Court File and Parties

CITATION: Kelly v. Law Society of Upper Canada, 2015 ONSC 886

DIVISIONAL COURT FILE NO.: 251/14 DATE: 20150206

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

SACHS, HORKINS AND GILMORE JJ.

BETWEEN:

TERENCE AUSTIN KELLY Appellant

– and –

THE LAW SOCIETY OF UPPER CANADA Respondent

COUNSEL: Marie T. Henein, for the Appellant Brendan J. Van Niejenhuis, Respondent

HEARD at Toronto: February 6, 2015

Oral Reasons for Judgment

SACHS J. (ORALLY)

Nature of the Proceeding

[1] This is an appeal by the appellant from the decision of the Law Society Tribunal Appeal Division (“the Tribunal”) dated April 17, 2014, which upheld the penalty of licence revocation imposed by the Hearing Panel. It did so in spite of the fact that the Tribunal reversed two of the findings of the Hearing Panel, findings which involve the most serious charge of professional misconduct against the appellant, namely, misappropriating client funds.

[2] The appellant is appealing on the issue of penalty only. He is requesting that this Court set aside the revocation and substitute a lesser penalty in its place. He does so first because he submits that having dismissed the most serious charge against him the Tribunal erred in imposing the severest penalty at its disposal – a penalty that was disproportionate to his circumstances. Secondly, the appellant argues that the Tribunal unreasonably diminished the compelling evidence before it that his conduct was significantly affected by the severe depression he was suffering from when the misconduct at issue occurred. Thirdly, he argues that the Tribunal failed to give appropriate weight to the evidence that his mental illness is now under control and that he is unlikely to reoffend.

Background

[3] The appellant practised law from 1982 until March 2008. Most of his solo practice was devoted to estate work and conveyancing. In 1993 he began to suffer recurring bouts of severe depression. Between 1999 and 2006 the appellant engaged in several transactions which were later determined to be instances of professional misconduct. In April 2007 the Law Society issued a Notice of Application listing seven particulars of misconduct.

[4] In September 2009 a Hearing Panel held that the Law Society had proved twelve of the seventeen particulars. These included:

(i) failing to communicate with clients for months on end, without advising them to retain new counsel;

(ii) misrepresenting affidavits as having been sworn in front of him, when they were actually signed elsewhere;

(iii) three particulars connected to his 2003 personal bankruptcy;

(iv) misappropriating or dealing dishonestly with funds from his mixed trust account in a mortgage transaction, in which he also acted for both the borrower and the lender;

(v) using a false name to deceive the Law Society and three persons involved with that mortgage;

(vi) keeping inadequate records; and

(vii) failing to co-operate with the Law Society investigators.

[5] The appellant appealed the Misconduct and Penalty Decisions. In August 2012 the Tribunal overturned the findings of misappropriation and using a false name.

[6] The Tribunal conducted a fresh consideration of penalty at its September 2013 hearing. In April 2014 it confirmed the revocation of Mr. Kelly’s licence. Even without the finding of misappropriation, the panel held that:

(1) the presumption of revocation also attached to Mr. Kelly’s knowing participation and bankruptcy fraud; and

(2) the presumption was reinforced by the sheer number of instances of misconduct and a pattern of “reflexive dishonesty”, i.e. “dishonesty as an all too ready response to difficulty or perceived crisis.”

[7] As he had before the Hearing Panel, the appellant argued that his mental illness was a mitigating factor. The Tribunal considered his medical evidence, including a second report from a forensic psychiatrist, Dr. Bloom. Once again, according to the Tribunal, the appellant failed to rebut the presumption of revocation. The Tribunal held that his failure to tell Dr. Bloom the full particulars of his misconduct reduced the potential mitigating value of the psychiatric evidence. Even if the past could be explained away, the risk of future offences was too high.

[8] The Tribunal was not convinced that the appellant “would truly avoid the type of conflict and stress, even with monitoring and counselling, that caused him to engage in the reflexive dishonesty accurately described by the Law Society.”

Court’s Jurisdiction

[9] Section 49.38 of the Act creates a statutory right of appeal to the Divisional Court from a final order of the Law Society of Upper Canada Tribunal Appeal Division. That right belongs to any lawyer whom the Society has charged with professional misconduct under sections 33 and 34 of the Act. The lawyer may appeal on any question of fact or law.

Standard of Review

[10] Both parties agree that the Tribunal’s decision on penalty is subject to review on a standard of reasonableness. In this regard the Supreme Court of Canada has recognized that a high degree of deference is owed to the remedial decisions of a professional regulatory tribunal in a disciplinary context where one of its mandates is to protect the public (Law Society of New Brunswick v. Ryan, [2003] S.C.C. 20).

Analysis

[11] The appellant asserts that the Tribunal’s decision is unreasonable for three reasons:

(a) It unreasonably started from the premise that revocation was the only appropriate penalty if acts of dishonesty or fraud have been proved. According to the appellant, while that may be true where the acts of dishonesty are motivated by greed, it is not true in a case such as the one at bar, where there is no suggestion that the appellant intended to or did benefit personally by what he did.

(b) It unreasonably dealt with the evidence before it from Dr. Bloom that the appellant’s conduct was significantly affected by the severe depression he was suffering from when the conduct occurred.

(c) It unreasonably failed to give appropriate weight to Dr. Bloom’s evidence that the appellant’s depression is now under control and that, accordingly, he is unlikely to reoffend.

[12] Dealing with the appellant’s first submission, it is our view that it is not necessary in this decision to engage in an analysis of the jurisprudence as to whether revocation is presumptively the only appropriate penalty of acts of dishonesty have been proved. We say this because the appellant acknowledges that in this case, because he has engaged in repeated acts of dishonesty, revocation could be the appropriate penalty. Thus, there is no suggestion by the appellant that the Tribunal erred in principle by imposing a penalty that was outside the range of the appropriate penalties that could be imposed.

[13] The essence of the appellant’s second submission is that, viewed as a whole, Dr. Bloom did provide a report that demonstrated that the appellant’s misconduct was causally connected with his depression. He did so by establishing that but for the appellant’s depression, the misconduct would not have occurred. The Tribunal, unreasonably in the view of the appellant, expected Dr. Bloom to explain why the fact that the appellant was depressed caused him to engage in repeated acts of dishonesty. This, according to the appellant, is not something that any psychiatrist can do.

[14] In assessing the reasonableness of the Tribunal’s decision on this issue, it is important to keep in mind one of the other key purposes of revoking a lawyer’s licence in the face of repeated acts of dishonesty – namely to maintain public confidence in the integrity and trustworthiness of the members of the legal profession. The impact of this purpose on the appropriateness of a penalty of revocation in a case of dishonesty was recently discussed by this Court in Bishop v. Law Society of Upper Canada [2014] O.J. No. 4007. In that case there was no concern that the member would reoffend. However, the Court held that in the face of fraud or dishonesty the explanation for the dishonesty must be such that it is “obvious to the other members of the profession and to the public, that the underlying circumstances of the individual clearly obviated the need to provide reassurance to them of the integrity of the profession.” (Bishop at para. 31).

[15] In the case at bar, while the Tribunal was satisfied that the appellant was depressed when the misconduct occurred; it was not satisfied that this explained why the appellant reacted to his depression by engaging in dishonest conduct. In its view, Dr. Bloom’s report did not provide an answer to this question. Nor did his report contain any statement that to provide an answer to this question was beyond the limits of his expertise. Instead, what the report did make clear is that the appellant continued to insist to Dr. Bloom that he did not commit the most serious act of dishonesty that the Tribunal found he had committed – namely, according to the appellant, he did not lie on his bankruptcy form when he said that he had made no preferential payments to any creditors as his mother (to whom the payment was made) was not a creditor.

[16] This failure to be truthful caused the Tribunal to be concerned about the extent to which Dr. Bloom could have opined “as to the connection between the appellant’s repeated acts of dishonesty and his mental illness when the appellant did not acknowledge the most troubling misconduct, and when he provided no opportunity for Dr. Bloom to explore with him why he repeatedly engaged in dishonesty.” (Tribunal’s Reasons, para. 65).

[17] In our view, the Tribunal reasonably concluded that the appellant’s explanation for his misconduct did not go so far as to make it obvious to the public and the profession that his depression explained why he was dishonest and that now that the appellant’s depression was under control he would not be dishonest again. First of all, many people can suffer from severe depression and do not react to that depression by engaging in repeated acts of dishonesty. Secondly, and very significantly, if the appellant is still not acknowledging that he did engage in what the Tribunal found to be a serious act of dishonesty, how can anyone be satisfied that he really understands what a dishonest act is such that he will not engage in one again?

[18] This last observation is also a response to the appellant’s third submission that the Tribunal gave too little weight to the evidence that the appellant’s depression was now under control and therefore he was not likely to reoffend. Without sufficient insight into the moral turpitude of his prior conduct, how can the profession and the public be confident that the appellant is now a man who (to use the language of the English Court of Appeal in Bolton v. Law Society, [1994] 1 W.L.R. 512 that is relied on in Bishop) “may be trusted to the ends of the earth.” (Bishop at para. 26)?

Conclusion

[19] For these reasons the appeal is dismissed.

Costs

[20] I have endorsed the Appeal Book, “This appeal is dismissed for reasons given orally. As per the agreement of counsel, the respondent is entitled to its costs of this appeal, fixed in the amount of $5,000, all inclusive.”

___________________________ SACHS J.

HORKINS J.

GILMORE J.

Date of Reasons for Judgment: February 6, 2015

Date of Release: February 27, 2015

CITATION: Kelly v. Law Society of Upper Canada, 2015 ONSC 886

DIVISIONAL COURT FILE NO.: 251/14 DATE: 20150206

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

SACHS, HORKINS AND GILMORE JJ.

BETWEEN:

TERENCE AUSTIN KELLY Appellant

– and –

THE LAW SOCIETY OF UPPER CANADA Respondent

ORAL REASONS FOR JUDGMENT

SACHS J.

Date of Reasons for Judgment: February 6, 2015

Date of Release: February 27, 2015