CITATION: Anderson v. Law Society of Upper Canada, 2010 ONSC 4409
DIVISIONAL COURT FILE NO.: 63/10
DATE: 20100809
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
J. WILSON, SWINTON AND NORDHEIMER JJ.
BETWEEN:
PAUL JOHN ANDERSON
Appellant
– and –
THE LAW SOCIETY OF UPPER CANADA
Respondent
Douglas G. Christie, for the Appellant
Amanda K. Worley, for the Respondent
HEARD at Toronto: August 9, 2010
NORDHEIMER J. (orally)
[1] This is an appeal from the decision of an Appeal Panel of the Law Society upholding the decision of a Hearing Panel that found that the appellant had engaged in professional misconduct in a number of different particulars including a contravention of rule 2.06 of the Rules of Professional Conduct. The allegations arise out of an estate matter in which the appellant provided both administrative and legal services, the former through a corporation owned by him.
[2] The standard of review with respect to the Appeal Panel’s conclusions on the merits of the appeal before it, including the penalty, is reasonableness.
[3] The Appeal Panel correctly held that the Hearing Panel acted within its jurisdiction. The Hearing Panel was required to determine whether the appellant met the standards of professional conduct. In doing so, it had to consider issues that included the date and circumstances of the signing of the Compensation Agreement and the overlap between accounts for legal services and estate administration. In doing so, it did not in any way usurp the jurisdiction of the court in the parallel civil proceedings. The issues that the Hearing Panel had to determine were separate and distinct from those that the court was required to determine.
[4] The appellant asserts that rule 2.06 has no application to the facts of this case. In our view, the Appeal Panel reasonably concluded that, regardless of its possible application to other factual scenarios, the rule does apply to the particular circumstances of this case - see the reasons at paragraph 55. Rule 2.06 expressly states that where a client intends to enter into a transaction with a corporation in which the lawyer has an interest, before accepting any retainer, the lawyer shall require that the client receive independent legal advice. In this case, the client was led into an agreement with a corporation in which the appellant clearly had an interest. It is acknowledged that there was no independent legal advice sought or given with respect to this contractual arrangement.
[5] As found by the Hearing Panel, the agreement was not explained to the client, she did not understand it and she did not receive a copy of it at the time of its execution. The appellant then subsequently billed the client through this corporation for alleged estate administrative services in amounts that not only exceeded the accepted “rule of thumb” for such services but also duplicated services separately billed by the appellant directly. As the Appeal Panel found at paragraph 55:
But we also agree with the Hearing Panel that, where the corporate entity in which the lawyer has an interest is the beneficiary of a one-sided Compensation Agreement, a potential or actual conflict of interest clearly arises that triggers the obligation contained in the Rule.
[6] We agree with that statement and would only add that the facts of this case demonstrate the central rationale for the rule requiring independent legal advice regarding such arrangements.
[7] We also do not accept the contention that the Hearing Panel and the Appeal Panel’s decisions are unsupportable because of a fundamental misunderstanding of estate law. We do not accept that the Hearing Panel misunderstood or failed to properly appreciate the thrust of the expert evidence. The Appeal Panel concluded that even on the most generous interpretation, the amount of compensation taken through the appellant’s corporation, was compensation that should not have been taken before the beneficiaries or a court had approved of it. The Appeal Panel and the Hearing Panel reasonably concluded that the taking of this compensation put the appellant in a conflict of interest position.
[8] The submission that the appellant’s corporation was the legal equivalent of any third party contractor providing services to an estate is untenable. The fundamental point made by the Hearing Panel is that the actions of the appellant through the impugned compensation agreement exposed the client to risks. That conclusion cannot be seriously disputed. The fact that the client would have had remedies in other venues to redress any losses arising from such risks does not change the fact that the appellant failed in his professional obligations to his client by acting as he did.
[9] Based on those conclusions, it was reasonable for the Appeal Panel and the Hearing Panel to find that the appellant had contravened the Rules of Professional Conduct as set out in particulars 1 and 2. In regards to particulars 3 and 4, those contraventions, while more technical in nature, flow inexorably from the findings of fact by the Hearing Panel regarding the withdrawal of funds from the trust account prior to the rendering of a legal account and the opening of the estate bank account and the movement of funds therein prior to signing of the Compensation Agreement.
[10] The appellant also raises a variety of procedural fairness and natural justice issues. None of those issues, including the failure to call Mr. Hanna, the issue over the diary and the treatment of Ms. Jenkins’ expert report, warrant intervention by this court. The Hearing Panel fairly directed counsel to address particular issues that were of concern to them. The Hearing Panel did not suggest that other issues were not in play or had been determined in the appellant’s favour. While we doubt that the experienced counsel who acted for the appellant at the hearing would have made any such assumption, if he did, then that assumption was neither a fair nor reasonable one. Similarly, the suggestion that the reasons of the Appeal Panel do not allow for adequate review lacks any merit. The Appeal Panel was not required to address each and every issue raised by the appellant in his lengthy factum. They were only required to address those issues that were necessary to properly dispose of the appeal. They did that in careful and detailed reasons which addressed the central arguments raised.
[11] Finally, there is the appeal against the remedy imposed of a seven month suspension together with an order that the appellant pay $50,000 in costs. In our view, given the particulars of the misconduct of the appellant as determined by the Hearing Panel - notably that he was engaged in a serious conflict of interest, that he repeatedly acted in a self-interested fashion, that he engaged in repeated misrepresentations and that there was an element of dishonesty to his actions - the imposition of a period of suspension together with an order for costs was well within the range of reasonable penalties.
[12] The appeal is dismissed.
J. WILSON J.
[13] I endorse the Appeal Book, “The appeal is dismissed for oral reasons given. The stay of the decision of the Appeal Panel shall continue until midnight of August 18, 2010 to allow the appellant to wind up his practice. Costs fixed in the amount of $6,000.00, payable within 90 days of the expiry of the suspension.”
NORDHEIMER J.
J. WILSON J.
SWINTON J.
Date of Reasons for Judgment: August 9, 2010
Date of Release: August 13, 2010
CITATION: Anderson v. Law Society of Upper Canada, 2010 ONSC 4409
DIVISIONAL COURT FILE NO.: 63/10
DATE: 20100809
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
J. WILSON, SWINTON AND NORDHEIMER JJ.
BETWEEN:
PAUL JOHN ANDERSON
Appellant
– and –
THE LAW SOCIETY OF UPPER CANADA
Respondent
ORAL REASONS FOR JUDGMENT
NORDHEIMER J.
Date of Reasons for Judgment: August 9, 2010
Date of Release: August 13, 2010