CITATION: D’Mello v. The Law Society of Upper Canada, 2015 ONSC 5841

DIVISIONAL COURT FILE NO.: 530/13

DATE: 20151016

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Molloy, Sanderson, and Perell, JJ.

BETWEEN:

ROY FRANCIS D’MELLO

Roy D’Mello, self-represented, Appellant

Appellant

• and -

THE LAW SOCIETY OF UPPER CANADA

Respondent

Leslie Maunder and Nisha Dhanoa, for the Respondent

HEARD at Toronto: September 16, 2015

PERELL J.

REASONS FOR DECISION

A. INTRODUCTION AND OVERVIEW

[1] The Appellant Roy Francis D’Mello, who is a real estate practitioner, was disciplined by the Law Society of Upper Canada for failing to co-operate in a Law Society investigation of a complaint by the Canadian Imperial Bank of Commerce (“CIBC”) about a mortgage transaction. I foreshadow to say that it shall become very important to differentiate the investigation of the complaint, which was eventually closed, from the failure to co-operate discipline proceeding.

[2] The CIBC’s complaint, which as will be seen below had a bizarre history, was eventually closed after Mr. D’Mello complied with the Law Society’s direction to provide his file and accounting records to the investigator, but, by then, Mr. D’Mello was already the subject of discipline proceedings about his initial failure to co-operate in the investigation.

[3] By decision dated June 28, 2012, a Law Society Hearing Panel of three (Malcolm Mercer (chair), Roger Leclaire, and Catherine Strosberg) concluded that Mr. D’Mello had failed to co-operate in the investigation, and the Hearing Panel imposed a one-month suspension and it ordered Mr. D’Mello to pay costs of $10,000. The Hearing Panel’s decision was upheld by a Law Society Appeal Panel of five (Susan McGrath (chair), Constance Backhouse, Cathy Corsetti, Judith Potter, and Jan Richardson). The Appeal Panel dismissed Mr. D’Mello’s appeal and added further costs of $10,000.

[4] Mr. D’Mello appeals the decision of the Appeal Panel, reported as Law Society of Upper Canada v. Roy Francis DMello, 2013 ONLSAP 36, 2013 ONLSAP 0036, that upheld the three reported decisions of the Hearing Panel; namely: Law Society of Upper Canada v. Roy Francis DMello, 2012 ONLSHP 96, 2012 ONLSHP 0096; Law Society of Upper Canada v. Roy Francis DMello, 2013 ONLSHP 14, 2013 ONLSHP 0014; and Law Society of Upper Canada v. Roy Francis DMello, 2013 ONLSHP 15, 2013 ONLSHP 0015.

[5] For the Reasons set out below, it is my opinion that Mr. D’Mello’s appeal of the merits of the discipline decision should be dismissed but that his appeal of the penalty should be allowed.

[6] Mr. D’Mello did indeed fail to co-operate in a Law Society investigation. However, the order that the Hearing Panel ought to have made was simply to reprimand him. The Hearing Panel’s penalty was wrong in principle, and it was also unreasonable in the circumstances, described below.

[7] Given that Mr. D’Mello has already served half of his one-month suspension, which ought not to have been imposed, and given my view, explained below, that the Hearing Panel ought not to have made adverse, demeaning, and procedural unfair findings of fact against Mr. D’Mello on the very issues that the Hearing Panel considered irrelevant to the failure to co-operate proceeding, I conclude that Mr. D’Mello has been punished enough, and I shall simply set aside the penalty orders and the costs orders made against him.

[8] Each party should bear their own costs with respect to this appeal to the Divisional Court.

B. FACTUAL AND PROCEDURAL BACKGROUND

The Investigation and the Failure to Co-Operate Proceeding

[9] On December 5, 2008, Andrina McMillan, a Risk Manager at the CIBC, wrote the Law Society and asked that it investigate a $440,000 mortgage transaction in which Mr. D’Mello had acted for the CIBC.

[10] As a result of a follow up letter dated December 8, 2008 from Ms. McMillan, on December 12, 2008, Allison Cheron of the Law Society phoned Ms. McMillan and left a voicemail message asking if the CIBC wanted to continue with the complaint.

[11] On December 15, 2008, Ms. McMillan called Ms. Cheron and told her to ignore the matter for the moment. After this phone call, the Law Society closed the CIBC’s complaint file.

[12] It is a disputed fact, but two days later, on December 17, 2008, Ms. McMillan supposedly wrote the Law Society to the attention of the Complaints Department to update the matter, and she asked the Law Society to proceed with the complaint against Mr. D’Mello.

[13] However, it is not disputed that the CIBC’s letter of December 17, 2008, which as will soon become apparent, will be the source of much misery for all concerned, was not received by the Law Society in December 2008.

[14] Mr. D’Mello, who in 2008 knew nothing of these communications between the Law Society and the CIBC, believes that the December 17, 2008 letter was actually written in 2011 and backdated to appear to have been written in 2008. How and why Mr. D’Mello came to have this belief and the consequences and significance of his belief and the Law Society’s response and reaction to his belief are the source of the circumstances of Mr. D’Mello initially refusing to provide his file material to the Law Society’s investigator.

[15] In any event, on January 16, 2009, Ms. McMillan of the CIBC wrote Mr. D’Mello directly to advise him that it was the CIBC’s opinion that he had not followed instructions with respect to the $440,000 mortgage transaction and to advise him that he was no longer authorized to act on behalf of the CIBC. Ms. McMillan’s letter makes no mention that the CIBC had made a complaint to the Law Society.

[16] Meanwhile, not having received the December 17, 2008 letter, the Law Society’s CIBC complaint file remained closed. The file remained closed for more than three years, until January 13, 2011 when Eric Smith, the Assistant Manager of the Mortgage Fraud Investigations Department of the CIBC, contacted Ms. Cheron of the Law Society by email and referring to the CIBC’s December 17, 2008 letter, he asked that the D’Mello investigation be reactivated.

[17] On January 19, 2011, Ms. Cheron phoned Mr. Smith to tell him that the Law Society had not received the December 17, 2008 letter. She asked the CIBC to provide an update of its complaint. There was a follow up telephone conversation on February 18, 2011, and on April 5, 2011, the CIBC provided the update. On April 5, 2011, the CIBC also formally requested that the complaint against Mr. D’Mello go forward.

[18] On April 26, 2011, Mary Ann Lord, an investigator at the Law Society, wrote Mr. D’Mello and advised him of the nature of the CIBC’s complaint. Her letter notes that the complaint had initially been made in December of 2008. In her letter, in accordance with s. 49.3 of the Law Society Act, S.O. 1998, c. 21, Ms. Lord required Mr. D’Mello to turn over documents that related to the matter under investigation; i.e. the CIBC’s mortgage complaint, by May 31, 2011.

[19] Mr. D’Mello did not provide the documents requested. Rather he wrote Ms. Lord on May 13, 2011and objected to the unfairness of the Law Society proceeding with a complaint after three years without informing him that the complaint had been made in 2008. He said that the delay in proceeding with the complaint was prejudicial and unfair.

[20] On May 24, 2011, Ms. Lord wrote Mr. D’Mello explaining that “due to a miscommunication between the Law Society and CIBC about the status of the complaint, the file was closed” but that “in April 2011, CIBC wrote to the Law Society requesting the matter be re-opened.”

[21] In her May 24, 2011 letter, while expressing appreciation for Mr. D’Mello’s concern, in accordance with s. 49.3 of the Law Society Act, Ms. Lord required him to turn over documents that related to the matter under investigation by June 17, 2011.

[22] Again, Mr. D’Mello did not provide the documents, and rather he wrote Ms. Lord on June 17, 2011, and asked to see the Law Society’s file about the complaint. Mr. D’Mello’s letter stated:

…. My concerns are not unreasonable and it is clear from your letter that you also understand and can appreciate such concerns. You raise section 49.3 of the Act. I wish to make it clear that I am not, nor do not intend to be, in non-compliance with that section. Furthermore it is a requirement that the Law Society, in exercising statutory powers, governs in a manner that is, and appears to be procedurally fair and in good faith. The facts in this case indicate that the Law Society is not governing in such a manner.

While you have requested various materials and information, it would be putting the cart before the horse if the questions surrounding the delay and the issue of abuse of process are not first thoroughly vetted. Therefore I would like to review the Law Society’s file on this matter including the correspondence you refer to in your letter. …

[23] On June 24, 2011, Ms. Lord wrote Mr. D’Mello and enclosed paper copies of the correspondence and communications between the Law Society and the CIBC surrounding the initial complaint and its reactivation. In her letter, in accordance with s. 49.3 of the Law Society Act, Ms. Lord required Mr. D’Mello to turn over documents that related to the matter under investigation by July 15, 2011.

[24] Once again, Mr. D’Mello did not provide the documents. He wrote Ms. Lord on July 15, 2011 to say that the information she had provided did not satisfy his questions about the delay, and he requested, among other things, an electronic copy of the December 17, 2008 letter from the CIBC to the Law Society.

[25] On July 28, 2011, Ms. Lord wrote Mr. D’Mello indicating that he now had all the information about the delay. In her letter, yet once again, in accordance with s. 49.3 of the Law Society Act, Ms. Lord required Mr. D’Mello to turn over documents that related to the matter under investigation, this time by August 11, 2011.

[26] Yet again, Mr. D’Mello did not provide the documents, and, yet again, he wrote Ms. Lord, this time on August 10, 2011. He disputed that the Law Society had properly responded to his request for information. He repeated his demands for disclosure, particularly his request for an electronic copy of the December 17, 2008 CIBC letter.

[27] On August 11, 2011, Ms. Lord responded with a repeat of her letter of July 28, 2011 letter, this time requiring the documents by August 25, 2011. This time she warned that if the documents were not received, she would recommend that disciplinary proceedings be commenced against Mr. D’Mello.

[28] Mr. D’Mello did not provide the documents and throughout the summer and into the fall, he wrote numerous email messages to various Law Society staff members, including the Manager of Investigations and the Director of the Professional Regulation Division, attempting, without success, to obtain an electronic copy of the December 17, 2008 CIBC letter.

[29] By email dated September 14, 2011 sent to Mr. D’Mello, Ms. Lord's manager set a new deadline for his compliance. The deadline was now October 3, 2011, after which Mr. D’Mello was warned that disciplinary proceedings would be recommended.

[30] On September 22, 2011, by fax communication, Ms. Lord reminded Mr. D'Mello of the impending deadline. Mr. D’Mello persisted in not providing the documents, and on December 15, 2011, the Law Society filed a Notice of Application alleging that he had breached s. 49.3 of the Law Society Act by failing to co-operate with an investigation.

[31] Into the winter of 2011, Mr. D’Mello’s requests for an electronic copy of the CIBC’s letter of December 17, 2008 continued but were rebuffed.

[32] On March 31, 2012, Mr. D’Mello wrote Loreta Arci, Associate Discipline Counsel, at the Law Society and formally requested that the Law Society disclose to him an electronic copy of the December 17, 2008 CIBC letter.

[33] On April 16, 2012, Ms. Arci wrote Mr. D’Mello refusing to provide another copy of the December 17, 2008 letter. In her letter, Ms. Arci stated:

The Law Society’s position concerning your request for this format of disclosure remains the same. The Law Society will not provide you with an electronic copy of the said emails at this stage of the process.

At the investigative state, the Law Society is obligated to provide licensees with sufficient information to understand the complaint about their professional conduct and the nature of the investigation that the Law Society is conducting so that they may provide a meaningful response. It is the Law Society’s position that it has met its obligation to you in this regard. …

You will recall that this position was explained to you in an email from Anne-Marie Kearney dated September 14, 2011 and a letter from Zeynep Onen dated October 18, 2011.

I reiterated this position to you on February 21, 2012 and referred you to Law Society of Upper Canada v. Hamalengwa, 2008 ONLSHP 30, a copy of which was provided to you. You will recall that I directed you to paragraphs 23-25 of the Hamalengwa decision, which state, in part, that persons under investigation are not entitled to disclosure of the entire investigative file while the investigation is ongoing and before a decision is made whether or not to hold a hearing. Further, licensees are not entitled to make their co-operation conditional upon receipt of disclosure. …

Please be advised that the Law Society intends to proceed with a hearing on the merits on April 30, May 1 or May 2, 2012.

[34] On May 1, 2012, Mr. D’Mello delivered his file material for the investigation of the CIBC’s complaint to Ms. Arci without prejudice to demanding the disclosure of an electronic copy of the December 17, 2008 CIBC letter. Later in the day, Ms. Lord emailed Mr. D’Mello to indicate that several items of information were still outstanding, to which Mr. D’Mello responded with more information.

[35] On May 2, 2012, Mr. D’Mello brought a motion for an Order that the Law Society deliver to him electronic copies of the emails containing the copy of the letter “purportedly written and sent on December 17, 2008 from CIBC to the Law Society.” In his Notice of Motion, Mr. D’Mello submitted that the examination of the electronic copy was necessary for him to mount a defence to the proceedings being brought against him.

[36] The Hearing Panel heard Mr. D’Mello’s disclosure motion, and it did not call on the Law Society’s discipline counsel to respond. The Chair of the Hearing Panel, Mr. Mercer, provided the following oral reasons for dismissing Mr. D’Mello’s motion:

We do not see the merit of the motion on the basis that the information sought is not on the authority of the Hamalengwa material to this proceeding. It might be relevant to the matter being investigated, but the issue in this proceeding is co-operation. Mr. D’Mello doesn’t – it seems to us on the authority of this case and on our own view of the matter, Mr. D’Mello isn’t entitled to choose to co-operate or not respond or not based on his view of whether or not this December 17, 2008 letter is suspicious or not. We may or may not elaborate in written reasons, but that is our disposition of this motion.

[37] The same day, the Hearing Panel proceeded with the failure to co-operate discipline proceeding. Ms. Lord testified at the hearing, and she described the repeated requests that had been made pursuant to s. 49.3 of the Law Society Act.

[38] Mr. D’Mello cross-examined Ms. Lord, and he testified in his own defence.

[39] Mr. D’Mello’s position was that the history of the complaint by the CIBC raised sufficient concerns that he was not required to provide the documents required by Ms. Lord as investigator. He stated that he was convinced that there was a problem about the December 17, 2008 CIBC letter and that the Law Society was implicated. He said he wished to co-operate, but he needed answers to his questions about his suspicions that the letter was not written in December 2008 but written later and backdated. He believed that a forensic examination of the metadata of an electronic copy of the letter would prove whether his concerns were genuine or not.

[40] Based on his examination of the paper copies of the correspondence between the CIBC and the Law Society, Mr. D’Mello raised eight reasons why he believed that the December 2008 letter was concocted by the CIBC in January 2011 and backdated to 2008.

[41] Three examples of his reasons for doubting the letter are: (1) the CIBC logo on the copy of the December 17, 2008 letter was the same as the logo on the CIBC’s letter of April 2011, but those logos were different from the logos on the other correspondence of December 2008; (2) the CIBC’s letters to the Law Society in 2008 and in 2011, with the exception of the December 17, 2008 letter which is silent, were noted as being delivered by courier; and (3) in the CIBC’s letters to the Law Society on December 5 and 8, 2008, Mr. D'Mello was referred to as “Mr. D’Mello” (i.e. with an apostrophe) but in the letter of December 17, 2008, he is referred to as “Mr. DMello” (without an apostrophe), which is how the Law Society referred to him in its records including the records of the discipline proceedings. Mr. D’Mello thought it peculiar that after referring to him as D’Mello in the letters of December 5 and 8, 2008, the CIBC changed to referring him as DMello in its supposed December 17, 2008 letter.

[42] I will return to this topic below, but another curiosity, which Mr. D’Mello missed, is that the CIBC’s letters of December 5 and 8, 2008 are addressed to the Law Society’s “Claims Department” but the letter dated December 17, 2008 and April 5, 2011 are addressed to the Law Society’s “Complaints Department.”

The Hearing Panel Decision

[43] On June 28, 2012 the Hearing Panel released its decision finding Mr. D’Mello guilty of professional misconduct for failure to co-operate with an investigation. At paragraphs 52 to 55, it explained its reasons for finding that Mr. D’Mello had not co-operated with an investigation. The Panel stated:

52. Ms. Lord was assigned to conduct the investigation. Accordingly, Ms. Lord had lawful authority pursuant to s. 49.3(2)(c) to require Mr. D'Mello to provide information and, pursuant to s. 49.3(b), to require production of documents that relate to the matters under investigation as she did.

53. Based on this analysis, it is clear that Ms. Lord had the power to require Mr. D'Mello to provide information and produce documents relating to the matter under investigation as she did.

54. As the Divisional Court recently observed in Wise v. LSUC, 2010 ONSC 1937:

19. It is well recognized that to ensure the effective discharge of the responsibilities of professional regulators, every professional has an obligation to co-operate with the self-governing body: Artinian v. College of Physicians and Surgeons of Ontario, (1990), 73 O.R. (2d) 704 (Div. Ct.) at 707; Law Society of Saskatchewan v. Stromberg, (1995), 122 D.L.R. (4th) 433 (Sask. C.A.) at 438; Adams v. Law Society of Alberta (2000), 2000 ABCA 240, 82 Alta. L.R. 219 (Alta. C.A.) at 221, para.7.

20. The duty to co-operate is such an important and clear obligation, that s. 49.8(1) of the Act provides that a licensee is required to provide information even if it is privileged or confidential. ...

21. The important and onerous duty of Law Societies and other professional colleges to protect the public interest is recognized by the Supreme Court of Canada: McCullock-Finney v. Barreau du Québec (2004), 2004 SCC 36, 240 D.L.R. (4th) 410 (S.C.C.) at para. 45; Pharmascience v. Binet 2006 SCC 48, (2006), 273 D.L.R. (4th) 193 (S.C.C) at paras. 36, 37.

22. Accordingly, self-regulating professions must have effective investigation powers to fulfill their obligations (Pharmascience, supra, at paras. 36, 37).

55. To conclude, Ms. Lord had the authority to require information and documents from Mr. D'Mello but Mr. D'Mello did not provide any of what was required of him for a full year, despite repeated requests, until the day before this hearing.

[44] In its Reasons for Decision the Hearing Panel was dismissive of Mr. D’Mello’s defence. The Hearing Panel stated at paragraphs 40-45.

40. We would observe that many documents are now stored electronically rather than physically and that some copies are kept in scanned form while other copies are kept in native form such as MS Word. We also observe that, if the copy of the December 17, 2008 document had been kept in native form and printed to letterhead in April 2011, this would explain why the letterhead was the same as the April 2011 letter and different from the other December 2008 letters.

41. Based on the evidence before us, we would conclude on the balance of probabilities that the CIBC either mailed the December 17, 2008 letter, which was then somehow lost, or that the CIBC erroneously thought that this letter had been mailed. We cannot conclude that there is any reasonable basis from the evidence to think that the CIBC manufactured the December 17, 2008 letter in 2011 nor that the substance of the complaint would be affected even if this were so. We do not see any basis for a reasonable suspicion that there was any impropriety that might be uncovered on further investigation.

42. We do not think that knowing the creation date on the electronic copy of the letter e-mailed to the Law Society could change our conclusion. The attachment to the e-mail from the CIBC is not the original electronic version of the letter dated December 17, 2008. Without forensic electronic examination of CIBC records, any conclusion as to the creation date of the original letter would be speculative even knowing the metadata from the attachment sent to the Law Society. And whether or not a reliable conclusion might be reached based on investigation of CIBC records is uncertain as well.

43. While Mr. D'Mello has raised a number of issues as described above, we do not think that any of them individually, or taken together, provide any reasonable basis to suspect any impropriety in the timing or fact of this investigation.

44. And significantly, the substance of the complaint merits investigation. Mortgage frauds are a serious problem in Ontario. Lawyers play a vital role in mortgage matters and it is very important to clients and in the public interest that this legal work be done properly. It is important that the Law Society be able to effectively and efficiently investigate this matter.

45. There is a range of possible explanations for Mr. D'Mello's refusal to co-operate until the day before this hearing. His position is consistent with an attempt to delay investigation and prosecution knowing or fearing that he had engaged in professional misconduct. His position is also consistent with the reaction of an innocent person outraged by allegations known to be false and thought to be unfair. We are unable to assess Mr. D'Mello's actual motivation with any degree of confidence on the evidence before us. But it does not matter. This matter required proper investigation in the public interest.

[45] Relying on Law Society of Upper Canada v. Munyonzwe Hamalengwa, 2008 ONLSHP 30, the Hearing Panel concluded that Mr. D’Mello had not co-operated with the Law Society’s investigation and that his justification for not doing so was without merit. The heart of the Hearing Panel’s reasoning is found at paragraphs 56-58 and 67-70 which state:

56. Mr. D'Mello's essential position is that he was entitled not to co-operate unless and until he was satisfied as to the propriety of the complaint and the investigation. He demanded disclosure from the Law Society to assist him in his assessment of the situation. He brought a motion before this panel for disclosure of the electronic communication from the CIBC to the Law Society to which the December 17, 2008 letter was an attachment.

57. However, there is no basis in the legislation for Mr. D'Mello's position. It is for the Director, Professional Regulation or the Senior Counsel, Professional Regulation, to assess whether there is a "reasonable suspicion" not Mr. D'Mello.

58. As a matter of public policy, it would frustrate the intent of the statute if the lawyer whose conduct was in issue were able to impede an investigation by declining to co-operate because the lawyer disagreed about the assessment of information regarding the lawyer's own conduct.

59. For the reasons given, Mr. D'Mello was required to co-operate with the investigation into his professional conduct in the CIBC mortgage matter. Mr. D'Mello was not entitled to condition his co-operation on disclosure or his satisfaction as to the propriety of the complaint or the decision to investigate.

60. Mr. D'Mello did not provide the documents required of him until the day before this hearing. We find that Mr. D'Mello engaged in professional misconduct by breaching s.49.3 of the Law Society Act as alleged.

61. At the time of the hearing, Mr. D'Mello had yet to provide all of the documents that were required of him, in that he had not produced client trust ledgers for the period July 1, 2008 to December 31, 2008. Further documents were produced by Mr. D'Mello after the hearing.

62. As stated above, we are not able to decide whether Mr. D'Mello refused to co-operate out of a misguided but genuine view of his obligations and entitlements or whether Mr. D'Mello refused to co-operate in order to impede the investigation of his conduct in the context of alleged mortgage fraud. Based on his testimony and his submissions, we are inclined to believe at this time that Mr. D'Mello acted on a misguided but genuine belief.

[46] The Hearing Panel, referring to the matter of Mr. D’Mello’s unsuccessful request for disclosure of an electronic copy of the December 17, 2008 letter, reasoned that Mr. D’Mello had not been denied procedural fairness. At paragraphs 61-66 of its decision, the Hearing Panel stated:

61. The Court of Appeal for Ontario has more recently considered procedural fairness in a very similar context to the case before this panel. In Egerton v. Appraisal Institute of Canada, 2009 ONCA 390, the Court of Appeal for Ontario considered the duty of fairness required of the Investigating Committee of the Appraisal Institute of Canada and stated at para. 20 that:

... the Investigating Committee can impose no sanction or substantive consequence on the respondent. It can do no more than recommend charges and pro-posed penalties for the Adjudicating Committee to consider. In other words, this stage can impose no sanctions on the respondent. It can do no more than cause a hearing before the Adjudicating Committee. The requirements of the duty at this stage are therefore extremely minimal.

62. The process under the Law Society Act is very similar. The Law Society may conduct an investigation into the professional conduct of a lawyer or paralegal under s.49.3 as discussed above. Section 34 requires the authorization of the Proceedings Authorization Committee before a proceeding may be brought by the Law Society for a determination by the Hearing Panel as to alleged professional misconduct. As a result of any investigation, the Law Society can do no more that cause a hearing before the Hearing Panel and then only with authorization of the Proceedings Authorization Committee. The reasoning and conclusion of the Court of Appeal in Egerton is applicable here.

63. Mr. D'Mello had no legitimate need for disclosure as demanded at the investigative stage. It is not for the subject of an investigation to decide whether there is a reasonable suspicion of engagement in professional misconduct. It was not for Mr. D'Mello to impede the investigation by refusing to co-operate because, if such was truly his belief, he was not satisfied as to the propriety of the complaint and the decision to investigate.

64. To be clear, the Law Society must not act in an arbitrary or fundamentally unfair way in requiring co-operation from a lawyer or paralegal (Wise v. LSUC, 2010 ONSC 1937 at para. 27). In an appropriate case, a breach of this obligation by the Law Society can be a defence to an allegation of failure to co-operate. However, lawyers or paralegals who refuse to co-operate on this basis do so at their peril as an ultimately unproven allegation of arbitrariness or fundamental unfairness is no de-fence. The same is true with respect to a refusal to co-operate based on ultimately unproven allegations of abuse of process or breach of Charter rights.

65. In this case, Mr. D'Mello has not alleged any specific facts, nor has he provided any evidentiary foundation of anything, that might provide the basis for a defence. Mr. D'Mello is not entitled to disclosure in this proceeding in aid of a mere fishing expedition. There was no air of reality to the vague allegations raised by Mr. D'Mello as being his concerns.

66. It was on this reasoning that Mr. D'Mello's motion for production of an electronic copy of the e-mail was dismissed.

[47] With the release of the Hearing Panel’s decision, the proceeding was adjourned to consider penalty.

[48] The penalty phase of the hearing was scheduled for December 11, 2012, but on December 5, 2012, Mr. D’Mello brought a motion, heard by teleconference, requesting that Mr. Mercer recuse himself as chair. Mr. D’Mello said that he had learned that the CIBC was a significant client of Mr. Mercer’s law firm, McCarthy Tétrault, and therefore, there was a reasonable apprehension of bias if Mr. Mercer participated in the penalty phase of the discipline proceeding.

[49] Mr. Mercer declined to recuse himself. Delivering reasons on behalf of the Hearing Panel, after referring to the leading cases about disqualification on the basis of a reasonable apprehension of bias, Mr. Mercer said that the issue to be determined was whether an informed person viewing the matter realistically and practically - and having thought the matter through - would conclude that there are substantial grounds for concluding that Mr. Mercer would be predisposed by his firm's relationship with the CIBC to decide against Mr. D'Mello and that Mr. Mercer would be prevented by that predisposition from coming to a decision on the basis of the evidence and submissions.

[50] The penalty hearing went forward on December 11, 2012. By this time, the investigation of the CIBC’s complaint had been completed, and the complaint file had been closed.

[51] Mr. D’Mello had no discipline history. At the penalty hearing, he testified: “You know, it’s important for the Tribunal to know the truth, I simply can’t you know, admit responsibility and having remorse over this.” Without providing corroborating documents, Mr. D’Mello testified that he was not able to pay costs because he was a sole practitioner with a wife and infant to support. He said his wife worked and owned the matrimonial home, that the family received assistance from family members, and that he was in the process of selling another property that he owned with others.

[52] The Hearing Panel suspended Mr. D’Mello for one month and ordered him to pay costs of $10,000. Its reasons for this penalty are described in paragraphs 10-26 of its decision (reported at Law Society of Upper Canada v. Roy Francis DMello, 2013 ONLSHP 14, 2013 ONLSHP 0014), as follows:

10. Applying the approach set out in Law Society of Upper Canada v. Ricardo Max Aguirre, 2007 ONLSHP 46, we note the following:

(a) Mr. D'Mello does not have a prior disciplinary record;

(b) Mr. D'Mello demonstrates no remorse, no acceptance of responsibility and no understanding of the effect of his misconduct on others;

(c) Mr. D'Mello fully complied with his obligations shortly after the May hearing having complied with most of his obligations on the eve of that hearing;

(d) Mr. D'Mello’s misconduct deprived the Law Society of the ability to effectively investigate alleged professional misconduct for a lengthy period of time, wasted time and resources and risked impairment of public confidence in the regulation of the profession by the Law Society. As our jurisprudence makes clear, failure to co-operate with an investigation is a serious matter;

(e) Mr. D'Mello has not admitted his misconduct and did not obviate the necessity of its proof. However, Mr. D'Mello did enter into an agreement with the Law Society as to facts relating to communications between Mr. D'Mello and the investigator; and

(f) There are no extenuating circumstances that might explain, in whole or in part, the misconduct.

11. There is a further Aguirre factor that bears particular examination, namely whether the misconduct is out-of-character or, conversely, likely to recur.

12. Mr. D'Mello's principal position as to penalty was that he had an honest belief which explained his conduct and that this honest belief should count in mitigation.

13. Specifically, Mr. D'Mello testified that he did not feel at the time that he was not co-operating but rather that he believed, and still believes, that the investigation arose out of impropriety on the part of the Law Society and the CIBC as complainant.

14. Mr. D'Mello started with the proposition that his honest belief was a mitigating circumstance but then attempted to re-litigate the issue of the propriety of his refusal to co-operate despite our earlier findings.

15. Mr. D'Mello went on to say that his conduct was unlikely to recur because a similar circumstance was unlikely to recur. He testified that he has co-operated with a number of other investigations (based, he says, on frivolous complaints) and that his co-operation in these investigations makes it clear that this was an unusual situation unlikely to recur.

16. Nevertheless, based on Mr. D'Mello's testimony and submissions, we conclude that Mr. D'Mello would not act differently in the future were he to be faced with the same or a similar circumstance, despite this proceeding. Mr. D'Mello was clear that he would not provide documents and information in a future Law Society investigation if he thought that the Law Society was acting improperly.

17. We conclude that Mr. D'Mello's misconduct is very likely to recur should similar circumstances present themselves.

18. Based on the jurisprudence canvassed with us, the most common penalty in a failure to co-operate case is a reprimand if compliance is achieved prior to the hearing and there is no prior misconduct. However, a one-month suspension is the penalty in a minority of these cases.

19. General deterrence and public confidence in effective regulation of the legal profession may have been satisfied by a reprimand in this case.

20. However, the critical point is specific deterrence. It is clear that Mr. D'Mello has not learned his lesson. Mr. D'Mello is not prepared to accept that he is not the decision-maker when it comes to investigative requirements for documents and information. While Mr. D'Mello may well choose to respond in some cases, it is clear to us that he reserves the right to be the decision-maker.

21. As we do not think that a reprimand will deter Mr. D'Mello from similar misconduct in the future, we conclude that a one-month suspension is the appropriate penalty. Despite Mr. D'Mello's submission, we do not think it relevant that a similar situation may not arise again in the future.

22. The Law Society sought costs from Mr. D'Mello on the basis that the profession should not bear the costs arising from professional misconduct. We agree with that reasoning which is well supported by our jurisprudence.

23. Mr. D'Mello argued against costs on the basis of his alleged honest belief that the Law Society acted improperly in the investigation that led to these proceedings. We do not accept this argument. Indeed, while we accept that Mr. D'Mello does believe that he was the subject of impropriety, we do not see that his belief is reasonable. In any event, a belief in impropriety is no ground to avoid paying costs.

24. While we were concerned that Mr. D'Mello might not be in a position to pay the costs sought by the Law Society, Mr. D'Mello was not prepared to frankly and fully disclose his financial situation. Accordingly, we did not take ability to pay costs into account.

25. However, we reduced the costs ordered from what was requested to reflect the fact that this matter could have proceeded by summary hearing, in which case the costs of Proceedings Management Conferences and a Pre-Hearing Conference would not have been incurred. While the Law Society no doubt had good reason to proceed as it did, we did not think that Mr. D'Mello should bear those additional costs.

26. We therefore ordered costs to be paid by Mr. D'Mello in the amount of $10,000 within two years, with interest at 3% per annum commencing six months after our order.

Decision of the Appeal Panel

[53] Mr. D’Mello appealed the decisions of the Hearing Panel to an Appeal Panel of the Law Society. The appeal was heard on September 6 and 9, 2013.

[54] By way of a preliminary motion in his appeal, Mr. D’Mello repeated his request for disclosure of an electronic copy of the December 17, 2008 letter. The Appeal Panel dismissed this motion, essentially on the grounds that it did not have jurisdiction to make the Order requested.

[55] The grounds of Mr. D’Mello’s appeal to the Appeal Panel were fourfold: (1) the Hearing Panel erred in not concluding that there was actual bias or a reasonable apprehension of bias; (2) the Hearing Panel erred in failing to grant the motion for disclosure; (3) the Hearing Panel erred in rejecting his defence with respect to his concerns about the December 17, 2008 letter; and (4) the Hearing Panel erred in imposing an unusually harsh penalty on the Appellant.

[56] On October 23, 2013, the Appeal Panel released its decision dismissing the appeal. In dismissing the reasonable apprehension of bias ground of appeal and the rejection of Mr. D’Mello’s defence based on the December 17, 2008 letter, the Appeal Panel stated at paragraphs 21-25 of its Reasons for Decision:

21. The hearing panel correctly noted [at paras. 32 and 33] that:

it was Mr. D’Mello's failure to respond to investigative request that is in issue and not the conduct being investigated; and

the making of unparticularized and unsubstantiated allegations of serious impropriety by the complainant in the matter being investigated does not convert this application into something it is not. [Emphasis added]

22. On these findings, the hearing panel concluded that there was no bias and no reasonable apprehension of bias in respect of the matters that were actually in issue in this proceeding.

23. Mr. D’Mello's affidavit in support of his motion for disclosure, in paragraph 7, indicates that:

Ms. Lord then provided a timeline which included some correspondence between the Law Society and CIBC. It was upon review of this correspondence that I became certain that there was improper and deceptive conduct on the part of CIBC and the Law Society.

24. While the affidavit indicates his belief that there was improper and deceptive conduct on the part of CIBC and the Law Society, it does not allege conspiracy between CIBC and the Law Society, or that the conduct of CIBC in respect of this complaint was tantamount to fraud. Rather, he raised "vague allegations" as "being his concerns."

25. Mr. D’Mello takes the position that "deceptive conduct" is tantamount to fraud. While that can be the case, it was incumbent upon Mr. D’Mello to establish specific facts to support an inference that there was deceptive conduct by CIBC and the Law Society. He did not do so. The hearing panel, therefore, made no reversible error in its conclusions in paragraphs 27 and 30 of its Decision on a Request for Recusal, nor upon its determination that there was no bias and no reasonable apprehension of bias in respect of the matters that were actually in issue in this proceeding.

[57] In dismissing the ground of appeal based on the Hearing Committee’s failure to order disclosure of an electronic copy of the December 17, 2008 CIBC letter and in dismissing Mr. D’Mello’s arguments that he did have a defence to the failure to co-operate allegation, the Appeal Panel stated at paragraphs 33-36 of its Reasons for Decision:

33. A review of the affidavit in support of the motion for disclosure reveals Mr. D’Mello's serious concerns about the timing of the investigation, given the complaint in 2008, the closing of the file in 2008, and the reopening of the complaint in 2011. However, the motion record contained no evidence, other than the Appellant's unsubstantiated belief, to support an inference that there was any impropriety, or deceptive conduct, on the part of the Law Society or CIBC.

34. It is clear from the record that the Law Society voluntarily disclosed the timing issues to the Appellant in an attempt to explain the reasons for the reopening of the investigation. This points to a desire to be open and transparent about the process, as opposed to any attempt to conceal or deceive. The Law Society's willingness to be open and transparent about the process does not overrule the statutory prohibition, in s. 49.12 of the Law Society Act, against disclosure of information obtained during an investigation, nor the requirement in Rule 19 of the Rules of Practice and Procedure that the Law Society disclose as required by law and provide an opportunity to examine any relevant document.

35. The December 17, 2008 letter was relevant only to the underlying investigation of possible mortgage fraud initiated by the CIBC. It had no relevance whatsoever to the allegation of failure to co-operate in the investigation. Allowing any licensee to refuse to co-operate when they believe the complaint to be unfounded would seriously undermine the Law Society's ability to regulate the profession, and could ultimately lead to the loss of self-regulation. It is likely that the vast majority of licensees believe that complaints against them are unfounded, and in fact, many are found by the Law Society to be so, but it is not up to the individual licensee to make that determination based upon his or her own self-interest. It is the responsibility of the Law Society to review or investigate the complaint in the public interest, and to make a determination as to whether the public interest requires that an investigation proceed and/or a conduct proceeding commence.

36. The hearing panel did not err in its determination that Mr. D’Mello was not entitled to make his compliance with requests for documents and information conditional upon the Law Society's disclosure of documentation in the underlying investigation. The allegation of failure to co-operate was inconsistent with his obligation to co-operate in an investigation. Confidence in the Law Society to govern the legal profession would be undermined, threatening both self-regulation and the independence of the bar.

[58] In dismissing the unreasonable penalty ground of appeal, the Appeal Panel stated at paragraphs 39-41 of its Reasons for Decision:

39. The penalty imposed was within the range, albeit at the high end.

40. Unfortunately, the Appellant provided no factual basis for a finding that he was unable to pay costs. However, in such cases, it is necessary, albeit difficult, to provide such evidence, to allow a finding of an inability to pay costs.

41. While we can sympathize, in general, with the plights of some sole practitioners, who are barely scraping by financially, the hearing panel and consequently the appeal panel cannot reach a conclusion of an inability to pay costs without a solid evidentiary foundation. That means that the Appellant must testify not only as to his general impecuniosity, but also as to specific facts that restrict his ability to pay a costs award.

C. ANALYSIS AND DISCUSSION

Standard of Appellate Review

[59] The Law Society’s Appeal Panel is entitled to deference with respect to its interpretation of the Law Society Act, its home statute: Dunsmuir v. New Brunswick, 2008 SCC 9 at para. 54; Law Society of Upper Canada v. Evans (2008), 295 D.L.R. (4th) 281 (Ont. Div. Ct.) at para. 13.

[60] The Court should only intervene if the Panel's decision is unreasonable: Igbinosun v. Law Society of Upper Canada (2009), 83 Admin. L.R. (4th) 106 (Ont. Div. Ct.), aff'd 2009 ONCA 484, 96 O.R. (3d) 138 (C.A.), paras. 8-9; Wise v. Law Society of Upper Canada, supra.

The Appeal of the Decision that Mr. D’Mello Failed to Co-operate

[61] The analysis and discussion of Mr. D’Mello’s appeal of the decision that he had failed to co-operate in an investigation can get underway with an observation that concerns the importance of the investigative role of a regulator of a self-governing profession.

[62] The observation is that there are very powerful public policy reasons for requiring the members of a self-governing profession to co-operate with an investigation by their regulator. I agree with the comments of Larry Banack in Law Society of Upper Canada v. Joseph Dannial Ernest Stewart Baker, [2006] L.S.D.D. No. 31, at paras. 6-7:

6. It is of paramount importance that members of the Law Society co-operate with investigations and promptly and substantively respond to communications from the Law Society in order that it may fulfill its statutory mandate of governing the profession in the public interest. Members' failure to do so delays investigations, jeopardizes the collection of evidence including the recollection of witnesses, results in a backlog of investigations and can lead to an erosion of public confidence in the self-regulatory authority of the Law Society.

7. Members must be aware that their failure to co-operate and/or respond in a prompt and substantive fashion results in the implementation of a second investigative process to compel the member's compliance. This diverts attention from the primary complaint or investigation at a cost of time and Law Society resources funded by all members of the Society. Members who choose to not co-operate or respond promptly and substantively interfere with the proper functioning of the Law Society, diminish the public's respect for the profession and the self-regulatory process of the Law Society and cause otherwise avoidable expense to be incurred.

[63] See also: Wise v. Law Society of Upper Canada, supra.

[64] In the Hamalengwa, case, which is the failure to co-operate with an investigation case to which Mr. D’Mello was referred by Ms. Arci and others, Abraham Feinstein, Q.C. stated at paras. 22-26:

22. Throughout the motion, the licensee asserted he was entitled to full disclosure while the investigations were ongoing and that he was entitled to make his co-operation conditional upon receipt of that disclosure.

23. The case law is clear that persons under investigation are not entitled to disclosure of the entire investigatory file while the investigation is ongoing and before a decision is made whether or not to hold a hearing (Strauts v. College of Physicians and Surgeons of British Columbia, [1997] B.C.J. No. 1518 (B.C.C.A.)).

24. While under investigation, you do not have the same right to disclosure that you do once a hearing has been initiated where a much higher disclosure obligation applies.

25. In Law Society of Upper Canada v. Munyonzwe Hamalengwa (File No. CN64b/02), a previous conduct application before the Law Society, the licensee was told clearly that he was not entitled to disclosure while the investigation was ongoing and not entitled to make his co-operation conditional upon receipt of disclosure. In his Oral Decision and Reasons of March 24, 2004, Mr. Wright states at line three on page four: "Our members are required to co-operate with the Law Society during an investigation. There is no duty to disclose in anything other than the most general, and perhaps not even there, the most general reasons for the investigation."

26. Moving down to line 12: "The Law Society is required to give disclosure after a conduct application has been issued, but there is not the same obligation to disclose during an investigation for obvious reasons. The failure to co-operate with the Law Society is itself professional misconduct."

[65] In the immediate case, the Law Society’s investigators were, however, somewhat inconsistent in applying the principle from the Hamalengwa case both before and after Ms. Arci’s advice to Mr. D’Mello, and the Law Society’s investigators were inconsistent in their responses to Mr. D’Mello during the investigative phase of the CIBC’s complaint and during the adjudicative phase of the separate matter of Mr. D’Mello’s failure to co-operate in that investigation.

[66] As a legal matter, during the investigation of the CIBC’s complaint, Mr. D’Mello did not have any right to disclosure of an electronic copy of the CIBC’s December 17, 2008 letter because disclosure would follow if the investigation matured into a complaint proceeding, and as a legal matter, Mr. D’Mello did not have a right to disclosure of an electronic copy of the CIBC’s December 17, 2008 letter, because disclosure of any CIBC documents was irrelevant to the failure to co-operate proceedings, but as an emotive matter, it is perfectly understandable why Mr. D’Mello might have felt like K in Kafka’s novel, The Trial.

[67] Ms. Lord, who was under no obligation to disclose documents, did so to placate Mr. D’Mello’s concerns about the three-year delay in launching the investigation. She provided him with documents that explained the delay; unfortunately, the documents suggested a conspiracy to Mr. D’Mello, and when he was refused an electronic copy that might in his mind have proved or disproved the conspiracy, the refusal suggested there was a Law Society cover-up.

[68] Further, unfortunately, in my opinion, the Hearing Panel made a mess of responding to Mr. D’Mello’s request for information, and its Kafkaesque reasoning in rejecting his defence to the failure to co-operate proceeding treated Mr. D’Mello unfairly.

[69] Nevertheless, in my opinion, in the end result, and notwithstanding the inconsistencies, the Hearing Panel came to the correct decision that Mr. D’Mello had failed to co-operate in an investigation.

[70] As appears from the above account of the factual and procedural background, the legal and factual flashpoint of the discipline proceedings against Mr. D’Mello and of his subsequent appeals to the Appeal Panel and to this Court was the issue of whether Mr. D’Mello had a defence to the Law Society’s allegation of professional misconduct because of his concerns, which the Hearing Panel found to be genuinely held but misguided concerns, about whether the CIBC and the Law Society had concocted the CIBC’s December 17, 2008 letter.

[71] Mr. D’Mello’s defence to the failure to co-operate proceedings arose from his position that he would comply with his disclosure obligations concerning that mortgage transaction after the Law Society provided him with an electronic copy of the CIBC’s letter of December 17, 2008, which he persistently requested and which the Law Society just as persistently refused to disclose.

[72] The position of the Law Society’s investigator, which led to the discipline proceedings being brought against Mr. D’Mello was that he was required to comply with s. 49.3(2) of the Law Society Act regardless of his concerns about the three year delay in informing him of a December 2008 complaint and regardless of his concerns that the December 17, 2008 letter was a fraud concocted by the Law Society and the CIBC.

[73] Mr. D’Mello did not take any steps to stay the investigation nor to obtain a ruling on his entitlement to disclosure. Instead, he simply dug in his heels and refused to comply with the proper requests of the investigator. Quite simply, he was wrong to have done so, and that is what led to the charge against him for failing to cooperate, and the ultimate finding against him on that charge.

[74] In rejecting Mr. D’Mello’s disclosure motion, the Hearing Panel; i.e. the Law Society in its role as adjudicator, agreed with the position of the Law Society investigator. To repeat the Chair of the Hearing Panel’s oral reasons; he stated:

We do not see the merit of the motion on the basis that the information sought is not on the authority of the Hamalengawa material to this proceeding. It might be relevant to the matter being investigated, but the issue in this proceeding is co-operation. … [I]t seems to us on the authority of this case and on our own view of the matter, Mr. D’Mello isn’t entitled to choose to co-operate or not respond or not based on his view of whether or not this December 17, 2008 letter is suspicious or not. We may or may not elaborate in written reasons, but that is our disposition of this motion.

[75] In my opinion, this reasoning of the Hearing Panel in rejecting Mr. D’Mello’s motion was sound, but what followed when the Hearing Panel proceeded with the discipline proceeding was that it lost the courage of its own correct convictions and made inconsistent, adverse, demeaning, and procedurally unfair findings of fact against Mr. D’Mello on the very issues that the Hearing Panel had ruled irrelevant to the failure to co-operate proceeding.

[76] Having found that Mr. D’Mello’s concerns might be relevant to the underlying matter being investigated, but that the relevant issue in the proceeding was co-operation, it was inconsistent, adverse, demeaning and procedurally unfair for the Hearing Panel to state in paragraphs, 41, 64 and 65 of its Reasons for Decision that: (a) on the balance of probabilities the CIBC either mailed the December 17, 2008 letter, which was then somehow lost, or the CIBC erroneously thought that the letter had been mailed; (b) there was no reasonable basis from the evidence to think that the CIBC manufactured the December 17, 2008 letter in 2011; (c) the CIBC’s complaint would not be affected even if it had manufactured the letter in 2011; (d) there was no basis for a reasonable suspicion that there was any impropriety that might be uncovered on further investigation; (e) if the Law Society had acted in a fundamentally unfair way in requiring co-operation that could be a defence to an allegation to co-operate, but Mr. D’Mello had not alleged any specific facts and had not provided any evidentiary foundation for any such defence; (e) he was on a mere fishing expedition; and (f) his defence had no air of reality.

[77] While denying Mr. D’Mello an opportunity to prove his allegations that the December 17, 2008 letter was concocted, it was inappropriate for the Hearing Panel to rule: (a) that his defence was irrelevant to the failure to co-operate proceeding; (b) that the irrelevant defence might be relevant to a failure to co-operate proceeding, in an appropriate case; and (c) that Mr. D’Mello’s irrelevant defence had no evidentiary foundation and no air of reality and had not been proven and could not be proven.

[78] In my opinion, having ruled Mr. D’Mello’s defence irrelevant, the Hearing Panel ought not to have offered any conclusions about the probity of Mr. D’Mello’s concerns about the CIBC’s and the Law Society’s conduct associated with the supposed letter of December 17, 2008.

[79] I do not know what a forensic examination of the December 17, 2008 letter would reveal, if anything, but I do know that without testimony from a forensic expert and more importantly without somebody subpoenaing Ms. McMillan from the CIBC to testify, there was no evidentiary foundation for the Hearing Panel to conclude anything beyond the fact that the CIBC’s letter was not received by the Law Society in December 2008.

[80] I shall not fall prey to the error that the Hearing Panel made of commenting about whether Mr. D’Mello’s concerns on their merits wanted for an air of reality as a defence to an allegation of failure to co-operate, but in my view if the CIBC’s complaint had moved from an investigation to a discipline proceeding, then Mr. D’Mello’s eight reasons why he believed that the December 17, 2008 letter was concocted by the CIBC in January 2011 and backdated to 2008 would have been enough to require the Law Society to provide him with an electronic copy of the CIBC’s correspondence, and it would have justified summoning Ms. McMillan and Mr. Smith of the CIBC as witnesses to the CIBC’s complaint proceedings. I also comment that it would have been incumbent upon any Hearing Panel to permit Mr. D’Mello an opportunity to make his defence before ruling that it did or did not have any merit.

[81] In contrast to the approach of the Appeal Panel was more consistent with the principle from the Hamalengwa case. I agree with its conclusion that Mr. D’Mello’s concerns about the December 17, 2008 letter were not relevant to the allegation of failure to co-operate and only relevant to the underlying investigation of possible mortgage fraud.

[82] Once again, I shall not fall prey to the error of the Hearing Panel of commenting about whether Mr. D’Mello tendered specific facts or provided any evidentiary foundation that might provide the basis for a defence based on delay, a conspiracy, or a cover-up, but I shall comment again that the Hearing Panel should have simply explained to Mr. D’Mello that his concerns, proven or unproven, were not relevant to whether or not he had complied with his obligation to co-operate. The inconsistencies of the Hearing Panel’s reasoning, however, do not change the fact that the Hearing Panel and the Appeal Panel were both factually and legally correct that Mr. D’Mello had failed to co-operate in an investigation, and, therefore, I would not allow his appeal of the decision that he had failed to co-operate with an investigation.

The Appeal of the Decision about a Reasonable Apprehension of Bias

[83] For the reasons that I am about to explain, in my opinion, the penalty imposed by the Hearing Panel cannot stand. Therefore, the issue of whether Mr. Mercer was wrong in refusing to recuse himself from the penalty stage of the hearing is now moot and it is not necessary to deal with it further.

The Appeal of the Hearing Panel’s Penalty

[84] In reaching its decision about penalty the Hearing Panel and the Appeal Panel referred to Law Society of Upper Canada v. Aguirre, 2007 ONLSHP 46, a failure to co-operate case in which Hearing Panel Chair Mark Sandler stated at paras. 11-13:

11. There have been a number of recent decisions dealing with analogous cases before other single member hearing panels. In the cases I am aware of, a suspension has been imposed, ranging from 25 days to 4 months, followed by indefinite suspension until the member has met his/her obligations to the Society. Costs are also regularly awarded in favour of the Society.

12. The following factors -- and no doubt others -- inform the appropriate penalty to be fixed:

(a) the existence or absence of a prior disciplinary record;

(b) the existence or absence of remorse, acceptance of responsibility or an understanding of the effect of the misconduct on others;

(c) whether the member has since complied with his/her obligations by responding to or otherwise co-operating with the Society;

(d) the extent and duration of the misconduct;

(e) the potential impact of the member's misconduct upon others. In this regard, consideration may be given not to the merits of the complaints that prompted the Society's intervention (unless proven at the hearing), but to how the member's unresponsiveness did or might reasonably be expected to affect the client's interests;

(f) whether the member has admitted misconduct, and obviated the necessity of its proof;

(g) whether there are extenuating circumstances (medical, family-related or others) that might explain, in whole or in part, the misconduct;

(h) whether the misconduct is out-of-character or, conversely, likely to recur.

13. A finding of professional misconduct in these cases may arise from a member's failure to answer the Society's inquiries promptly (or at all) or from answers that are patently unresponsive to the issues raised by the Society. Such misconduct is often, though not necessarily, coupled with unresponsiveness to the member's client or former client.

[85] I have already explained above my opinion that the Hearing Panel made inconsistent, adverse, demeaning, and procedurally unfair findings of fact against Mr. D’Mello on the very issues that the Hearing Panel had ruled irrelevant to the failure to co-operate proceeding. In my opinion, these unfair findings tainted the reasonableness of the Hearing Panel’s decision about penalty.

[86] The Hearing Panel concluded (at para. 19) that general deterrence and public confidence in effective regulation of the legal profession may have been satisfied by a reprimand in this case.” However, the Panel then went on to hold that a greater penalty was required in order to specifically deter Mr. D’Mello in the future. In my opinion, it was unreasonable for the Hearing Panel to conclude that Mr. D’Mello deserved specific deterrence because he had not shown remorse and had not learned his lesson and might, in a future Law Society investigation, not provide documents and information if he thought that the Law Society was acting improperly. This conclusion was particularly unreasonable given that the Hearing Panel in its decision on the merits wished to be clear that in an appropriate case, a breach of the Law Society’s obligation not to act in a fundamentally unfair way could be a defence to an allegation of failure to co-operate.

[87] Here, I repeat that the Appeal Panel got it right in paragraph 35 of its Reasons for Decision that the December 17, 2008 letter was relevant only to the underlying investigation of possible mortgage fraud initiated by the CIBC and that the letter had no relevance whatsoever to the allegation of failure to co-operate in the investigation. That said, both the Hearing Panel’s and the Appeal Panel’s decisions about penalty became unreasonable when they concluded that Mr. D’Mello was a likely recidivist notwithstanding that he had a genuine belief that there was an impropriety that would have at least been relevant to the underlying investigation of possible mortgage fraud by the CIBC, which had not been closed at the time of the failure to co-operate proceeding.

[88] Moreover, it was unfair and unreasonable of both panels to expect Mr. D’Mello to repent and show remorse for his allegations of impropriety at a time when he had provided the documents required by the Law Society without prejudice to his request for an electronic copy of the December 17, 2008 letter, which electronic copy might have given him a defence to the underlying investigation, even if it did not provide him with a defence to the failure to co-operate proceeding.

[89] Further, both panels erred in principle by, in effect, treating Mr. D’Mello’s lack of remorse as an aggravating factor justifying specific deterrence. Remorse may be a mitigating factor, and the lack of remorse may mean that there are no mitigating factors, but lack of remorse is not an aggravating factor. Mr. D’Mello sincerely believed that he had no obligation to comply without disclosure of the information to which he believed he was entitled. Although the Hearing Panel found that belief to be misguided, Mr. D’Mello still had a right of appeal, which he intended to exercise. He cannot be penalized in that situation for failing to express remorse, which would be a confession of wrongdoing.

[90] I agree with what Susan McGrath said for the Appeal Panel at para. 27 of its decision in Law Society of Upper Canada v. Armstrong, 2011 ONLSAP 1:

27. The majority of the hearing panel also placed undue weight on the factors of remorse and rehabilitation, given that Mr. Armstrong honestly believed that he was innocent. Lack of remorse is a consideration when misconduct is not disputed, as it demonstrates lack of insight into the consequences of the misconduct. However, it cannot be an aggravating factor when a person honestly believes in his or her innocence. In R. v. Nash (A.W.) (2009), 2009 NBCA 7, 340 N.B.R. (2d) 320 (N.B.C.A.) (leave to appeal to Supreme Court of Canada denied), Justice Robertson stated:

... In my respectful view, the trial judge erred. She erred in principle by holding that the failure to express remorse, following a conviction for second degree murder, is an "aggravating factor" that supports a decision to extend the period of parole ineligibility. In fairness to the trial judge, the jurisprudence of this Court pertaining to remorse is ambiguous. It fails to draw a clear distinction between cases where the offender is found guilty of second degree murder and those where the offender has pled guilty. For purposes of deciding this appeal, it is important to recognize that an offender's continuing right to silence based on a plea of not guilty does not evaporate once the jury returns a verdict of guilty. That is why the failure to express remorse cannot be considered an aggravating factor, save in exceptional circumstances.

[91] Thus, having regard to the reasonable application of the Aguirre factors, in my opinion, a reasonable penalty in the circumstances of Mr. D’Mello’s case would have been just a reprimand. Counsel for the Law Society agreed that if we were of the view that the suspension was inappropriate, there was little point in now ordering a reprimand. The purpose of the reprimand would have been accomplished as a result of the multiple decisions finding Mr. D’Mello’s conduct to have been improper.

[92] By the time Mr. D’Mello obtained a stay of his one-month suspension, he had already served half of it. In these circumstances, I shall allow his appeal of penalty and simply set aside the Hearing Panel’s penalty order and the costs orders of both panels.

D. CONCLUSION

[93] For the above reasons, the appeal is allowed in part. Given the divided success and the circumstances described above, there shall be no order as to costs of the appeal.

Perell, J.

Molloy, J.

Sanderson, J.

Released:

CITATION: D’Mello v. The Law Society of Upper Canada, 2015 ONSC 5841

DIVISIONAL COURT FILE NO.: 530/13

DATE: 20151016

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

MOLLOY, SANDERSON, AND PERELL JJ.

BETWEEN:

ROY FRANCIS D’MELLO

Appellant

‑ and ‑

THE LAW SOCIETY OF UPPER CANADA

Respondent

REASONS FOR DECISION

Perell, J.

Released: October 16, 2015