Appellant
Richard H. Parker, for the Appellant
- and -
THE LAW SOCIETY OF UPPER CANADA
Respondent
Lisa Freeman, for the Respondent
HEARD: May 9, 2005
MOLLOY J.:
REASONS FOR JUDGMENT
A. THE APPEAL AND STANDARD OF REVIEW
[1] Robert Charles Watt is a disbarred lawyer. He applied to the Law Society of Upper Canada for readmission, but his application was dismissed by a Hearing Panel on September 24, 2004. Mr. Watt appealed to the Appeal Panel of the Law Society but his appeal was dismissed on July 7, 2004. Mr. Watt now appeals to this court from the decision of the Appeal Panel and seeks an order reinstating him as a member in the Law Society.
[2] In this situation, there is a full right of appeal from the Appeal Panel to the Divisional Court: Law Society Act, R.S.O. 1990 c. L.8, s. 49.38 (“the Act”). Further, when hearing an appeal from the Hearing Panel, the Appeal Panel has broad jurisdiction to determine any question of fact or law and may “make any order or decision that ought to or could have been made by the Hearing Panel”: ss. 49.35 (1) and (2) of the Act.
[3] The Supreme Court of Canada held in Law Society of New Brunswick v. Ryan, 2003 SCC 20, [2003] 1 S.C.R. 247 that reasonableness is the appropriate standard of review from a law society’s decisions on questions of fact or mixed fact and law. However, with respect to questions of law, the law society is required to be correct.
B. THE 1993 DISCIPLINE PROCEEDINGS
[4] The appellant was called to the Bar in 1973 and practiced with the same small firm (Hetherington, Fallis) from the time he articled until he suspended his practice in 1991 in the midst of a Law Society investigation. In 1992, the Law Society charged Mr. Watt with misappropriating $513,000.00 from the account of a client, the Jessie Brown Estate account (“the Brown Estate”). Mr. Watt acknowledged having received the money and admitted negligence in the handling of the firm’s accounts. He denied having deliberately taken the client’s funds, testifying that he believed the money belonged to him for billed fees held in a mixed fee pool account maintained by his firm with Thompson Kernaghan (“TK”).
[5] The discipline proceedings against Mr. Watt proceeded before the Discipline Committee in 1993. After a seven day hearing, the Discipline Committee issued a decision, dated May 17, 1993, finding Mr. Watt guilty of professional misconduct. The Committee rejected Mr. Watt’s evidence as to the “fee pool” account and found that Mr. Watt deliberately withheld certain securities from the Brown Estate account intending to convert them to his own use, transferred them into a TK account and then took them for his own use. The Committee ordered that Mr. Watt be disbarred. Mr. Watt did not take any steps to appeal or judicially review the Discipline Committee’s decision.
C. IMPACT OF SUBSEQUENT LITIGATION ON MISAPPROPRIATION FINDING
[6] Mr. Watt was never charged criminally with respect to the missing funds. However, there has been considerable civil litigation involving Mr. Watt, his former partners and various clients since 1993. Counsel for the appellant takes the position that Mr. Watt’s name has been cleared in the course of that litigation because of new evidence that has come to light and that it has been established in this litigation that Mr. Watt was guilty only of negligence, not misappropriation. There is no merit to that submission.
[7] In 1997, the Brown Estate sued Mr. Watt and others to recover the misappropriated funds. On October 16, 2000, Rivard J. granted summary judgment against Mr. Watt in that action, holding that the decision of the Discipline Committee was final and conclusive and the requirements of issue estoppel had been met. His decision on that point was upheld by the Court of Appeal: Brown Estate v. National Trust Company, [2001] O.J. No. 2017 (C.A.). However, the Court of Appeal found that the motions judge erred in granting judgment because there were genuine issues for trial on the amount of the recovery. At trial, issue estoppel and res judicata were again raised by both parties. However, the trial judge, Wilton-Siegel J., ruled that the plaintiff was entitled to proceed to civil judgment against Mr. Watt notwithstanding findings of quantum made in other litigation winding up the law firm partnership. Wilton-Siegel J. held that the plaintiff was entitled to a judgment that reflected the Discipline Committee’s findings of misappropriation, rather than a simple judgment for a fixed quantum, because of the implications of a judgment based on fraud and breach of trust in a bankruptcy. Further, Wilton-Siegel J. held that Mr. Watt was estopped from re-litigating the factual determinations of liability and misappropriation made by the Discipline Committee. (See Reasons for Judgment of Wilton-Siegel J. issued April 15, 2002 in Court File No. 97-CU-119382)
[8] In addition to the litigation commenced by the Brown Estate, there was extensive litigation involving the winding up of the law partnership, including an accounting of all funds flowing through the firm and the determination of amounts owed to various clients and liabilities as between the partners. A Reference was directed before Master Linton to deal with these matters. Between September 1996 and February 1999, Master Linton reviewed the evidence and issued 22 Interim reports. There was evidence before Master Linton as to the state of the firm’s accounts and the confusion around the TK account that was additional to the evidence before the Discipline Committee.
[9] The last of the interim reports to deal with the trust liabilities of the firm was the Seventeenth Interim Report. In various reports up to that time, Master Linton sometimes referred to clients’ funds as having been “misappropriated” and sometimes used the word “appropriated”. In the Seventeenth Report, Master Linton used the word “misappropriation”. After the release of the Seventeenth Report, Mr. Watt brought an application to have the Master amend the report to take out the word “misappropriation” and substitute the word “appropriation”. Mr. Linton acceded to this request, but stated in his endorsement, “I see no material difference in changing the wording of the interim report number 17 as requested.”
[10] Counsel for Mr. Watt points to the findings of Master Linton as a determination that Mr. Watt had not misappropriated funds and argues that this determination was based on new evidence not before the Discipline Committee in 1993 and is final and binding. I do not agree.
[11] First of all, there is no specific finding by the Master that Mr. Watt had been guilty only of negligence and not misappropriation. The Master himself wrote that he saw no material difference between “appropriation” (which is the term that appears in the final version of the Report) and “misappropriation” (which was the word he used originally). I do not interpret Master Linton’s findings as at all determinative of the nature of Mr. Watt’s culpability. I note that the same conclusion was reached by Wilton-Siegel J. at para 10 of his Reasons on the trial of the Brown Estate litigation.
[12] Secondly, there was no issue before the Master which required him to make such a determination. One of the parties attempted to get a ruling on this very issue from Master Linton, but the Master refused. A motion was then brought before Farley J., who ordered on May 7, 2003 that the Master should examine the accounts and determine if the “appropriations were innocent and justified and/or were negligence or some other excusable action or inexcusable.” However, on appeal that decision was set aside. The Court of Appeal endorsement, dated January 22, 2004, states, “In light of the scope of the orders directing the reference, in our view, it was not within the Master’s mandate to determine the ‘nature of the basis’ for the amounts owing to the clients.”
[13] I therefore conclude that there was nothing in the subsequent litigation to alter the findings of the Discipline Committee.
C. THE APPLICATION FOR READMISSION
(i) Decision of the Hearing Panel
[14] Mr. Watt applied for readmission to the Law Society on January 18, 2001. The hearing proceeded before a three-person panel on September 23 and 24, 2003. Evidence was heard from Mr. Watt and also from seven character witnesses who testified on his behalf. The Hearing Panel reserved its decision and delivered written reasons on February 9, 2004, rejecting Mr. Watt’s application. The Hearing Panel determined that it would not go behind the original decision of the Discipline Committee in 1993 and therefore treated the application as one in which the original disbarment was for misappropriation of clients’ funds. The Hearing Panel applied a six-part test in determining whether to readmit Mr. Watt, as follows:
(1) Is there a long course of conduct showing that the applicant is a person to be trusted?
(2) Has the applicant’s conduct since disbarment been unimpeachable?
(3) Has there been a sufficient lapse of time since the disbarment?
(4) Has the applicant purged his guilt?
(5) Is there substantial evidence that the applicant is extremely unlikely to misconduct himself again if readmitted?
(6) Has the applicant remained current in the law through continuing legal education or is there an appropriate plan to become current?
[15] The Hearing Panel found that Mr. Watt had worked diligently to remain current in the law and that Element 6 of the test had been met. With respect to Element 2, the Tribunal found that his conduct since disbarment has been “praiseworthy and without blemish”. The character witnesses were described as “impressive and unanimous and generous in their praise” of Mr. Watt. However, the Panel noted that it “would have been happier” if those witnesses had been more aware of the adverse findings of the original Discipline Committee. The Panel therefore found that whether Mr. Watt had met Element 2 was “borderline”. The Panel found that Elements 1, 3, 4 and 5 had not been met and that the application must therefore be denied.
[16] The Hearing Panel applied the same analysis with respect to Elements 1 and 3 (long course of conduct and sufficient lapse of time). The Panel’s sole concern on these two points was that Mr. Watt was still “embroiled in litigation arising out of the incidents that led to his disbarment”. The Panel stated at para 48 of the reasons:
In our view, the applicant should be well clear of the circumstances of the disbarment, including any unsettled or unresolved litigious aftermath even where the litigation is an effort to seek vindication or redress. Otherwise, the Society runs the risk that the litigation will produce a result that does not vindicate, but instead renders the decision to readmit harmful to the public interest or embarrassing to the profession.
[17] The Hearing Panel’s reasons with respect to Elements 4 (purging guilt) and 5 (likelihood to re-offend) also overlap. In both cases, the source of the Panel’s concern was Mr. Watt’s “steadfast refusal to admit to misappropriation”. With respect to whether Mr. Watt had purged his guilt, the Hearing Panel accepted (at para 49) that he had “suffered great damage in his personal life and to his professional opportunities”, that he “has made substantial restitution given his means” and that he “has become a productive and contributing member of society”. The Panel then pondered the possible explanations for why Mr. Watt has continued to deny misappropriation. The panel suggested three possibilities: (1) that he was telling the truth and was guilty only of negligence; (2) that he had taken funds from the Brown Estate intending to return them; and (3) that he deliberately took the money, in a moment of weakness, but could not admit it to himself. The Panel rejected the first possibility on the basis that it accepted the findings of the Discipline Committee. It rejected the second possibility because there was no evidence to support it. It therefore concluded that the third situation was correct, and described it as follows, at para 49:
. . .he intended to take the funds from the Brown estate but it happened during one moment of reckless weakness in what has been an otherwise exemplary life. Given his upbringing as the son of a respected clergyman and loving mother, his remarkable record of community service, and the high regard most people in his life have for him, he cannot admit to himself that he once succumbed to an all-too-human frailty, at great cost to himself and his family.
[18] The Hearing Panel then concluded that it was possible for a person who cannot admit to an incident of dishonesty to nevertheless be trustworthy thereafter. The Panel concluded, however, that it would not be prepared to accept that Mr. Watt was such a person without independent corroborating psychiatric or psychological evidence.
[19] The Hearing Panel reached a similar conclusion with respect to Element 5, finding that Mr. Watt had “probably learned his lesson” and is “unlikely to re-offend”. However, noting that the test is “extremely” unlikely to re-offend, the Panel held, at para 52, “To make such a finding in the case of the Applicant, we would need psychological evidence touching upon the extreme unlikelihood that he would re-offend and showing that he is an honest person whom the Society could trust notwithstanding his refusal to admit to misappropriation.”
(ii) Decision of the Appeal Panel
[20] Mr. Watt appealed from the decision of the Hearing Panel. His appeal was heard before a five-member Appeal panel on June 21, 2004. By written decision dated July 7, 2004, the Appeal Panel dismissed the appeal. At the outset of the appeal, the Panel heard argument on Mr. Watt’s motion to admit fresh evidence on the appeal. The Panel held (at para 6), that it “has a residual discretion to allow fresh evidence in order to be fair to the applicant, where allowing the evidence would not be unduly prejudicial to the position of the Law Society.” It then found that the test was met and admitted into evidence the Order of the Court of Appeal dated January 22, 2004 (reversing the decision of Farley J.), the report of a treating psychiatrist, Dr. Louis Canella, dated March 11, 2004, and the report of an independent psychiatrist, Dr. Vivian Rakoff, dated March 25, 2004.
[21] In its review of the Hearing Panel’s decision, the Appeal Panel applied a standard of reasonableness for questions of fact and mixed fact and law and a standard of correctness for questions of law. The Appeal Panel found that the Hearing Panel correctly identified the legal tests to be applied on a request for readmission after disbarment. The Appeal Panel agreed with the Hearing Panel that there was no basis for disturbing the findings of the Discipline Committee with respect to the misappropriation. On the issue of Element 2 (conduct since disbarment), the Appeal Panel held that the weight to be given to the character witnesses was a matter for the Hearing Tribunal.
[22] With respect to Elements 1 and 3 (long course of conduct and sufficient lapse of time), Mr. Watt relied upon the Court of Appeal decision in the Brown Estate litigation dated January 22, 2004 to show that the litigation was finally over and the 17th Report of Master Linton was conclusive. The Appeal Panel then stated that “it would appear there are still issues as to costs arising out of that litigation and issues with regard to the accounts of the applicant’s former law practice.” They then concluded, “Whether or not the litigation is finally completed is not a determinative factor in this appeal.”
[23] With respect to the purging of guilt issue, the Appeal Panel stated that the Hearing Panel’s findings were “reasonable” and held, at para 22:
The Hearing Panel reviewed at length considerations where an applicant continues to protest his innocence and ultimately the hearing panel was in the best position to access [sic] “the sincerity, frankness, and truthfulness of the applicant in presenting and discussing the factors relating to his disbarment and reinstatement.”
[24] The Appeal Panel also held that the Hearing Panel’s findings on the likelihood to re-offend were “reasonable”. In considering the effect of the new evidence on this point from the two psychiatric reports, the Appeal Panel held, at para 20:
While we afford them some weight we note that their entry at this late stage in the proceedings precludes the Law Society from having its own assessment done or indeed cross-examining the Doctors on their reports. These reports may have been of limited use in any event as this was not a case where the actions of the applicant which led to his original disbarment were caused by any medical or psychotic condition (which has now been cured or otherwise dealt with). Both Doctors note that the applicant asserts to them his continuing denial that he misappropriated any funds.
[25] Finally, on this point (unlikely to re-offend), the Appeal Panel held at para 23:
. . . Even with the fresh evidence before us (consisting of the reports of Doctors Canella and Rakoff) the panel must still satisfy itself that the evidence disclosed that the Applicant be “extremely unlikely to reoffend” [sic]. Notwithstanding the explicit statement in Doctor Canella’s report, the panel must make up its own mind based on the totality of the evidence as opposed to the opinion of the Doctor regarding future conduct of the Applicant. Based on the totality of the materials before us, we would not disturb the finding of the Hearing Panel that the Applicant has not met the tests in Element 5.
D. ANALYSIS
Test for Readmission and Discipline Committee Finding of Misappropriation
[26] Both the Hearing Panel and the Appeal Panel were correct in abiding by the conclusion of misappropriation reached by the Discipline Committee in 1993. While Mr. Watt appears to have fastened on the idea that Master Linton’s determination of “appropriation” rather than “misappropriation” is in some way a vindication for him, this is simply not borne out by the evidence, nor is it correct in law, for the reasons I stated above. Accordingly, both Law Society Panels correctly held that the factual finding of misappropriation made by the original Discipline Committee is determinative of this issue. The test for readmission to the Law Society after a finding of misappropriation was also correctly identified by both the Hearing Panel and the Appeal Panel.
Element 1: Long Course of Trustworthy Conduct
[27] The first of the requisite elements considered by the Hearing Panel was whether the applicant had shown a “long course of conduct” indicating he was a person who could be trusted. It would appear from the Reasons of the Hearing Panel that they had no difficulty with respect to the nature of Mr. Watt’s conduct since the time of his disbarment. Rather, the only conclusion under this heading was that a sufficiently long course of conduct had not been established for the reasons set forth with respect to Element 3 (which dealt solely with the fact of outstanding litigation). In an earlier part of its reasons, the Panel set out the six tests to be met and commented briefly on each. With respect to this “long course of conduct” criteria, the Hearing Panel noted (at page 10) that the “long course” will rarely be less than ten years and that the earlier the application, the more careful the panel should be in deciding whether trustworthiness has been proved. Mr. Watt was disbarred in 1993, more than 10 years ago, and has behaved very responsibly since that time, as the Panel noted under other categories. The Appeal Tribunal did not comment directly on this particular element of the test. I conclude therefore, that the only difficulty either Panel had with this test was the outstanding litigation, which I will discuss below under Element 3.
Element 3: Lapse of Time and Outstanding Litigation
[28] The only reason given by the Hearing Panel for finding this element was not satisfied was the fact that Mr. Watt was still embroiled in litigation relating to the incidents giving rise to the disbarment. It would appear that this was simply inaccurate and that the Hearing Panel fundamentally misapprehended the evidence in that regard. The litigation brought by the Brown Estate against Mr. Watt had been concluded. There may have been some minor issues remaining in the winding up of the partnership, but a final decision had been rendered with respect to the findings of liability and responsibility of the various partners.
[29] The purpose of this requirement is to ensure that all of the issues arising from the incident giving rise to the disbarment have been finally settled. The Law Society wants to be sure that the incident is in the applicant’s past; that he is now “clear of the brambles that arose from the thorny ground of his disbarment”. Further, the Society wants to ensure that any decision to readmit is on solid ground, and that there will be no subsequent findings in other litigation that could “redound harmfully to the Society”: Hearing Tribunal Reasons, page 11. We are advised by counsel that there are no substantive issues remaining in any of the litigation. There may be issues of costs yet to be determined, and there has not yet been a passing of accounts by the executor in the Brown Estate. However, there is nothing left of the nature that would represent any reasonable basis for concern under this aspect of the test, given the purposes for which the test was developed. The Appeal Panel appears to have recognized this point as it found that “whether or not the litigation is resolved is not a determinative factor”: Reasons of Appeal Panel, para 18.
[30] Accordingly, I conclude that there is no reasonable basis for denying readmission based on any unresolved litigation. To the extent either of the Panels found to the contrary, such findings were based on a fundamental misapprehension of fact or a failure to appreciate the legal basis for this test. Either is reversible error. Since this was the only basis for refusing the application under Elements 1 and 3, it follows that these two tests have now been met.
Element 2: Unimpeachable Conduct Since Disbarment
[31] At page 10 of its decision, the Hearing Panel discussed the importance of evidence of trustworthy persons, especially members of the profession and persons with whom applicants have been associated since disbarment, in establishing unimpeachable conduct since disbarment. The Hearing Panel also noted that such witnesses should be aware of the salient features of the disbarment. Otherwise, the weight given to their evidence will be reduced. This is a correct statement of the standard to be applied.
[32] The Hearing Tribunal was impressed with the caliber of the witnesses who testified on behalf of Mr. Watt. They included senior executives who had extensive experience with Mr. Watt since his disbarment and a respected lawyer of long experience. The Hearing Tribunal accepted the evidence of these witnesses as to his conduct since disbarment. The Panel’s only reservation on this point was that it “would have been happier” if these witnesses had been more aware of the findings of the Discipline Committee.
[33] It would appear that one of the underlying difficulties for the Panel was the persistent belief by some that there had been no misappropriation, a belief not only maintained by Mr. Watt but also by many of the witnesses who supported him. However, many of the witnesses who had difficulty accepting that Mr. Watt had stolen money did know the findings of the Discipline Committee (e.g. Mr. Waterman, Mr. McNaught, Ms Watt-Watson and Mr. Young). Some were simply not convinced that the Discipline Committee had reached the right conclusion. They are obviously entitled to hold that opinion. Further, it is not difficult to understand why they would. The Hearing Panel itself concluded that this misappropriation of funds by Mr. Watt was an aberrant act of dishonesty in an otherwise completely blameless and, indeed, exemplary past. This dishonesty was so out of character that people who know Mr. Watt well find it difficult to believe he actually did it. However, the purpose of their evidence is not to reinforce the findings of the Discipline Committee. Their evidence is directed towards Mr. Watt’s good conduct since his disbarment and all of the witnesses were unanimous on that count. Further, many of them testified to his ongoing remorse that others have suffered for his mistakes. All found him to be completely trustworthy.
[34] I agree with the conclusion of the Appeal Panel that an appellate body is not in a good position to assess the weight to be given to the evidence of witnesses. Here, however, the issue was not one of credibility. Also, it was not just that the witnesses were unaware of the findings against Mr. Watt, such that their assessments of his integrity were reached without full knowledge of the facts. Rather, their assessments of his integrity were so high that they simply did not accept he would ever have knowingly stolen money. For the Hearing Tribunal to give less weight to their evidence for that reason is more problematic and entitled to less deference.
[35] However, the Hearing Panel did not discount this evidence entirely, but merely said that this element of the test was “borderline”. The Appeal Panel agreed with the Hearing Panel. It follows, as was conceded by respondent’s counsel in argument, that if Mr. Watt had met all of the other elements of the test, his application for readmission would not have been denied.
Element 5: Likelihood of Re-Offending
[36] As I have already noted, the Hearing Panel accepted that the misappropriation which caused Mr. Watt’s disbarment was “one moment of reckless weakness in what has been an exemplary life”. They accepted that he had “learned his lesson” and that he was “unlikely to re-offend”. However, the Panel was unable to say Mr. Watt met the higher standard of “extremely unlikely to re-offend” because of his refusal to admit the misappropriation. The Panel’s underlying difficulty with Mr. Watt’s continuing denial of guilt is a recurring theme, which I will address in more detail below. Moreover, in my view, there is no direct connection between extreme likelihood of re-offending and failure to admit guilt. I consider the Hearing Panel’s conclusion in that regard to be unreasonable.
[37] However, the Hearing Panel did not foreclose the possibility of a person reaching the standard of “extremely unlikely to re-offend” in the absence of an admission of guilt. Rather, the Panel said it would need psychological evidence on the point. That evidence was before the Appeal Panel in the form of two expert psychiatric opinions, one from Dr. Canella and the other from Dr. Rakoff.
[38] Dr. Canella provided supportive psychotherapy to Mr. Watt from October 1995 to October 1998 while he was undergoing the stress of disbarment, ongoing litigation, the breakdown of his marriage, concerns about his children and financial ruin. Dr. Canella saw Mr. Watt again in March 2004 before preparing his report. In all, Dr. Canella saw Mr. Watt 108 times over those years. Dr. Canella concluded that from a psychiatric perspective Mr. Watt was not suffering from any limitations and did not have a drug or alcohol dependency. He stated at page 4 of his report, “It is my impression that he has learned from experience and that it would be extremely unlikely that he would get himself into any future trouble as a result of either negligence or the misappropriation of funds.” He concluded at page 5, “Mr. Watt does not suffer from any psychiatric disturbance such as substance abuse, personality disorder or psychosis, that would affect his judgment and cause him to re-offend. It is my opinion that it is extremely unlikely that he will re-offend.”
[39] Dr. Rakoff was retained to provide an expert opinion for use on the appeal. He met with Mr. Watt on one occasion prior to writing the report. His overall conclusions are similar to those of Dr. Canella. He stated at pages 3-4 of his report:
. . . This gentleman, prior to his present difficulties, was, if anything, “a model citizen”. He was involved in many charities and extracurricular activities. He married and had children and worked for twenty years as a respectable lawyer. All these indicate a degree of social awareness and responsibility which would completely invalidate the notion of sociopathy. In the history I obtained from Mr. Watt, I was unable to elicit any history of any previous involvement with the law or any antisocial activities. As I stated above, he does not suffer from a psychosis and I believe he is severely chastened by his experience.
Since people behave in the future as they have in the past, I see no indication that Mr. Watt will re-offend, even in terms of “the carelessness and the recklessness”. His life up to that point had been exemplary in the care he gave his personal and social concerns.
[40] The Appeal Panel did not accept the evidence of these experts for the following reasons:
(a) their entry at the outset of the appeal precluded the Law Society from having its own assessment done or cross-examining the doctors on their reports;
(b) the reports were of limited use because the actions leading to Mr. Watt’s disbarment were not caused by any medical or psychotic condition;
(c) both doctors were told by Mr. Watt that he had not misappropriated the funds;
(d) the panel must make up its own mind based on the totality of the evidence and not merely accept the opinion of the doctors.
[41] At the hearing before us, counsel for the Law Society conceded that when Mr. Watt applied to introduce this new evidence, the Law Society did not seek an adjournment to obtain its own expert report, nor did it seek to cross-examine either of the two doctors. In admitting the evidence, the Appeal Panel concluded that the Law Society was not unduly prejudiced by its introduction. In that context, it was unreasonable for the Panel to conclude that the evidence should nevertheless be given little or no weight because it was introduced late and without cross-examination.
[42] It was likewise unreasonable to discount the medical reports because they did not report any medical or psychotic condition leading to the misappropriation of funds. The purpose of the medical reports was to address the issue of likeliness to re-offend, as the Hearing Panel had indicated it would not be satisfied in the absence of such evidence. The report of Dr. Canella, in particular, provides exactly the evidence sought by the Hearing Panel, an expert opinion that Mr. Watt is “extremely unlikely” to re-offend. Further, the fact that there is no underlying sociopathic or other psychiatric condition that would lead Mr. Watt to re-offend is relevant information, particularly in light of the Hearing Panel’s finding that this act of dishonesty was out of character for him.
[43] The fact that Mr. Watt told the doctors that he had not misappropriated the funds but rather had been negligent resulting in the funds being misallocated, is hardly surprising. Mr. Watt has consistently and steadfastly maintained that position all along. If he had told the doctors that he had stolen the money, no doubt this would be held up as inconsistent with his evidence before the Hearing Panel and his statements to others and therefore an indication of his lack of credibility. The doctors were aware of the nature of the offence upon which Mr. Watt had been found guilty. They were also aware that Mr. Watt maintained his innocence of stealing while expressing regret for his negligence. In this context they found him unlikely to re-offend. The Appeal Panel acted unreasonably in discounting the medical evidence based on this factor. Once again, this emphasis on Mr. Watt’s failure to admit guilt has coloured the Panel’s analysis, a factor which will be explored below.
[44] Finally, any trier of fact is of course not obliged to accept the opinion of experts on the very issue to be determined by the tribunal. However, where that evidence is uncontradicted and directly on point, the tribunal ought to have cogent reasons for failing to give it any weight. In this case, the Appeals Panel did not provide any reasonable grounds for failing to accept this evidence. The Hearing Panel had indicated such evidence would be persuasive. It was provided. In my opinion, the Appeal Panel acted unreasonably in failing to find there was now sufficient evidence to satisfy this element of the test.
Element 4: Purging of Guilt
[45] The evidence is clear that Mr. Watt has suffered immensely since his disbarment. He has made restitution to the full extent of his ability, contributing $1.4 million of his own funds to repay those who lost money. He once had a lavish lifestyle with an elegant home, vehicles, private club memberships and the like. He has lost all of those assets, no longer owns a car and lives in his sister’s basement. His marriage broke down. He has suffered considerable anxiety and sleeplessness and was treated by a psychiatrist for a period of three years. He has expressed deep and sincere remorse for having let people down and has accepted responsibility for the misallocation of funds into his own account.
[46] The Hearing Panel accepted all of these facts, but then went on to consider why Mr. Watt had steadfastly refused to admit to misappropriation. The Hearing Panel acknowledged it was possible for a person to admit dishonesty and yet never be dishonest again. However, they then noted the need to be cautious before determining that Mr. Watt was such a person and stated that corroborating evidence would likely be required. In doing so, the Hearing Panel mixed up two elements of the test: Element 4 (purging of guilt) and Element 5(likelihood to re-offend). In their analysis under Element 4, the Hearing Panel did not clearly find that Mr. Watt had failed to purge his guilt. However, in their final paragraph the Hearing Panel stated that this element of the test had not been satisfied. I therefore conclude that the Panel’s difficulty was with Mr. Watt’s failure to admit misappropriation, since no other negative feature was mentioned. I will deal with this issue of failure to admit guilt below.
[47] In my opinion, it is not reasonable to conclude, as the Hearing Panel did here, that a person who has not fully admitted guilt cannot be considered to have purged his guilt in the absence of corroborating psychiatric evidence. Indeed, I would have considered psychological or psychiatric evidence to be unnecessary in most cases of this nature. However, in response to the Hearing Panel’s concern, Mr. Watt did obtain such evidence for the Appeal Panel. My observations about the unreasonableness of the Appeal Panel’s treatment of this evidence is set out above, and I will not repeat it here. The same analysis applies.
Underlying Concern of Both Panels: Failure to Admit Misappropriation
[48] Both the Hearing Panel and the Appeal Panel were troubled by the fact that Mr. Watt has consistently refused to admit having misappropriated funds. Although this factor was most directly linked to Element 4 (purging of guilt), it was also taken into account on many of the other elements. On Element 2, the Hearing Panel discounted the evidence of character witnesses who accepted Mr. Watt’s version of the events leading up to his disbarment. The Appeal Panel discounted the evidence of the expert witnesses because Mr. Watt told them he had been guilty only of negligence, not misappropriation. The main source of concern with respect to whether Mr. Watt was extremely unlikely to re-offend (Element 5) was the fact that he had not admitted misappropriation. And finally, Mr. Watt’s failure to make that admission appears to have been the determinative factor in finding that he had not purged his guilt as required under Element 4.
[49] In dealing with legal issues in the earlier part of its decision (at pp. 12-13), the Hearing Panel correctly stated that the applicable law on purging of guilt when a person has not admitted his crime is as stated in In Re Hiss (1975), Mass., 333 N.E. 2d 429 (S.J.C.). In 1950, Alger Hiss, a Boston lawyer, was convicted of two counts of criminal perjury and served 3 ½ years in prison. In 1974, Mr. Hiss applied for reinstatement to the Boston Bar Association. The Board of Bar Overseers held that Mr. Hiss’s continued failure to admit his guilt of the crimes upon which he was convicted made it impossible to satisfy the requirements of present good moral character and rehabilitation and therefore refused his application. The Massachusetts Supreme Judicial Court reversed this decision. The Court first noted that it is not appropriate to go behind the decision of the court in the criminal case and it must therefore be assumed that Mr. Hiss was a perjuror. However, the Court also recognized that no legal system is perfect and that wrongful convictions can and do occur. This is the underlying rationale for not penalizing a person for refusing to admit the accuracy of the court findings against him. As Chief Justice Tauro stated, at pp. 436-437:
. . . Though we deem prior judgments dispositive of all factual issues and deny attorneys subject to discipline proceedings the right to relitigate issues of guilt, we recognize that a convicted person may on sincere reasoning believe himself to be innocent. We also take cognizance of Hiss’s argument that miscarriages of justice are possible. Basically, his underlying theory is that innocent men conceivably could be convicted, that a contrary view would place a mantle of absolute and inviolate perfection on our system of justice, and that this is an attribute that cannot be claimed for any human institution or activity. We do not believe we can say with certainty in this case, or perhaps any case, what is the true state of mind of the petitioner. Thus we cannot say that every person who, under oath, protests his innocence after conviction and refuses to repent is committing perjury.
[50] In that same case, Tauro C.J. eloquently described the dilemma facing an honest person who does not accept a finding of guilt against him, stating as follows at p. 437:
Simple fairness and fundamental justice demand that the person who believes he is innocent though convicted should not be required to confess guilt to a criminal act he honestly believes he did not commit. For him, a rule requiring admission of guilt and repentance creates a cruel quandary: he may stand mute and lose his opportunity; or he may cast aside his hard-retained scruples and, paradoxically, commit what he regards as perjury to prove his worthiness to practice law. Men who are honest would prefer to relinquish the opportunity conditioned by this rule: “Circumstances may be made to bring innocence under the penalties of the law. If so brought, escape by confession of guilt … may be rejected, - preferring to be the victim of the law rather than its acknowledged transgressor – preferring death even to such certain infamy.” Burdick v. United States, 236 U.S. 79, 90-91, 35 S. Ct. 267, 269, 59 L.Ed. 476 (1915). Honest men would suffer permanent disbarment under such a rule. Others, less sure of their moral positions, would be tempted to commit perjury by admitting to a nonexistent offense (or to an offense they believe is nonexistent) to secure reinstatement. So regarded, this rule, intended to maintain the integrity of the bar, would encourage corruption in these latter petitioners for reinstatement and, again paradoxically, might permit reinstatement of those least fit to serve. We do not consider in this context the person who admits committing the alleged criminal act but honestly believes it is not unlawful.
Accordingly, we refuse to disqualify a petitioner for reinstatement solely because he continues to protest his innocence of the crime of which he was convicted. Repentance or lack of repentance is evidence, like any other, to be considered in the evaluation of a petitioner’s character and of the likely repercussions of his requested reinstatement.
[51] That is not to say that an admission of guilt is not a relevant factor to take into account in considering readmission. It clearly is. Indeed, it is typically a significant positive factor in determining whether an applicant has purged his guilt. It does not follow, however, that an absence of such an admission, should be a negative factor. A similar consideration arises in sentencing in criminal or quasi-criminal cases. For example, in College of Physicians and Surgeons of Ontario v. Gillen (1990), 1990 6710 (ON SC), 1 O.R. (3d) 710 (Div. Ct.), a doctor had been found guilty of performing a sexual act on a patient without consent, but maintained his innocence. The College used this as grounds for imposing the most severe penalty, revocation of his licence. The Divisional Court found that this reasoning was unacceptable, stating:
A person accused and at risk, as the doctor was in this case, is entitled to defend and continue to defend and appeal without in any way jeopardizing his position when it comes to sentence in the sense that his sentence should not be more harsh because he does not plead guilty.
This was affirmed by the Court of Appeal (1993), 1993 8641 (ON CA), 13 O.R. (3d) 385, which held:
Any doctor is entitled to deny allegations made against him or her and to require the College to establish such allegations. If he or she chooses to admit the allegations, that may be taken into account in appropriate circumstances in setting a penalty, but in no circumstances should denial serve to increase what would otherwise be an appropriate penalty.
[52] In his case, although the Hearing Panel stated that it accepted the reasoning in Hiss, it failed to actually apply those principles to the case before it. Particularly with respect to whether Mr. Watt had purged his guilt and whether he was extremely unlikely to re-offend, the fact that Mr. Watt refused to accept the truth of the Discipline Committee’s characterization of his conduct is the only negative factor mentioned by either Panel. His application for readmission was then refused. Thus, what the Panels did amounts to exactly what the Court in Hiss emphasized was improper: they effectively made an admission of guilt a precondition for reinstatement. In doing so they committed an error of law. Further, this is an error that permeates much of the reasoning of both Panels.
E. CONCLUSIONS
[53] For the reasons stated above, the Appeal Panel and the Hearing Panel decisions cannot be sustained. Mr. Watt urges this Court to order his reinstatement, rather than remitting the case for a new hearing by another panel. That is an unusual disposition, but one which I think is appropriate in the particular circumstances of this case. Mr. Watt was disbarred in 1993, and has not practiced law since 1991. He is now 59 years old. He commenced his application for readmission on January 18, 2001. It is now more than four years later and he still does not have a resolution. Given his age, he does not have many years of practice left. Starting the process for readmission again would likely sufficiently delay his ability to re-enter the profession as to make it not worthwhile, especially given the cost of the litigation. There is therefore some merit in granting the remedy Mr. Watt seeks if it can be done on the strength of the findings already made by the Panel.
[54] On the First Element, the Hearing Panel accepted the evidence of a long course of good conduct since disbarment. The only difficulty the Panel had with the course of conduct criterion was with respect to the outstanding litigation, which (as I have stated above) was an error. Without that consideration, therefore, that aspect of the test is met based on the reasonable findings of the Hearing Tribunal.
[55] On the Second Element, the Hearing Panel was impressed with the evidence of witnesses that Mr. Watt’s conduct since disbarment has been exemplary. The Panel felt this aspect of the test was “borderline” only because it was not happy with the extent to which the witnesses were aware of the findings of the Discipline Committee. If the other aspects of the test are met, this element would not be an obstacle to readmission.
[56] As to the Third Element, (sufficient lapse of time since disbarment), Mr. Watt has not practiced law since 1991, and was disbarred in 1993. It has now been 12 years since that disbarment, a period of time that exceeds that which has been found acceptable by the Society in other similarly serious cases. Again the only difficulty the Panel expressed with respect to this element was the outstanding litigation, upon which it erred. Once that consideration is removed, this element of the test is met.
[57] On the Fourth Element, the Panel accepted much of the evidence relevant to whether Mr. Watt had purged his guilt. It must be noted that this is not a situation in which Mr. Watt has denied all responsibility entirely. On the contrary, he has accepted personal responsibility, admitted gross negligence and expressed great remorse for his conduct. He has also suffered greatly in his personal life and has made full restitution. The only thing he has not done is admit that he intentionally stole the money. The Panel accepted all of this, but wanted corroborating psychiatric evidence that Mr. Watt could be trusted in the future. That was provided. Once the Panel’s error in fixating on Mr. Watt’s failure to admit guilt is removed from the equation, this aspect of the test is met, based on the other findings of the Panel which were reasonable.
[58] With respect to the Fifth Test, the Hearing Panel found that it was satisfied Mr. Watt was “unlikely” to re-offend but, because of his refusal to admit guilt, required psychiatric evidence that he was “extremely unlikely” to re-offend. This was an error. However, the psychiatric evidence was provided. Once again, if the errors in reasoning are removed, the other reasonable findings of the Panel are sufficient to show this aspect of the test is met.
[59] Finally, on the Sixth Test, the Panels accepted that Mr. Watt has remained current in the law and that this element of the test was met.
[60] I am therefore of the view that the appropriate order in this case is to set aside the decision of both Panels and to order that Mr. Watt be readmitted as a member of the Law Society. It is typical in cases of this nature for the Law Society to impose conditions on the readmission, particularly with respect to supervision, reporting, handling of clients’ funds and the like. These are matters appropriately dealt with only by the Law Society and are not within the expertise of this Court. Accordingly, this matter is remitted to a Hearing Panel, differently constituted, for its determination as to the appropriate conditions to be imposed.
[61] If the parties are unable to agree on costs, this issue may be addressed in writing. The submissions for Mr. Watt shall be delivered within one month of receipt of these reasons and the submissions of the Law Society, within 15 days after the appellant’s submissions are delivered.
MOLLOY J.
I agree:__________________________
LANE J.
I agree:__________________________
JENNINGS J.
Released: June 13, 2005
COURT FILE NO.: 579/04
DATE: 20050613
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
LANE, JENNINGS AND MOLLOY JJ.
B E T W E E N:
ROBERT CHARLES WATT
Appellant
- and –
THE LAW SOCIETY OF UPPER CANADA
Respondent
REASONS FOR JUDGMENT
MOLLOY J.
Released: June 13, 2005