Law Society of Ontario v. Costa, 2026 ONLSTH 74

LAW SOCIETY TRIBUNAL

HEARING DIVISION

Date: April 10, 2026

Tribunal File No.: 26H-008

BETWEEN:

Law Society of Ontario

Applicant

• and -

Santiago Hernan Costa

Respondent

Before: Malcolm M. Mercer (Chair)

Heard: March 20, 2026, by videoconference

Appearances:

Kandace Forbes, for the applicant

Respondent, self-represented

Summary:

COSTA – Summary Hearing – Failure to Co-operate – Books and Records – While certain books and records had been provided some remained outstanding – The panel found that the Lawyer failed to promptly and completely respond to the investigative requests and failed to maintain the required books and records – The non-compliance was ongoing and so the Lawyer was suspended indefinitely until he has complied and then for an additional month – The Lawyer was also ordered to pay costs of $3,838 to the Law Society.

REASONS FOR DECISION

1Malcolm M. Mercer:– This is a summary application in which two allegations of professional misconduct are made against Santiago Hernan Costa:

• failure to co-operate with the Law Society regarding one investigation by failing to produce all the information and documents requested, including required books and records.

• failure to maintain complete required books and records.

2For the following reasons, I conclude that these allegations have been made out. Mr. Costa’s licence is suspended until he produces all the information and documents requested and brings his books and records into compliance with By-Law 9. A further one-month suspension is also ordered.

THE INVESTIGATION

Initial contact

3Following a referral from the spot audit program, an investigation was instructed in respect of Mr. Costa’s conduct. Mr. Costa was first contacted by the investigator on September 8, 2025. The investigator published ten case requirements (CASRs) and a portal message that day.

The September 10 attendance

4On September 10, 2025, the investigator and a colleague attended at Mr. Costa’s office. Thirty further CASRs were published that day.

5Mr. Costa provided some of the requested information and documents on September 10, 2025.

6During the attendance, Mr. Costa advised the investigator that he thought that his books and records were complete and in order; however, when he was asked to provide certain books and records, he was unable to do so.

7It did not seem to the investigator that Mr. Costa fully understood specifically what records he was asking for. When the following books and records were requested and were described to Mr. Costa, he advised that he did not have such records:

• trust transfer journal;

• fees book or chronological billings file; and

• trust reconciliations and comparisons for his special trust account.

8A chart of accounts showed trust funds in the name of Client MG in the amount of $30,142.48. When asked about this account, Mr. Costa stated that he thought that the trust account had been closed and that he had to look for the books and records for that trust account.

9Mr. Costa provided trust journals for his mixed trust bank account and for his special trust account. These trust journals only contained entries up to January 17, 2025 and November 19, 2024, respectively.

10The investigator advised Mr. Costa that he needed to correct the deficiencies and to bring his books and records up to date.

11Mr. Costa uploaded documents to the Law Society during and shortly after the visit.

Subsequent communication

12The investigator contacted Mr. Costa twice on September 23, 2025, and left voicemails saying that Mr. Costa’s books and records had to be brought up-to-date by October 24, 2025, and that this was a hard deadline. By this time, there were four outstanding CASRs.

13The investigator published a portal message on September 25, 2025, advising that Mr. Costa had not provided all of the material and information required. The investigator explained in detail how Mr. Costa’s records were deficient and repeated the October 24, 2025 deadline.

14Mr. Costa replied on October 21, 2025, advising that he was finalizing the submissions and that he would deliver them as promptly as possible, but that they will be delayed a further two or three days.

15By voice message on October 23 and by portal message on October 24, 2025, the investigator reiterated the October 24, 2025 deadline. The promised delivery did not occur.

16On January 9, 2026, the investigator advised Mr. Costa by portal message that this application had been authorized.

17On January 12, 2026, Mr. Costa advised by portal message that he was travelling abroad. He stated that he had experienced further difficulties with his bookkeeping. He stated that he was in full compliance with recordkeeping requirements and that he had hired a bookkeeper to finalize the remaining reconciliations. The bookkeeper called the investigator that day wanting to know how things stand and what needed to be done.

18By way of summary, investigative requests were made to Mr. Costa starting on September 8 and 10, 2025. He provided information and documents on September 10 and 11 but did not provide any further substantive response until shortly before this hearing.

Status as of March 6, 2026

19On March 6, 2026 the investigator swore an affidavit for this hearing, stating that nothing further had yet been received from Mr. Costa. The investigator summarized the then current situation, as follows:

• Mr. Costa had advised that he did not maintain and could not produce the following books and records:

i. trust transfer journal;

ii. fees book or chronological billings file; and

iii. trust reconciliations and comparisons for his special trust account.

• Mr. Costa was unable to produce the following books and records:

i. trust reconciliations and comparisons for Client MG’s trust bank account;

ii. trust bank account statements for Client MG’s trust bank account; and

iii. trust journal for Client MG’s trust bank account.

• The following books and records were not kept current:

i. transactions had only been recorded in the trust journal for the mixed trust bank account up to January 17, 2025;

ii. transactions had only been recorded in the trust journal for the special trust up to November 19, 2024; and

iii. monthly trust reconciliations for the mixed trust account had only been prepared up to September 2024.

• Mr. Costa had to prepare and provide proper:

i. trust comparisons, including trust bank account statements;

ii. trust journals;

iii. trust transfer journals;

iv. a fee book/chronological billings file; and

v. trust comparisons.

The submission package

20In the week prior to this hearing, Mr. Costa provided the investigator with a package of documents (the submission package) that had been prepared with the assistance of the bookkeeper. The submission package includes the following:

• trust reconciliations for the mixed trust account from March 2021 to February 2026;

• client trust listings from March 2021 to February 2026;

• trust receipts journals for the mixed trust account from March 2021 to February 2026;

• trust disbursement journals for the mixed trust account from March 2021 to February 2026;

• client trust ledgers for 1,260 clients;

• trust transfer journals from March 2021 to February 2026;

• Form 9A and Form 9B authorizations;

• bank statements for the mixed trust account, the special trust account and other accounts, but not for Client MG’s trust bank account, from March 2021 to February 2026; and

• a file index and a compliance status report.

21The submission package does not include:

• The following for Client MG’s trust bank account:

i. reconciliations and comparisons;

ii. bank account statements; or

iii. trust journal.

• The following for the special (aka Terraview) trust bank account:

i. reconciliations and comparisons; or

ii. trust journal.

• Fee book/chronological billings file.

THE HEARING

22The investigator testified at the hearing. Mr. Costa did not.

23The investigator testified that the following remained outstanding:

• trust receipts and disbursements journals for the special trust account and Client MG’s trust account;

• trust reconciliations and comparisons for the special trust account and Client MG’s trust account;

• bank statements for Client MG’s trust account and evidence that this account had been closed;

• a proper trust transfer journal;

• proper trust reconciliations and comparisons for the mixed trust account; and

• fee book/chronological billings file.

24The investigator testified that the mixed and special trust bank account statements were not produced to date. However, close review of the submission package shows that two sets of bank statement files were included and that mixed and special trust bank account statements to February 2026 have been produced.

25In cross-examination:

• Mr. Costa seemed to suggest that simply producing the bank statements was sufficient for the special trust account. The investigator did not accept this suggestion.

• Mr. Costa and the investigator took different views on what was required for a proper trust transfer journal. The investigator stated that transfers between client trust ledgers were to be recorded even though there would be no transfer within the trust bank account. Mr. Costa stated that there were no such transfers in his practice.

• Mr. Costa suggested that documents disclosed during the spot audit may have satisfied the requirements with respect to the Client MG’s trust account. The investigator did not agree. During the cross-examination, Mr. Costa did not put any documents to the investigator from the spot audit.

• Mr. Costa asked the investigator about what Mr. Costa had said to him about problems with Quickbooks and Clio. The investigator responded that it appeared that Mr. Costa had two different systems each doing half of the job, and they really didn't work together.

FINDING WITH RESPECT TO OUTSTANDING REQUESTS

26I am satisfied that the following were requested and have not been produced:

• trust receipts and disbursements journals for the special trust account and Client MG’s trust account;

• trust reconciliations and comparisons for the special trust account and Client MG’s trust account;

• bank statements for Client MG’s trust account; and

• fee book/chronological billings file.

27There may be issues with respect to the trust reconciliations and comparisons for the mixed trust account based on my review of the submission package:

• According to the client trust listing for February 2026, the total trust balance should be $175,142.49, taking into account approximately $300,000 in negative client trust balances.

• The actual balance in the mixed trust bank account for February 2026 was only $39,062.66, much lower than the total trust balance according to the client trust listing.

• There is an unmatched amount of $324,948.04 in the February 2026 reconciliation with no reason provided.

• There is a reconciliation entry of $188,868.21 in the February 2026 reconciliation with respect to what appears to be a special trust account for Client MG, which is of concern given the suggestion in cross-examination that this account was closed by early 2024.

• The bank account balance reflected in reconciliation and comparisons often differs from the bank balance in the bank statements.

28There may also be issues with respect to the trust receipts and disbursements journals for the mixed trust account which do not record the purpose for which money is received and disbursed and, in the case of the disbursement journal, the person to whom money is disbursed.

29I make no finding with respect to these issues as the evidence at the hearing did not much address specific concern with the trust reconciliations and comparisons.

30With respect to the trust transfer journal, s 18(4) of By-Law 9 requires:

A record showing all transfers of money between clients’ trust ledger accounts and explaining the purpose for which each transfer is made.

31This record is of particular importance because a transfer from one client’s account to another client’s account does not require a bank account transfer in a mixed trust account. It would be difficult to determine inter-account transfers from the client trust ledger accounts without a trust transfer journal.

32In this case, Mr. Costa’s position is that he has not made any transfers of money between clients’ trust ledger accounts and accordingly that he need not maintain a record in this regard.

33As no submissions were directed to the question of whether a journal must be maintained whether or not there are any such transactions and as there is no evidence showing any such transactions, I make no finding with respect to this matter.

THE APPLICABLE LAW

34It is professional misconduct to violate the Rules of Professional Conduct, the By-Laws and the Law Society Act, RSO 1990, c L.8 (the Act).

35Section 18 of By-Law 9 requires that licensees maintain, among other things:

• a trust receipts journal – s 18(1);

• a trust disbursements journal – s 18(2);

• client trust ledgers – s 18(3);

• a trust transfer journal – s 18(4);

• a fees book or a chronological file of copies of billings – s 18(7);

• a monthly trust reconciliation and comparison – s 18(8); and

• bank statements or pass books etc. and detailed duplicate deposit slips for all trust and general accounts – s 18(10).

36Rule 7.1-1 of the Rules of Professional Conduct provides, “A lawyer shall reply promptly and completely to any communication from the Law Society in which a response is requested”.

37Section 49.3 of the Act entitles an investigator to require production of documents and provision of information in an instructed investigation that relate to the matters under investigation.

38The test for determining whether a licensee has failed to co-operate was articulated in Law Society of Ontario v Diamond, 2021 ONCA 255 at para 50:

… the test … focusses on the determination of a licensee’s good faith efforts to cooperate with the Law Society. … the following considerations emerge… (a) all of the circumstances must be taken into account in determining whether a licensee has acted responsibly and in good faith to respond promptly and completely to the Law Society’s inquiries; (b) good faith requires the licensee to be honest, open, and helpful to the Law Society; (c) good faith is more than an absence of bad faith; and (d) a licensee’s uninformed ignorance of their record-keeping obligations cannot constitute a “good faith explanation” of the basis for the delay.

MERITS FINDING

39Mr. Costa provided some information and documents in September 2025 in response to investigative requests made then. However, he did not provide all that was requested of him.

40He did not provide further documents until mid-March 2026, six months later. He still has not provided all of the documents that were requested.

41In assessing whether Mr. Costa acted responsibly and in good faith to respond promptly and completely to the Law Society’s requests, it is necessary to take all of the circumstances into account.

42Notably, Mr. Costa did not testify. In submissions, he said that he had difficulty recreating books and records because of a change in systems several years ago and that he had spent substantial time and effort attempting to recreate book as records.

43When asked what evidence he relied on for this submission, he asked that his submission package be carefully examined, which I have done. While the submission package is well-prepared in terms of what it contains, it provides no information as to what it does not contain; nor does it provide any history which could explain the difficulty as submitted by Mr. Costa.

44Further, it is not at all evident that most of the remaining deficiencies have anything to do with alleged historic difficulties. The most obvious example is the failure to provide anything with respect to Client MG (whether that trust account is closed or not). The same is true with respect to journals and reconciliations with respect of the special trust account and the fee book/​chronological billings file.

45On the evidence, there is no apparent explanation for the late and incomplete response to the September 2025 requests other than that Mr. Costa is not maintaining books and records as required by By-Law 9. This is not a satisfactory reason. Accordingly, I find that Mr. Costa has failed to promptly and completely respond to the investigative requests that have been made and that he thereby engaged in professional misconduct as alleged.

46I further infer from this failure that Mr. Costa has violated By-Law 9 by failing to maintain the records required by s 18. I have no basis to conclude that these records once existed but cannot now be provided. To repeat, I do not accept that the unsworn explanation that Mr. Costa’s delay is explained by difficulties arising from a system change. If there is some truth to this claim, it does not explain the extent of current deficiencies.

47Accordingly, I also find that Mr. Costa engaged in professional misconduct by failing to maintain books and records in compliance with By-Law 9.

PENALTY

48Mr. Costa’s failure to respond and to maintain required books and records is ongoing. This almost invariably results in an indefinite suspension pending compliance.

49Where non-compliance continues at the time of the hearing and the licensee does not have a relevant discipline history, a one-month suspension is also almost invariably ordered.

50Mr. Costa emphatically objected to a suspension on the basis that a suspension would not be proportional. I disagree for two reasons.

51The first is that proportionality and fairness are best achieved by consistency. Like cases should be treated in like manner. Cases such as this have, and should have, consistent outcomes.

52The second is that this is serious misconduct, and not a matter of mere “paperwork”. As said in Law Society of Upper Canada v Wysocky, 2009 ONLSHP 77 at para 90:

A licensee's failure to maintain proper books and records or co-operate in a timely and substantive manner in a Law Society investigation in fact pulls the blinds down on those windows and prevents the regulator from fulfilling its function. Licensees must not be allowed to control the operation of the blinds on their practices.

53Law Society of Ontario v Awgu, 2021 ONLSTH 3, addressed the requirement to maintain books and records at para 48:

The jurisprudence of this Tribunal makes clear that the maintenance of proper books and records is not an option; it is a positive obligation on every licensee. It has the same priority and ranking as services to clients. Cases have referred to these documents representing a “window into the licensee’s practice” that enables the Law Society to look at whether the public interest is being protected, and whether further steps need to be taken by the licensee or the regulator. There is no doubt that maintaining the myriad of financial documents that are required by By-Law 9 can be an onerous obligation, especially for a sole practitioner. Where they have not been maintained, the licensee’s task is to reconstruct them.

54One of the important services provided by licensees is the receipt and disbursement of trust monies. Clients place their faith in lawyers and paralegals when they put their resources in trust with licensees. Important transactions depend on the trustworthiness and competence of licensees in dealing with trust monies. Overwhelmingly licensees deserve the trust of their clients.

55But this is not always the case. Too many clients and other parties have suffered very serious losses because of breach of trust. Public confidence is lost when client money is not protected.

56One of the ways to address this important risk is to ensure appropriate books and records that are promptly available to the Law Society when required. In this way, risk of monetary and reputational loss is reduced.

57Specific and general deterrence require an effective penalty to guard against future failures to maintain required books and records. And general deterrence requires an effective penalty that will bring licensees into compliance.

58There is nothing in this case that justifies a penalty other than the usual indefinite suspension pending compliance followed by a one-month suspension. In my opinion, the penalty goals long recognized by the Tribunal require the usual penalty: Law Society of Upper Canada v Strug, 2008 ONLSHP 88.

COSTS

59The Law Society has filed a bill of costs in the amount of $3,838 for investigation and litigation costs, which I accept. This is a reasonable and proportionate request which is in the usual range.

NOT-PUBLIC ORDER

60The submission package contains client information that is presumptively privileged and is confidential. As a result, the submission package should be not public.

ORDER

61For these reasons, I order:

1. The respondent’s licence to practise law is suspended, starting April 17, 2026, and continuing indefinitely thereafter until, to the satisfaction of the Law Society’s Executive Director, Professional Regulation or their designate, the respondent has met all of the following conditions:

a. The respondent has provided a complete response to the outstanding requests as outlined in the investigator’s affidavit (affirmed March 6, 2026) at exhibits E, F, G and H.

b. The respondent has demonstrated that the books and records of their practice are in full compliance with the requirements of the By-Laws or has demonstrated that such compliance is not possible.

2. The respondent’s licence to practice law is suspended for a period of one month, to follow immediately upon the latter of:

a. the end of the suspension ordered at paragraph 1, above; and

b. the end of any and all current suspensions of the respondent’s licence to practise law under Part II of the Law Society Act.

3. The respondent shall comply fully with the terms of the Law Society’s Guidelines for Lawyers Who Are Suspended or Who Have Given an Undertaking Not to Practise while suspended pursuant to this order.

4. The respondent shall pay costs to the Law Society in the amount of $3,838 on or before the deadline of March 22, 2027. This deadline may be extended by the Law Society in accordance with By-Law 11. Interest shall accrue on any overdue part of those costs, at a rate of 4% per year.

5. Exhibit 2 (the Submission Package) is not-public.