COURT FILE NO.: CV-10-100008 DATE: 20160913 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

THE LAW SOCIETY OF UPPER CANADA Plaintiff/Applicant – and – LEE EDWARD FINGOLD Defendant/Respondent

Dennis Reeve, for the Plaintiff/Applicant Lee Edward Fingold, acting for self

HEARD: June 23, 2016

Reasons for Decision

CHARNEY J.:

Introduction

[1] The Law Society of Upper Canada (LSUC) brings this motion pursuant to Rule 60.11(1) of the Rules of Civil Procedure for finding that the respondent is in contempt of court for breaching or failing to comply with a court order dated September 2, 2010, prohibiting the respondent from holding himself out as a person who may practice law or provide legal services or by providing legal services in Ontario.

[2] In particular, the LSUC alleges that the respondent breached the court order by providing legal services in the area of real estate law in relation to residential mortgages.

Facts

[3] The respondent was called to the bar and admitted as a member of the LSUC in 1977.

[4] In 1994 the LSUC, which is statutorily responsible for the licensing and regulation of lawyers and paralegals in Ontario, issued a complaint against the respondent and in November 1995 the Discipline Committee of the LSUC found professional misconduct and recommended that the respondent be disbarred.

[5] On January 25, 1996, Convocation of the LSUC ordered the respondent disbarred, and he has not been a member of the LSUC or applied for readmission as a lawyer licensee or admission as a paralegal since that date.

[6] In 1997 the respondent was convicted of the criminal offence of fraud over $5,000 and sentenced to a 12 month term of imprisonment and ordered to pay restitution in the amount of $744,315.

[7] Since that date the respondent has been subject to various court orders in relation to his conducting real estate transactions in contravention of the Law Society Act, R.S.O. 1990, c. L.8.

[8] These orders include:

i. The Order of Boyko J. dated August 16, 2001 prohibiting the respondent from acting, holding himself out as, representing himself or practicing as a barrister or solicitor. ii. The Order of Scott J., dated March 1, 2002, finding the respondent in contempt of the August 16, 2001 order and fining the respondent $5,000. iii. The respondent’s appeal of the March 1, 2002, finding of contempt was dismissed by the Court of Appeal on January 21, 2004. The endorsement of the Court of Appeal stated: There was ample evidence… that the appellant was acting for and representing vendors and/or purchasers in real estate transactions, he was advising clients as to their rights and obligations under the law and preparing documents pertaining to legal rights and thereby acted and practiced as a solicitor. iv. The Order of Klowak J., dated August 16, 2005, finding the respondent in contempt of the August 16, 2001 order and prohibiting the respondent from “doing any real estate transactions” and “directly or indirectly” applying for or being in possession of a Teranet license”. v. On September 2, 2010, Favert J. found the respondent guilty of 12 counts of violating s. 26.1 of the Law Society Act, including 4 counts of unlawfully providing legal services, 4 counts of unlawfully representing himself as a person who may provide legal services and 4 counts of unlawfully holding himself out as a person who may provide legal services. He was fined a total of $20,000 and placed on probation for 2 years. vi. The order of Boswell J., dated September 2, 2010, prohibiting the respondent “from contravening the provisions of s. 26.1 of the Law Society Act …by holding himself out as, or representing himself to be, a person who may practice law or who may provide legal services in Ontario, or by practising law or by providing legal services in Ontario”.

[9] The notice of motion filed on behalf of the LSUC alleges that the respondent “breached, failed or refused to comply with the September 2, 2010 order of Boswell J.”. While there was some argument before me that Mr. Fingold also breached earlier court orders, I will restrict my analysis to the specific allegation contained in the notice of motion, which is limited to the order of September 2, 2010. Procedural fairness requires that Mr. Fingold have notice of the allegations against him, and it would be unfair to permit the LSUC to expand the grounds of their allegations at this stage of the proceedings.

[10] Section s. 26.1 of the Law Society Act prohibits any person, other than a licensee whose licence is not suspended, from practising law in Ontario or providing legal services in Ontario. Section 1(5) of that Act provides a definition of the provision of legal services:

a person provides legal services if the person engages in conduct that involves the application of legal principles and legal judgment with regard to the circumstances or objectives of a person.

[11] In May 2012 the LSUC brought a motion to find the respondent in contempt of Boswell J.’s September 2, 2012 order. On May 18, 2012, DiTomaso J. found the respondent in contempt of the order of Boswell J. for, inter alia, representing himself to be a paralegal, and ordered him to a term of 14 days imprisonment.

[12] In reaching that conclusion DiTomaso J. made two findings that are relevant to the case before me. Firstly, he concluded (at para. 33) that the Order of Boswell J. dated September 2, 2010, “is clear and unequivocal”, and “clear and unambiguous as to what conduct on the part of Mr. Fingold is prohibited”. DiTomaso J. also concluded that Mr. Fingold had actual knowledge of the order since September 2, 2010.

Present Allegations of Contempt

Bakaity Complaint

[13] There are two parts to this allegation of contempt. The first relates to the conduct of Mr. Fingold in December 2011 when he arranged to have a charge/mortgage registered on a property on behalf of a “client”. The second relates to Mr. Fingold’s correspondence with Mr. Bakaity, dated July 29, 2015, in relation to the removal of this charge/mortgage. The LSUC takes the position that Mr. Fingold was providing legal advice when he wrote this letter.

[14] On July 30, 2015, lawyer Antal Bakaity contacted the LSUC to report that Mr. Fingold had encumbered his client’s real property with the registration of a mortgage based upon a promissory note.

[15] This charge/mortgage was registered on December 21, 2011, encumbering the real property of Mr. Bakaity’s client, Marjorie James, located in Brampton, Ontario. The charge/mortgage was registered by Bruce Klassen who runs an abstract service. The charge/mortgage was registered in favour of Eric Comrie.

[16] Mr. Bakaity wrote to Mr. Klassen on July 20, 2015. I do not know what that letter said because it was not included in the affidavit material filed by the LSUC, but it appears to have related to Mr. Bakaity’s position that the charge/mortgage was based on a fraudulent document and should be discharged immediately. The validity of Mr. Bakaity’s position in this regard is not relevant to the issue before me.

[17] On July 21, 2015, Mr. Klassen replied to Mr. Bakaity with regard to the registration of the charge, stating:

In this regard, I was simply acting as the registration agent on behalf of Mr. Lee Fingold. The materials requested by you in your letter may be obtained from Mr. Fingold directly.

[18] In a second letter of the same date Mr. Klassen stated:

I would advise that I simply prepare the documentation when so directed. Since reviewing the other aspects of transaction is beyond my scope of work, I was not privy nor involved in that aspect of the file.

[19] Mr. Bakaity apparently wrote to Mr. Fingold on July 28, 2015. I do not know what was in that letter because it was not included in the affidavit material filed by the LSUC.

[20] Mr. Bakaity received a reply letter from Mr. Fingold, dated July 29, 2015, regarding the registration of a charge.

[21] In this July 29, 2015 letter Mr. Fingold was responding to Mr. Bakaity’s letter of July 28, 2015, and made the following statements:

Your client created an equitable mortgage, on a written agreement, attached. After discussion with Bruce Klassen we both agreed that this was sufficient to encumber the property without being a “slander of title”. I do not think your client would be able to remove it by Court Order, without payment as per the terms of the letter she herself signed and given the history between these two.

…it would be my belief that the mortgage should be discharged for free, but Mr. Comrie would split any net proceeds after the mortgages which were there when we registered, 50-50 with your client. If there are any fresh charges, or current arrears, these should be repaid ONLY out of your client’s share, since she occupies the property.

I will communicate with you further upon hearing from Eric [Comrie]. In the meantime I would appreciate receiving the “numbers” on the sale and current charges. Mr. Comrie would obtain a solicitor, if this is necessary, as I am only assisting Mr. Comrie and am not a solicitor or licenced paralegal.

[22] The LSUC has filed an affidavit from by Mr. Bakaity. They have also filed an affidavit by Stephen A. McClyment, Senior Investigation Counsel employed by the LSUC. Mr. McClyment states that Mr. Klassen advised him by letter dated October 23, 2015 that:

At no time did I provide legal services and at no time did I represent that I provide legal services or advice…No opinion as to the legality of the document he wanted me to register was ever given. Previous to this issue arising, I had done work for Mr. Fingold, however as soon as I discovered that he was a disbarred lawyer, I discontinued my relationship with him…

[23] On December 9, 2015, Mr. Fingold wrote to Mr. McClyment stating that Mr. Klassen “did not ‘simply follow’ my instructions – he was worried that he not get himself in trouble for the unusual registration. He has a valid licence to register such things, not me. I did no registration, clearly.” Mr. Fingold attached a letter he wrote to Mr. Klassen dated December 17, 2011, the week before the Charge was registered. In this letter Mr. Fingold inquires about Mr. Klassen’s fees to register a caution on lands in relation to an “agreement creating title interest in my client eric comrie (sic)”. The letter states: “I was asking your fees to register CAUTION on lands, and we can send you the money all in advance” (emphasis in original).

[24] In his letter to Mr. Clyment, Mr. Fingold also made the following statement, which is consistent with the position he took in court on this motion:

Whether arranging to have something registered on someone’s title constitutes providing legal services is of course open for a Court to decide, but I would suggest to you that I simply referred the matter to Mr. Klassen who did the registration or “legal work” if indeed this is even legal work at all. Only recently did the Land registry system stop being a public system. Now the LSUC has control over it, but someone under your control did the registration, so I fail to see how you attack me for doing the work of a lawyer, here. I suppose if I told my 86 year old mother not to cross the street on a red light, that would be providing legal advice. We need to be reasonable. I just gave Mr. Comrie ACCESS to legal help, respectfully I would submit…

As for the 2015 correspondence, when I was contacted to remove the registration, I admit that I suggested how I thought the money ought to be divided, subject to what Mr. Comrie might say, as I had lost contact with him. Giving my opinion, without even hearing from the client is not providing legal services. You might note that my opinion was correct as against the complaining lawyer for the wife who thought there was nothing to justify the registration. The Court agreed with Mr. Klassen’s registration, and upheld Mr. Comrie’s interest in the lands.

Bakish Complaint

[25] On January 14, 2016, lawyer Michelle Bakish contacted the LSUC to report that she had received a faxed “payout statement” from Mr. Fingold in relation to two outstanding private residential mortgages.

[26] The fax indicated that the amount payable to Dave Robinson was $16,655.78 and the amount payable to Evelyn Himel was $10,350.00. Within the body of the fax was the following:

Revised discharge statements. Donna, a conveyancer, who put this on, will take them off. Just fax us the drafts and we’ll register the discharges – fax them to you and come get the funds. We will, NOT engage a lawyer.

[27] Ms. Bakish did not receive any further correspondence from Mr. Fingold, however, on January 19, 2016 she received a fax from a lawyer, Harvey Ash, which provided slightly different payout figures and indicated that Mr. Fingold was “authorized to pick up the cheques.”

Position of the Parties

[28] With regard to the Bakaity complaint, the LSUC takes the position that by providing to his “client” Eric Comrie the opinion that a purported promissory note was sufficient legal authority for encumbering the title to the real property of Marjorie James, Mr. Fingold engaged in conduct that involved the application of legal principles and legal judgment that falls within the general definition of s.1(5) of the Law Society Act and specifically s. 1(6) 1 by giving a person “advice with respect to the legal interests, rights or responsibilities of the person or of another person”.

[29] The LSUC also argues that by directing or instructing Mr. Bruce Klassen to register the mortgage/charge on behalf of Mr. Comrie upon the real property of Marjorie James, Mr. Fingold engaged in conduct that involved the application of legal principles and legal judgment that falls within the general definition of s. 1(5) of the Law Society Act and specifically s. 1(6) 2 by selecting or drafting on behalf of any person “a document that affects a person’s interests in or rights to or in real or personal property”.

[30] Finally, the LSUC takes the position that Mr. Fingold’s letter to Mr. Bakaity dated July 29, 2015, in which he confirmed his legal opinion as to the validity of the right to register the charge/mortgage also qualified as contempt of court because it was conduct that involved the application of legal principles and legal judgment which falls within s. 1(5) and 1(6) of the Law Society Act.

[31] With regard to the Bakish complaint, the LSUC takes the position that Mr. Fingold engaged in conduct that involved the application of legal principles and legal judgment to determine the quantum of money required to discharge two privately held residential mortgages and represented that he would have registered discharges of these mortgages. By communicating this information, the LSUC maintains, Mr. Fingold was providing legal services by giving a person advice with respect to legal interests, rights or responsibilities of a person. He was also drafting a document affecting a person’s interests in, or rights to, or in real property.

[32] The LSUC also takes the position that Mr. Fingold’s statement in the fax: “We will NOT engage a lawyer”, is a “clear indication that he was aware that he was providing legal services”.

[33] The LSUC has argued that based on his past conduct, Mr. Fingold is defiant and unrepentant.

[34] Mr. Fingold has filed an affidavit in support of his position. The affidavit was filed at the hearing and was not provided to the LSUC in advance of the motion date.

[35] Mr. Fingold takes the position that he does not advertise that he is able to provide legal services, and that the only complaints against him are made by the LSUC and its lawyers, not by his clients. He acknowledges that he makes a “small livelihood arranging mortgages” – about 2 or 3 deals a month. None of his clients think he is a lawyer.

[36] He takes the position that the services that he offers are not “legal services” within the meaning of the Law Society Act. Since licenced conveyancers and/or paralegals were granted licences by Teranet to register certain instruments, including mortgages and discharges of mortgages, this work should not be considered “legal services”. He hires and pays a Teranet licenced paralegal or conveyancer to discharge a mortgage or place a mortgage on the property, but he personally has not registered any mortgage. He argues that the licenced paralegal or conveyancer must be satisfied by the provisions of identification and other documentation before the registration lawfully takes place. He argues that in each case the registrations were done lawfully and not by Mr. Fingold, although he “may have requested them to be done.” Mr. Fingold asks: “If you request a lawyer to draw a will for you, are you drawing the will, or is the lawyer providing the legal services?” He is paying the licenced paralegal or conveyancer to do something that he is not licenced to do.

[37] He argues that he does not report to clients that they have a valid mortgage; they make this determination themselves by looking at the Land Titles abstract before they advance funds.

Contempt

[38] There are several recent decisions summarizing the test for civil contempt. For example, in Chirico v. Szalas, 2016 ONCA 586 at para. 52, the Ontario Court of Appeal states:

The test for civil contempt is well established. The order must be clear and unequivocal, the failure or refusal to comply with the order must be deliberate, and the failure or refusal to comply with the order must be proved beyond a reasonable doubt: Boily v. Carleton Condominium Corporation 145, 2014 ONCA 574, 121 O.R. (3d) 670, at para 32.

[39] Most importantly, the Court of Appeal in Chirico reaffirmed the principle that the party subject to the court order must comply with “both the letter and spirit of the order” (at para. 54):

This court has rejected a formalistic interpretation of the relevant order. It is clear that a party subject to an order must comply with both the letter and the spirit of the order: Ceridian Canada Ltd. v. Azeezodeen, 2014 ONCA 656, at para. 8. That party cannot be permitted to “hide behind a restrictive and literal interpretation to circumvent the order and make a mockery of it and the administration of justice”: Boily, at para. 58; Sweda Farms Ltd. v. Ontario Egg Producers, 2011 ONSC 3650, at para. 21.

[40] See also para. 58 of Chiroco: “the days are long gone when someone subject to a court order can get away with circumventing it by relying on a benign technicality. To allow that to happen would be disrespectful of the order and of the administration of justice”.

[41] Relying on the Supreme Court of Canada decision in Carey v. Laiken, 2015 SCC 17 (Carey), Glustein J. recently summarized the law of civil contempt in the case of The Catalyst Group Inc. v. Moyse, 2015 ONSC 4388, at para. 59. I adopt the following summary from that decision:

(i) The contempt power rests on the power of the court to uphold its dignity and process. It is necessary to maintain the rule of law (Carey, at para. 30); (ii) There are three elements which must be established beyond a reasonable doubt before a court may make a finding of civil contempt: (a) The order that was breached must state clearly and unequivocally what should and should not be done; (b) The party alleged to have breached the order must have had actual knowledge of it; and (c) The party allegedly in breach must have intentionally done the act that the order prohibits or intentionally failed to do the act that the order compels (Carey, at paras. 31-35); (iii) Any reasonable doubt must be resolved in favour of the person or entity alleged to have breached the order (Prescott-Russell Services for Children and Adults v. G. (N.), at para. 270; (iv) The contempt power is discretionary and courts should discourage its routine use to obtain compliance with court orders. The contempt power should be used “cautiously and with great restraint” and as “an enforcement power of last rather than first resort” (Carey, at para. 36); and (v) The court retains a discretion to decline to make a finding of contempt if the alleged contemnor acts in good faith (Carey, at para. 37).

[42] Section 16(1) (b) of the Limitations Act, 2002, S.O. 2002, c. 24 provides that “there is no limitation period in respect of a proceeding to enforce an order of a court…” Accordingly, the fact that one of the incidents complained of dates back to December 21, 2011, does not preclude this motion.

[43] The Ontario Court of Appeal has also held that, as a general proposition, contempt proceedings should be bifurcated, with a liability hearing and a subsequent hearing to determine penalty. In Boily v. Carleton Condominium Corporation 145, 2014 ONCA 574, the court stated (at paras. 121 – 122):

There is no formally mandated process for contempt proceedings. The procedure followed may vary. However, contempt proceedings typically have two stages – the liability hearing and a subsequent hearing to determine penalty … If a contempt finding is made, the matter is adjourned to provide the contemnor an opportunity to purge the contempt and prepare for the sentencing portion of the process. Any action undertaken by a contemnor to purge his or her contempt may serve as a mitigating factor in sentencing...

There is good reason to bifurcate contempt hearings. As in criminal prosecutions, in contempt hearings, liability and penalty are discrete issues. In a hearing in which liability and penalty are dealt with together, there is a risk that evidence relevant, material and admissible to liability, will be improperly applied to penalty or vice versa…

Analysis

[44] I conclude that the LSUC has proven beyond a reasonable doubt all three elements of civil contempt with respect to the incident in December 2011, when Mr. Fingold arranged to have a charge/mortgage registered on property on behalf of a “client”, and the incident in January 2016 relating to the payout statement from Mr. Fingold in relation to two outstanding private residential mortgages (the Bakish complaint).

[45] I conclude that the LSUC has not met its onus with respect to the incident involving Mr. Fingold’s letter to Mr. Bakaity in July 2015.

[46] There is no dispute that Mr. Fingold had actual knowledge of the order of Boswell J., dated September 2, 2010, prohibiting the respondent “from contravening the provisions of s. 26.1 of the Law Society Act …by holding himself out as, or representing himself to be, a person who may practice law or who may provide legal services in Ontario, or by practising law or by providing legal services in Ontario”.

[47] I also agree with Justice DiTomaso’s ruling of May 18, 2012, that the Order of Boswell J. dated September 2, 2010, “is clear and unequivocal”, and “clear and unambiguous as to what conduct on the part of Mr. Fingold is prohibited”.

[48] This finding is also supported by the January 21, 2004 ruling of the Ontario Court of Appeal, in which the Court of Appeal held that Mr. Fingold had breached an earlier court order by “acting for and representing vendors and/or purchasers in real estate transactions, he was advising clients as to their rights and obligations under the law and preparing documents pertaining to legal rights and thereby acted and practiced as a solicitor.” While the September 2, 2010 order is not written in identical language to the earlier orders, the spirit and intent of all these orders is the same.

[49] There is also no dispute that Mr. Fingold intentionally engaged in the conduct giving rise to these allegations. His defence is a legal one – that the specific acts he engaged in do not fall within s. 26.1 of the Law Society Act’s prohibitions on the practice of law or provision of legal services as those terms are defined by s. 1(5) and 1(6) 2. For ease of reference those provisions provide:

(5) For the purposes of this Act, a person provides legal services if the person engages in conduct that involves the application of legal principles and legal judgment with regard to the circumstances or objectives of a person.

(6) Without limiting the generality of subsection (5), a person provides legal services if the person does any of the following:

1. Gives a person advice with respect to the legal interests, rights or responsibilities of the person or of another person.

[50] I accept the LSUC’s position that by providing to his “client” Eric Comrie the opinion that a purported promissory note was sufficient legal authority for encumbering the title to the real property of Marjorie James, Mr. Fingold engaged in conduct that involved the application of legal principles and legal judgment that falls within the general definition of s. 1(5) of the Law Society Act and specifically s. 1(6) 1 by giving a person “advice with respect to the legal interests, rights or responsibilities of the person or of another person”.

[51] I also accept the LSUC’s position regarding the Bakish complaint that Mr. Fingold engaged in conduct that involved the application of legal principles and legal judgment when he purported to determine the quantum of money required to discharge two privately held residential mortgages and represented that he would have registered discharges of these mortgages.

[52] I find Mr. Fingold’s argument that he is not infringing the s. 26.1 of the Law Society Act because he is merely paying licenced paralegals or conveyancers to register the relevant documents to be specious. The evidence does demonstrate that Mr. Fingold is giving advice with respect to legal interests, rights or responsibilities with respect to persons, and that paralegals/conveyancers are relying upon and acting on Mr. Fingold’s advice. I find that Mr. Fingold is deliberately trying to circumvent the clear language of the September 2010 court order.

[53] Mr. Fingold cannot circumvent the order of September 2, 2010, by paying and directing paralegals to do his work for him. As the Court of Appeal stated in Chirico v. Szalas, the party subject to the court order must comply with the “both the letter and spirit of the order”.

[54] Nor does it matter whether the complaint is brought by the LSUC or Mr. Fingold’s clients – the LSUC is charged with the statutory responsibility of protecting the public interest and ensuring that all persons who practice law or provide legal services in Ontario meet the relevant professional standards (Law Society Act, ss. 4.1 and 4.2).

[55] I do have a reasonable doubt regarding Mr. Fingold’s correspondence with Mr. Bakaity in July 2015. While the LSUC has provided the court with Mr. Fingold’s response to Mr. Bakaity, it did not provide Mr. Bakaity’s original letter of July 28, 2015, so I do not know what Mr. Fingold was responding to. Since the onus is on the LSUC to prove contempt beyond a reasonable doubt, it should have provided the July 28, 2015 letter in its affidavit so that I could consider Mr. Fingold’s reply in its proper context. The absence of this context leaves me with a reasonable doubt as to whether Mr. Fingold’s response actually qualifies as a violation of s. 26.1 of the Law Society Act.

Penalty

[56] Following the Ontario Court of Appeal’s decision in Boily v. Carleton Condominium Corporation 145, I will bifurcate the hearing and consider submission on penalty at a later date. The parties are directed to schedule a motion date before me to address the penalty issue. The LSUC should file its submission (maximum of 10 pages) thirty days before scheduled hearing date, and the respondent should file any reply submissions (also a maximum of 10 pages) at least five days before the hearing date.

Justice R.E. Charney

Released: September 13, 2016

ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: THE LAW SOCIETY OF UPPER CANADA Plaintiff/Applicant – and – LEE EDWARD FINGOLD Defendant/Respondent REASONS FOR DECISION Justice R.E. Charney Released: September 13, 2106