Vandor v. Law Society of Upper Canada, 2014 ONSC 740

CITATION: Vandor v. Law Society of Upper Canada, 2014 ONSC 740

DIVISIONAL COURT FILE NO.: DC-13-1935

DATE: 20140131

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: LESLIE ANDREW VANDOR, Appellant

and

THE LAW SOCIETY OF UPPER CANADA, Respondent

BEFORE: Hackland R.S.J., J. Wilson and Thorburn JJ.

COUNSEL: Leslie Vandor, Self-represented

Susan Heakes, for the Respondent

DATE HEARD: January 27, 2014

THORBURN J.

E N D O R S E M E N T

Introduction

1On September 27, 2012, the Law Society Hearing Panel found that the Appellant Leslie Vandor had contravened section 33 of the Law Society Act by engaging in professional misconduct and conduct unbecoming a licensee. The Hearing Panel determined that Vandor had misappropriated significant funds from his family’s company, Vandor Investments Limited, and from clients of his former firm, Lang Michener LLP.

2The Law Society Hearing Panels’ decision was upheld by the Appeal Panel, by order dated July 5, 2013.

3The Appellant requests that the Appeal Panel’s Order upholding the revocation of his licence should be set aside and the matter reheard before a freshly constituted Hearing Panel of the Law Society. The Appellant also requests costs with respect to the Hearing Panel proceeding, the Appeal Panel proceeding and this Appeal in the amounts of $65,695, $26,250 and $17,500 respectively.

The Issues to be Determined

4The two issues to be determined on this Appeal are as follows:

a) Did the Appeal Panel err in law by failing to apply the Superior Court Order in relation to the Appellant’s discharge from bankruptcy?

b) Did the Appeal Panel err in fact in deciding to uphold the Hearing Panel’s ruling that there was a failure to account for proper disbursements and expenditures?

Jurisdiction to Hear the Appeal and Standard of Review

5It is agreed that the Divisional Court has jurisdiction to hear this appeal by virtue of section 49.38 of the Law Society Act, R.S.O. 1990, c. L.8.

6It is agreed that in this case, the standard of review on the issue of the applicability of the bankruptcy order is correctness, being a question of law and the standard of review on the accounting issues is reasonableness, being questions of fact.

Analysis of the Issues

Issue 1: Did the Appeal Panel err in law by failing to apply an Order of the Superior Court in relation to bankruptcy proceedings involving the appellant?

7The Absolute Order of Discharge rendered by the Superior Court reads as follows:

Upon the application of Leslie Andrew Vandor who filed an Assignment in Bankruptcy on the 28th day of April, 2009 and upon reading the report of the Trustee as to the Bankrupt’s conduct and affairs, upon hearing counsel of any opposed creditor and upon hearing the Bankrupt;

AND WHEREAS proof has not been made of any of the facts mentioned in Section 173 of the Bankruptcy Act or that the Bankrupt has been guilty of any misconduct in relation to his property or affairs;

IT IS ORDERED that Leslie Andrew Vandor is hereby discharged.

8The Law Society was not a party to the Bankruptcy hearing.

9The Appellant submits that the Law Society was estopped from conducting a disciplinary hearing against him for alleged misappropriation of funds for the following reasons:

i. both his family and Lang Michener LLP submitted Proofs of Claim in the bankruptcy proceedings and made representations through counsel;

ii. the evidence presented “was the same” as the evidence adduced at the Law Society hearing;

iii. he could not have been discharged from bankruptcy if he had been guilty of any misconduct in relation to his affairs; and

iv. he was absolved of any wrongdoing at the discharge hearing.

10He claims that the Superior Court found he had not committed any offences under section 173 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3. He claims therefore that the Hearing Panel and the Appeal Panel erred in not applying this finding in the disciplinary proceedings.

11In the Supreme Court decision in Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77 at pp. 94-95, the court held that for an argument of issue estoppel to be successful the following preconditions must be met:

a) the issue must be the same as the one decided in the prior judicial decision;

b) the prior judicial decision must have been final; and

c) the parties to both proceedings must be the same.

12We agree with the finding of the Appeal Panel that the Absolute Order of Discharge does not prevent the Law Society from proceeding with a disciplinary hearing against the Appellant. We arrive at this conclusion for the following reasons:

a) Contrary to the assertion made by the Appellant, the Superior Court never found that the Appellant had not committed any offences under section 173 of the Bankruptcy Act. There was no hearing on the merits of the claim of misappropriation of funds. The court simply stated that “proof was not made of any facts mentioned in section 173 of the Bankruptcy Act or that the Appellant was guilty of misconduct in relation to his property or affairs.”

b) The legislative purpose of the proceedings is different: the purpose of the bankruptcy proceeding was not to assign blame or make determinations as to misappropriation of funds.

c) The Law Society was not present at the hearing and therefore had no opportunity to make representations.

d) Although the Appellant’s two key creditors: his mother and his former law firm attended the discharge hearing, Mr. Rankin the managing partner of Lang Michener LLP said that although he thought there were ample grounds to oppose the discharge, he decided not to oppose it because, “in the final analysis, I wasn’t prepared to pay a lawyer thousands and thousands of dollars to drag on the bankruptcy proceedings at my expense, at my firm’s expense.”

13For these reasons, the Hearing Panel’s decision to proceed with the disciplinary hearing after the Appellant’s discharge from bankruptcy was correct.

Issue 2: Did the Appeal Panel err in fact in deciding to uphold the Hearing Panel’s ruling that there was a failure to account for proper disbursements and expenditures?

14The LSUC Hearing Panel conducted a review of the complex factual background and evidence regarding the allegation that Vandor misappropriated funds.

15The Appellant claims there was uncontradicted evidence before the Law Society Hearing Panel that some of the funds he was alleged to have misappropriated were in fact used to purchase a condominium for his mother, to pay her notarial fees, municipal taxes, condominium insurance, and accounting fees, her personal and his family corporation’s corporate taxes, his father’s home care and funeral expenses, a Sun Life annuity and a BC Bond.

16The Appellant submits that these transactions were not taken into account by the Hearing Panel and thus the only reasonable solution is to set aside the Hearing Panel’s decision.

17It is not contested however, that transfers from Vandor Investments Limited (the Appellant’s family business) went to one of the following locations:

a. a company owned by the Appellant’s then wife but operated solely by him,

b. the Appellant’s law firm, or

c. directly to the Appellant himself to pay for personal expenses. Moreover, the document prepared by the Appellant to explain what happened to the monies contains a number of misleading entries.

18The Appellant does not dispute that while he managed his parent’s financial affairs in the 1990s and acted as the estate solicitor after his father’s death, their savings decreased from $2,003,341 in May 1998 to $5,125 in 2007 as confirmed by the Law Society’s forensic auditor.

19The Appellant also does not dispute that:

a. as estate trustee of the family company, he used monies from the family company to buy himself a horse farm, to collect a personal debt, school fees for his children and other personal expenses;

b. he offered no explanation as to why he told family members there was much more money in the account than there was; and

c. his former firm, Lang Michener claimed the Appellant misappropriated client and firm trust funds from three accounts. The firm paid back monies owed to the clients in the amount of $47,980.

20The Hearing Panel rendered a comprehensive well-reasoned decision. The Panel acted reasonably in rejecting the Appellant’s explanation of the depletion of Vandor Investments Limited accounts and in finding him responsible for the misappropriation of significant funds over an approximately 10 year period.

21The Panel found the Appellant had engaged in conduct unbecoming a lawyer contrary to section 33 of the Law Society Act, misappropriated funds, contrary to Rule 2.08 and By-Law 9 of the Rules of Professional Conduct and engaged in professional misconduct, contrary to Rule 6.01(1) of the Rules of Professional Conduct.

22The general rule, absent extenuating circumstances or compelling mitigating circumstances, is that revocation of license is the appropriate penalty. The Panel found that this is not a case for reducing costs sought by the Law Society but costs should not be used as an additional penalty for misconduct. Costs in the amount of $125,000 were ordered and the Appellant was given 10 years to pay this order.

23We are of the opinion that there is no basis to interfere with the Appeal Panels’ Order dismissing the appellant’s appeal or their award as to costs.

Summary of Conclusions

24For the reasons that follow, we find that:

a) the Law Society Appeal Panel was correct in holding that the Law Society Hearing Panel did not err in proceeding with a disciplinary hearing against the Appellant, Vandor after he was discharged from bankruptcy; and

b) the Law Society Appeal Panel did not err when it decided to uphold the Hearing Panel’s ruling that Vandor failed to account for expenditures and disbursements. On the contrary, the Law Society showed that the Appellant transferred large sums of money from trust funds over which he had control. The Appellant offered no reasonable explanation for the loss of most of these monies. No evidence was offered that restitution had been paid.

25The Appeal is therefore dismissed.

26At the conclusion of the hearing both parties made submissions as to costs. They agreed that the successful party would be entitled to costs fixed in the sum of $7,500 inclusive of disbursements and HST. Accordingly, the Law Society is awarded its partial indemnity costs of this Appeal in the amount of $7,500 inclusive of disbursements and HST.

Thorburn J.

Hackland R.S.J.

J. Wilson J.