Conway v. The Law Society of Upper Canada, 2016 ONCA 72

COURT OF APPEAL FOR ONTARIO

CITATION: Conway v. The Law Society of Upper Canada, 2016 ONCA 72 DATE: 2016-01-26 DOCKET: C59451

Weiler, van Rensburg and Roberts JJ.A.

BETWEEN

David Robert Conway Appellant

and

The Law Society of Upper Canada and Lorne Levine Respondent

David Robert Conway, in person Brendan van Niejenhuis, for the respondent

Heard: September 8, 2015

On appeal from the judgment of Justice F.L. Myers of the Superior Court of Justice, dated September 11, 2014.

By the Court:

Overview:

[1] The appellant appeals from the dismissal of his action as against the respondent, The Law Society of Upper Canada (“the LSUC”), following a motion to strike the appellant’s statement of claim, as disclosing no reasonable cause of action and as being frivolous, vexatious and an abuse of process.

[2] The appellant’s dispute with the LSUC has a long history stretching back to his first administrative suspension in June 2000 for his failure to pay transaction levies, and involves a myriad of different civil, disciplinary and bankruptcy proceedings that form the basis for his claims against the LSUC.

[3] In particular, the appellant complains that he has been the subject of relentless and inequitable targeting, abuse of process and denial of due process by the LSUC in the following proceedings: the administrative suspensions by the LSUC for his failure to remit transaction levies and forms; the civil proceedings brought by the LSUC to recover the transaction levies owing, in which he counterclaimed for unfair treatment by the LSUC; the disciplinary proceedings leading to disbarment for practising as a paralegal while his license to practise as a lawyer was suspended; the refusal of the LSUC to consider his application to practise as a paralegal on a “grandfathered” basis; the trustee proceedings involving his client accounts; and his bankruptcy proceedings in which the LSUC opposed his filing of a proposal and then unsuccessfully opposed his discharge.

[4] The appellant settled the civil and trustee proceedings with the LSUC and entered into releases and consent judgments. He was discharged unconditionally from bankruptcy. The finding that the appellant had engaged in unauthorized practice resulted in his disbarment, but was set aside in appeal proceedings. Ultimately, the appellant’s L1 licence was reinstated in April 2013.

[5] On April 10, 2013, he commenced his present claim against the LSUC.

Analysis:

i. Whether the statement of claim as against the LSUC should have been struck out in its entirety:

[6] The appellant argues that the motion judge erred in striking out his statement of claim in its entirety as disclosing no reasonable cause of action and as being frivolous, vexatious and an abuse of process. In particular, he complains that the LSUC’s mistake in proceeding with his administrative suspension under s. 46 of the Law Society Act, R.S.O. 1990, c. L.8 (failure to remit transaction levies), rather than s. 47 of the Act (failure to file levy forms), gave rise to a new cause of action that was not covered by the 2008 release and consent judgment in the LSUC’s civil action.

[7] Before a statement of claim is struck out under rule 21.01(1)(b) of the Rules of Civil Procedure, it must be plain and obvious, on a generous reading of the pleading, and taking the factual allegations as true or capable of proof, that it discloses no reasonable cause of action: Hunt v. Carey Canada Inc., 1990 90 (SCC), [1990] 2 S.C.R. 959.

[8] The motion judge struck out the entirety of the appellant’s statement of claim as against the LSUC for the reasons that are summarized as follows:

i. Many of the appellant’s factual allegations are completely irrelevant to any reasonable cause of action against the LSUC, constitute a pleading of evidence, and are frivolous, vexatious and scandalous.

ii. The appellant’s allegations concerning the LSUC’s conduct in dealing with the appellant’s failure to pay transaction levies were the subject of litigation that was settled by a release and court order such that the allegations were an improper attempt to re-litigate those settled and released issues. Buyer’s remorse regarding settlement and complaints about the pre-trial judge do not give rise to a tenable cause of action.

iii. The appellant’s allegations concerning the LSUC’s trustee services, including its efforts to obtain fees for acting as trustee of the appellant’s practice, resulted in a release and consent order of the court which cannot be subject to collateral attack or re-litigation. Alternatively, these are bald allegations of defamation which are statute-barred.

iv. The appellant’s allegations concerning the regulatory proceedings under the Law Society Act with respect to the LSUC’s regulation of lawyers and paralegals are a collateral attack on administrative decisions already made or that ought to have been pursued under the administrative regime.

v. The appellant has no right of action against the LSUC because there is no right of action against a creditor for merely voting to reject a debtor’s proposal in bankruptcy and opposing a bankrupt’s discharge from bankruptcy.

vi. The appellant’s allegations could be taken together as an allegation that the LSUC intentionally abused its statutory authority to single out and injure the appellant. The only tort that could apply would be misfeasance in public office, the constituent elements of which were not pleaded by the appellant. In any event, even if the LSUC was wrong in refusing to allow the appellant to apply for a paralegal license while suspended, it was corrected by the appeal tribunal.

[9] We agree with the motion judge’s reasoning and conclusions that the various individual acts by the LSUC of which the appellant complains are incapable of giving rise individually to any viable cause of action in the manner as pleaded by the appellant.

[10] Many of the factual allegations are irrelevant to any tenable of cause of action, such as the recitation of his family, education and work history. As a result, the motion judge correctly struck out these allegations as scandalous, frivolous and vexatious.

[11] The appellant`s main focus on appeal was that the motion judge failed to appreciate that the appellant had a separate cause of action against the LSUC because his administrative suspension was actually and erroneously carried out under s. 47 of the Law Society Act for his alleged failure to remit levy forms, rather than under s. 46 of the Act for his admitted failure to remit transaction levies. The appellant argues that he did not discover this error until after he had settled the civil proceedings with the LSUC.

[12] On a fair reading of the statement of claim, there is no question that by virtue of the releases he signed and the consent judgments that he agreed to, the appellant settled his complaints against the LSUC in relation to the civil and trustee proceedings that he is now seeking to re-litigate in the present action. The appellant’s long and detailed pleading recites the entire history of his dealings with the LSUC, including the terms and conditions of the settlements of certain LSUC proceedings and his complaints and claims. The appellant confirmed that he has pleaded all of the facts on which he relies.

[13] The motion judge correctly struck out these claims as an abuse of process under rule 21.01(3)(d).

[14] In particular, the appellant’s complaints about his administrative suspensions, whether under section 46 or 47 of the Law Society Act, are included in his counterclaim under the rubric of the alleged unfairness of the LSUC’s procedures and mistreatment of him. There is no question that the appellant had not remitted transaction levies so that the LSUC could properly suspend him from practice in 2000 under s. 46 of the Act. The release that the appellant signed in August 2008 comprised all claims that he had arising out of his suspension from practice, including his claims related to the alleged lack of due process and destruction of his law practice.

ii. Whether leave to amend the statement of claim should have been granted:

[15] The appellant argues that the motion judge erred in determining that the appellant should not be granted leave to amend his pleading because of the motion judge’s conclusion that there was no actionable tort possible on the facts as alleged in the statement of claim.

[16] The decision not to grant leave to amend should only be made in the clearest of cases, when it is plain and obvious that no tenable cause of action is possible on the facts as alleged: South Holly Holdings Ltd. v. The Toronto-Dominion Bank, 2007 ONCA 456, at para. 6. That said, the decision whether or not to grant leave to amend a pleading is a discretionary one, and absent palpable and overriding error of fact or error of law, such a decision is subject to deference on appeal: Mortazavi v. University of Toronto, 2013 ONCA 655, at para. 3.

[17] The motion judge carefully considered the cumulative effect of all of the appellant’s complaints against the LSUC and concluded that the only tort that may have any application based on the facts as pleaded was the tort of misfeasance in public office. The motion judge explained his reasoning as follows:

As noted above, nearly all of the plaintiff’s allegations could be taken together as an allegation that the LSUC intentionally abused its statutory authority to single out and injure the plaintiff. The appellant submitted that the LSUC is accountable in damages if [it] acts “outside its statutory authority”. He had no law to support that submission. The plaintiff does not expressly mention the tort of misfeasance in public office by name, but it is the only tort that might cover the essential thrust of the plaintiff’s allegations. (para. 11)

[18] The motion judge reviewed the constituent elements of the tort of misfeasance in public office and concluded: “Try as I might to allow for pleading deficiencies, I cannot see a proper plea of this tort or that one is possible on the facts alleged” (para. 12).

[19] While the motion judge correctly concluded that the appellant’s statement of claim was untenable in that it did not disclose in proper form the constituent elements of the tort of misfeasance in public office or any other properly pleaded tort, he erred in determining that the pattern of acts and omissions alleged by the appellant in his statement of claim, even if properly pleaded, could not give rise to a cause of action, and in failing to grant leave to amend the pleading if it was deficient in pleading the cause of action.

[20] The tort of misfeasance in public office has been variously described in the case law as the tort of abuse of public office or abuse of statutory power: Odhavji Estate v. Woodhouse, 2003 SCC 69, at paras. 25 and 30. Whatever the nomenclature, the essence of the tort is the deliberate and dishonest wrongful abuse of the powers given to a public officer, coupled with the knowledge that the misconduct is likely to injure the plaintiff: Odjhavji Estate v. Woodhouse, at para. 23. Bad faith or dishonesty is an essential ingredient of the tort: Odhavji Estate v. Woodhouse, at para. 28 and Gratton-Masuy Environmental Technologies Inc. v. Ontario, 2010 ONCA 321, at para. 85.

[21] The LSUC relies on the statutory immunity under s. 9 of the Law Society Act, for acts engaged in good faith in the performance of its duties or functions. Section 9 of the Law Society Act provides as follows:

No action or other proceedings for damages shall be instituted against the Treasurer or any bencher, official of the Society or person appointed in Convocation for any act done in good faith in the performance or intended performance of any duty or in the exercise or in the intended exercise of any power under this Act, a regulation, a by-law or a rule of practice and procedure, or for any neglect or default in the performance or exercise in good faith of any such duty or power.

[22] Mere negligence in the good faith performance of the LSUC’s duties or functions is not enough to establish liability. However, an absence of good faith or “bad faith”, involving malice or intent, is sufficient to ground a properly pleaded cause of action against the LSUC. See: Edwards v. Law Society of Upper Canada, 2001 SCC 80, [2001] 3 S.C.R. 562; Finney v. Barreau du Québec, 2004 SCC 36, [2004] 2 S.C.R. 17.

[23] The appellant’s statement of claim is replete with allegations that the LSUC intentionally acted dishonestly, fraudulently, and without statutory authority in its dealings with the appellant, knowing that its actions would cause and did cause damages to the appellant.

[24] In particular, the appellant’s allegations concerning the LSUC’s commencement of disciplinary proceedings in relation to the appellant practising as a lawyer while under suspension, the LSUC’s failure to process his application as a paralegal, and the manner of the LSUC’s opposition to his discharge application from bankruptcy, may support, if properly pleaded, a cause of action against the LSUC, based upon an alleged cumulative and relentless pattern of bad faith conduct by the LSUC that was directed against the appellant and caused him harm.

[25] We do not agree with the motion judge’s assessment that the allegations of fact in the appellant’s statement of claim could not give rise to a properly pleaded cause of action for misfeasance in public office.

[26] While, as the motion judge stated, “[a]llegations of ‘singling out’ may be no more than a regular carrying out of its duties against an individual” (para. 13), they, and some of the other allegations in the statement of claim, may also support a cause of action against the LSUC on the ground that the LSUC abused its statutory authority and acted in bad faith in its dealings with the appellant, namely, that the LSUC may have acted with malice or intent to harm.

[27] For example, in paragraph 182 of his statement of claim, the appellant complains of the uneven treatment that he received in relation to his paralegal application, pleading that the “LSUC singled out the appellant where it refused to process his application and denied his grandparent status. Although the issue came up during the course of the proceedings, LSUC has not named any other applicant who was treated in a like manner.”

[28] The appellant’s factual allegations of unequal treatment by the LSUC resemble those in the claim of the plaintiff lawyer in Dechant v. Law Society of Alberta, 2006 ABQB 908, which the Alberta Court of Queen’s Bench refused to dismiss. In that case, the parties had entered into a settlement of disciplinary proceedings. The plaintiff lawyer alleged in her statement of claim that she was “the victim of specialized and malicious treatment by the Law Society after the execution of the Settlement Agreement” (para. 10). The specific malicious and egregious actions that the plaintiff lawyer pleaded included that the Law Society treated her differently than other members with her status and that they impeded her efforts to practise law. The court held that the allegations of specialized treatment, among other actions by the Law Society, could support the claims that included abuse of public office.

[29] The LSUC’s challenge of the statement of claim was brought by way of a motion under rule 21 of the Rules of Civil Procedure and was not a motion for summary judgment under rule 20. As a result, as the motion judge noted, the factual allegations contained in the appellant’s statement of claim had to be taken as true unless they were patently ridiculous or incapable of proof: Nash v. Ontario (1995), 1995 2934 (ON CA), 27 O.R. (3d) 1 (C.A.).

[30] Taking all of the appellant’s factual allegations as true and reading the essence of the pleading as a claim for misfeasance in public office, it is not plain and obvious that a proper pleading of a reasonable cause of action founded on the alleged bad faith conduct against the LSUC would fail. As a result, the motion judge erred in refusing leave to amend to correct the deficiencies in the pleading.

[31] That being said, the appellant’s allegations of his mistreatment by the LSUC up to August 2008, namely, the allegedly unfair actions of the LSUC towards him in relation to his administrative suspensions and disciplinary proceedings, formed part of his counterclaim against the LSUC in the civil action and were released by the appellant in the settlement of that action. They cannot be resurrected under an allegation of bad faith to found a claim for damages.

[32] Similarly, the appellant’s allegations about the LSUC’s unfair treatment of him during the trustee proceedings are nothing more than a re-litigation of the issues that he settled with the LSUC. Again, they cannot form the basis of any new claim for damages because the appellant could have raised them during the trustee proceedings.

[33] While the appellant cannot claim damages arising out of the LSUC’s conduct that he has released, he may refer to this conduct, if appropriate, as part of the narrative of the alleged pattern of bad faith conduct by the LSUC that the appellant alleges caused him damages.

[34] At the hearing of the appeal, in addition to his argument about bad faith, the appellant asked that the appeal be heard as if he had amended paragraph 214 of his statement of claim to include allegations of breach of fiduciary duty and negligence against the LSUC, which were not raised before the motion judge, and to delete the particulars contained in the subparagraphs of 214 except for g, h, q, r, s, z, bb, cc, dd, and ee. The LSUC did not consent to these amendments. However, its counsel did not object to the appeal being considered as if those amendments had been made and the appeal proceeded on that basis.

[35] For the reasons that follow, even taking into account the appellant’s proposed amendments that were not submitted to the motion judge, we find that there is no basis to grant the appellant leave to amend his pleading to include claims against the LSUC for breach of fiduciary duty and negligence.

[36] The appellant has provided no particulars in support of his allegations that the LSUC owed to him a fiduciary duty in the performance of its administrative and regulatory duties. Moreover, none of the allegations contained in his presently drafted statement of claim would give rise to such a claim.

[37] Similarly, the appellant’s proposed claim of negligence against the LSUC is not supported by the allegations in his statement of claim. Rather, all of the factual allegations in the statement of claim relate to the appellant’s allegations of the LSUC’s intentionally improper, dishonest, corrupt and illegal actions against him.

[38] While the appellant should have been granted leave to plead properly the tort of misfeasance in public office, the appellant’s pleading as it presently stands is woefully deficient. The LSUC is entitled to know with particularity the case that it has to meet.

[39] The appellant has not pleaded any of the requisite elements of any viable cause of action based on alleged bad faith conduct that may deprive the LSUC of its statutory immunity, nor with any precision the particulars that support these allegations, as required under the Rules of Civil Procedure. Since bad faith or dishonesty is an essential ingredient of the tort of misfeasance in public office, rule 25.06(8) requires that full particulars be pleaded: Gratton-Masuy, at para. 88-89.

Disposition:

[40] For these reasons, the appellant’s appeal is allowed to grant him leave to permit him to serve and file within 60 days of today a fresh as amended statement of claim to plead with proper particulars a tenable cause of action against the LSUC based on the tort of misfeasance in public office arising out of its alleged bad faith conduct in relation to the appellant.

[41] The appellant’s fresh as amended statement of claim shall be subject to any applicable defences, including the application of any limitation periods, to a request for particulars, and to any further motions to strike or dismiss the fresh as amended claim, if warranted.

[42] His appeal is otherwise dismissed.

[43] The LSUC, and Mr. Levine if applicable, shall serve and file an amended statement of defence, a request for particulars, or a notice of motion to strike the fresh as amended claim and dismiss the action, within 45 days of receipt of the appellant’s fresh as amended statement of claim.

[44] If the parties cannot agree on the disposition of costs of the appeal, including the motion below, they shall submit brief written submissions of no more than two pages, plus their respective costs outlines, as follows: the appellant shall deliver his submissions within two weeks of today; the LSUC shall respond ten days thereafter.

Released: January 26, 2016

“K.M. Weiler J.A.”

“K. van Rensburg J.A.”

“L.B. Roberts J.A.”