Barnwell v. Law Society of Ontario, 2025 ONSC 1825

CITATION: Barnwell v. Law Society of Ontario, 2025 ONSC 1825 DIVISIONAL COURT FILE NO.: 533/24 DATE: 2025-05-07

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT Matheson, Trimble and Nakatsuru JJ.

BETWEEN: OSBORNE GODFREY BARNWELL Appellant

– and –

LAW SOCIETY OF ONTARIO Respondent

COUNSEL: Paul Slansky, for the Appellant Rhoda Cookhorn, for the Respondent

HEARD at Toronto: March 17, 2025

REASONS FOR JUDGMENT

By the Court:

[1] The appellant appeals from the decision of the Law Society Tribunal, Appeal Division, dated August 28, 2024 (the Appeal Panel Decision), which dismissed the appellant’s appeal from decisions of the Hearing Division dated March 2, 2024 and October 30, 2024 (the Hearing Panel Decision) and related interlocutory decisions. The Hearing Panel had found that the appellant engaged in professional misconduct and concluded that nothing less than revocation or permission to resign would prevent the appellant from committing similar misconduct, deciding on the latter.

[2] The course of events giving rise to the above disciplinary proceedings primarily relate to transactions that the Hearing Panel found were dishonest based upon evidence that they characterized as overwhelming. The allegations related to two transactions that are called the IC and L/W transactions below. As summarized by the Appeal Panel, at para. 11:

In both transactions, the borrower sought financing which it was unable to access through conventional lending sources. In both cases, advance fees were paid to the appellant and deposited to his trust account as part of a proposed transaction which would have supplied financing to the borrower. In both cases, no money was raised and the advance fees, which had been disbursed by the appellant, were never returned to the borrower. Two of the appellant’s clients, Ndem Belende and John Leung, persuaded the appellant that these types of transaction were viable. Both played a role in each transaction.

[3] These transactions had an international component. They contemplated that people could apply for loans worth millions of dollars or Euros from foreign lenders (who did not know them or their ability to repay) without any personal collateral by paying a fee.

[4] The Hearing Panel found that the appellant ought to have known that the IC transaction was dishonest and had constructive knowledge that the L/W transaction was dishonest. These findings were made after a lengthy hearing. The appellant unsuccessfully appealed to the Appeal Division. The appellant then appealed to this Court, raising many of the same issues that he raised on his first appeal.

[5] For the reasons set out below, this appeal is dismissed.

Background

[6] At the time of the transactions at issue, the appellant had practised law for almost twenty years.

[7] There were four transactions with overlapping participants referred to in the discipline proceedings. The findings of misconduct related to the IC transaction and the L/W transaction. The other two are called the Honduras transaction and the Pun transaction.

[8] The appellants’ clients Messrs. Belende and Leung were involved in the transactions. Neither of them testified at the discipline hearing. The appellant testified that they were the people who persuaded him that the types of transactions at issue were viable.

[9] The appellant had encountered Mr. Belende a few times before 2010, when Mr. Belende contacted the appellant for assistance in liquidating Venezuelan bonds. Between October 2010 and May 2011, the appellant made three separate efforts to liquidate the bonds, which did not occur largely because Mr. Belende would not provide the required information for the bond broker(s). The bonds were never fully authenticated.

[10] Later in 2011, Mr. Belende proposed using stand-by letters of credit (SBLCs) as collateral for a loan. An SBLC must be secured with assets equal to its face value. The appellant understood that foreign bonds would be used as the collateral for the SBLCs. At around that time, Mr. Belende moved to Brazil. The appellant paid his moving and living expenses, and each time the appellant asked to be reimbursed, Mr. Belende sent him another large financial instrument that the appellant could theoretically monetize. The appellant was unable to make use of the instruments and was not reimbursed.

[11] Before the IC and L/W transactions, Mr. Leung engaged the appellant for the Honduras transaction. Mr. Leung told the appellant that he was trying to get a US $100 million SBLC of the same type that Mr. Belende had proposed, for a hotel purchase. The transaction was not completed. Along the way, Mr. Leung said he was having difficulties raising funds and the appellant loaned him $110,000 of his own money, which was not repaid.

[12] The Pun transaction was just before the IC transaction, again proposing to use a SBLC as the collateral for a loan. The appellant drafted transaction documents for the Pun transaction and was named as the escrow agent. However, the “escrow agreement” did not provide for an escrow. Ms. Pun gave a $70,000 deposit, which the appellant deposited in his trust account. The same day, the appellant sent $40,000 of the deposit to the Ardh Al Shamal Tile and Plaster Company LLC in the UAE (the Tile and Plaster company).

[13] On the Pun transaction, the appellant received a SWIFT message from a Jakarta Bank indicating that a US$3 million SBLC would be issued but it could not be used to borrow money and that the violation of that term would result in it becoming null and void. Ms. Pun refused to go ahead – the instrument could not be used as collateral for a loan, which was the goal of her transaction.

[14] The IC and L/W transactions then took place between late 2012 and early 2013.

[15] IC had been unable to obtain conventional financing for a land development project. IC was introduced to Mr. Leung. After a failed attempt to get a $10 million SBLC, IC was introduced to the appellant. The appellant provided an overview document that contemplated getting an SBLC that could be monetized. He also prepared a form of contract between IC and Mr. Belende’s company, Daytomo, for the transaction.

[16] The IC transaction contemplated that Daytomo would secure a bank guarantee in the amount of €20,000,000 from an unidentified financial institution that would be used by IC’s company Richview to obtain a loan from a lender to finance the Richview project. Richview advanced $100,000 as a fee.

[17] The appellant’s overview document said that the $100,000 advance would be paid to the funder but not until the person acting for the funder signaled that the funder was prepared to issue the required SBLC. The contract was different. It said that the appellant would be the escrow agent but it had different terms about disbursing the funds, saying that the appellant could disburse the funds as directed by Mr. Belende’s company.

[18] Most of the $100,000 was disbursed by the appellant shortly after he received it. It was disbursed to the Tile and Plaster company, for Mr. Belende’s expenses and for the appellant’s fees. No loan was obtained for Richview in the IC transaction nor was the $100,000 fee ever returned to Richview.

[19] In the L/W transaction, L and W needed a loan for their company Jumbo King to renovate and expand their food manufacturing business. They were introduced to Mr. Leung and met with him in 2013 to try and arrange a $5 million loan for their company. They then met with the appellant. The appellant provided L/W with a contract (that he did not prepare) called Escrow Agreement, which he, L, and W then signed. The Agreement referenced a $5 million loan but did not include particulars of how it would be obtained. The Agreement included a $90,000 deposit, which Jumbo King paid.

[20] In the period before the deposit was paid, the appellant pressed Mr. Belende about the failure of the Pun transaction. In one of the emails, the appellant asked what was going on and in reply, Mr. Belende threatened to cut the appellant out of the transactions. The Hearing Panel characterized the appellant, in this period, as desperate to recover his own investment in the schemes.

[21] The appellant deposited the L/W fee of $90,000 into his mixed bank account, in trust for Mr. Belende. The appellant promptly disbursed it to persons other than those contemplated by the Escrow Agreement including Messrs. Belende and Leung, a M. Leung and for Mr. Belende’s expenses. The appellant explained this in his testimony by saying that he had not read the Escrow Agreement that he signed. No loan was ever obtained and the deposit was not returned.

[22] In 2014, the Law Society received complaints about the appellant arising from the IC and L/W transactions. The Law Society proceeded to a discipline hearing. As set out in the Notice of Application - Conduct, the Law Society alleged that the appellant engaged in professional misconduct or conduct unbecoming a licensee under s. 33 of the Law Society Act, R.S.O. 1990, s. L.8. The Law Society alleged that the appellant knowingly assisted Messrs. Belende and Leung in dishonest conduct (or ought to have known that he was being used by them to facilitate dishonest conduct) and wrongly withdrew trust funds.

[23] Over the course of the discipline proceedings, there were motion decisions that then formed part of the grounds for appeal at the Appeal Division and again in this Court:

(i) Recusal Motion: The appellant sought the recusal of the Tribunal Chair, which was expanded to include the whole panel, on the grounds of a reasonable apprehension of racial bias. After a detailed consideration of the evidence and law, the motion was dismissed. The panel concluded that the interactions complained of would not, individually or collectively, lead a reasonable observer to find a reasonable apprehension of bias, racial or otherwise. They found that when race was discussed, it was done respectfully and in the context of the racism issue raised by the appellant.

(ii) PAC Motion: In relation to a request to stay the application as an abuse of process, the appellant moved for production of all the investigation and other materials that would have been provided to the Law Society’s Proceedings and Authorization Committee (PAC), as well as the PAC report ordering the conduct application. The applicant relied on systemic racism as the grounds for disclosure.

The panel applied the agreed test for disclosure from Law Society of Upper Canada v. James, 2017 ONLSTA 16. The panel accepted that systemic racial discrimination exists in Canadian society and in its institutions but did not agree that they should then presume impropriety in this investigation. After considering the evidence, the panel concluded that racial bias or stereotypical negative assumptions about Black people were not a factor in the investigation.

(iii) Stay Motion: The appellant moved for a stay due to delay and anti-Black racism amounting to an abuse of process. The panel applied the contextual analysis provided for in Blencoe v. British Columbia (Human Rights Commission), 2000 SCC 44, [2000] 2 S.C.R. 307 and Law Society of Saskatchewan v. Abrametz, 2022 SCC 29, [2022] 2 S.C.R. 220.

The panel concluded that there was no inordinate delay. The panel found that racial bias or stereotypical negative assumptions about Black people were not a factor in the investigation or the hearing in this matter. The proceedings were neither oppressive nor contrary to the interests of justice. The complaints alleged serious misconduct – here, knowing participation in dishonesty – and there was a strong public interest in having the proceeding continue. The stay motion was dismissed.

Hearing Panel Decision

[24] After a twenty three day merits hearing, with both lay and expert evidence, the Hearing Panel released its lengthy reasons for decision. Briefly, the Hearing Panel concluded as follows regarding the two transactions:

(i) Based upon unopposed expert evidence, the transactions looked nothing like legitimate transactions using a SBLC.

IC Transaction:

(ii) The IC transaction was dishonest from the outset.

(iii) The panel rejected the appellant’s testimony that the obvious conflicts in the draft documents were due to sloppy drafting. They did not accept that a drafting error explained the reassurance of an escrow in the overview document and the complete lack of an escrow in the agreement.

(iv) There were other warnings signs in the IC transaction, known as red flags. Mr. Belende had not acceded to the request to have IC’s counsel be the escrow agent. Mr. Belende repeatedly required money from the appellant’s trust account to fund his personal expenses. And most significantly, the appellant received information from Mr. Belende that a tile and plaster company in the UAE was an agent to acquire a sophisticated international financing instrument. This raised a serious concern and was a significant warning sign that the transaction was not honest.

(v) No financial interest ever materialized and no money was available except for the $100,000 fee paid by IC, which was not returned.

L/W Transaction:

(vi) The L/W transaction was dishonest from the outset.

(vii) The appellant considered himself the escrow agent. However, the appellant took instructions from Mr. Leung to pay out the $90,000 deposit despite his obligations under the Escrow Agreement. When L/W asked for their money back the appellant said (and maintained in the discipline hearing) that he had not read the Escrow Agreement that he had signed.

(viii) The L/W transaction was intended simply to funnel money to the Leungs and there was no application for any loan or SBLC. A thorough review of the documents filed in the hearing revealed nothing that suggested any loan was ever applied for.

[25] The Hearing Panel then addressed the question of whether the appellant knew that the transactions were not legitimate, including findings of credibility.

[26] The Hearing Panel found that the appellant’s credibility was poor and they found that the appellant’s testimony about his belief in 2012 and 2013 was not credible. They considered the evidence, including the appellant’s testimony that even by the end of the discipline hearing he thought that the IC and L/W transactions were legitimate. They considered evidence that included emails that the appellant sent or received, such as an email in which the appellant said to Mr. Belende that Mr. Belende was protecting crooked people who would be charged with fraud. The Hearing Panel concluded that when the appellant represented to the Law Society that these were simply failed business deals he was not telling the truth because he knew differently.

[27] The Hearing Panel applied the well-accepted principles regarding states of knowledge in disciplinary proceedings – actual knowledge or constructive knowledge (wilful blindness or recklessness). They identified red flags of dishonesty and found that the appellant ought to have known that the IC transaction was dishonest and that he knew that the L/W transaction was dishonest based upon the principles of constructive knowledge. The Hearing Panel further found that the appellant’s trust account was overdrawn in breach of the relevant by-law.

Penalty, Costs and Compensation

[28] On penalty, the Hearing Panel described this as a difficult case, noting that the appellant was of great value to his marginalized community but had been found to have engaged in very serious misconduct. They considered the misconduct through which the appellant broke his promises to IC and L/W, who thought they could trust him with their money. The Hearing Panel considered the fundamental importance of trust in lawyers, giving rise to the presumptive penalty of revocation when a lawyer is dishonest. However, they found that the lay and expert evidence put forward by the appellant mitigated the penalty from revocation to permission to surrender his licence.

[29] The Hearing Panel also considered the appropriate penalty if presumptive revocation was not used, analyzing the accepted factors in Law Society of Upper Canada v. Aguire, 2007 ONLSHP 46. They considered each factor finding that the appellant showed no remorse, did not accept responsibility for what he had done, and did not recognize that being a lawyer, he had a special responsibility to keep IC and L/W’s money safe. They found that the appellant did not understand the effect of his misconduct on IC and L/W, and that he considered IC a person of bad character who, in effect, got what he deserved. They found these neutral factors. The harm to IC and L/W’s business was an aggravating factor.

[30] The Hearing Panel also found mitigating factors, including the appellant’s extensive penalty evidence, his cooperation in the investigation and his steps to pay back the funds that he overdrew from his trust account. They found that the misconduct was out of character, which was a mitigating factor. However, his continued insistence that the transactions were real, despite everything (including expert evidence in international financial transactions) was dishonest. He was entitled to a full defence, but not to testify falsely. The Hearing Panel concluded that if the appellant was permitted to continue practising law, he would be a significant danger to members of the public who would give him money to hold in his trust account, believing that he would keep it safe because he is a lawyer.

[31] The Hearing Panel concluded that this alternative analysis led to the same penalty – permission to resign. The appellant had not been honest with IC and L/W, and he would not be on his guard, which was contrary to the public interest and meant that this type of misconduct could easily reoccur. A reprimand, as requested by the appellant, would not be sufficient deterrence for other lawyers, and the public would conclude that the misconduct had not been taken seriously.

[32] The resulting penalty was permission to resign. On costs, the Hearing Panel ordered $207,000 be paid for the Law Society’s costs, less than the claimed amount. Two of the complainants in the Law Society proceeding sought reimbursement of $100,000 from the Lawyers’ Compensation Fund. Those claims on the Fund were still active. The Hearing Panel ordered that the appellant pay the Fund the amounts it paid out, up to a maximum of $100,000.

Appeal Panel Decision

[33] The Appeal Panel grouped the many grounds for appeal and released lengthy reasons for decision. A high-level summary follows:

1. Discrimination: The appellant submitted that the Tribunal erred on the above three motions by requiring a causal connection between his status as a Black licensee and his adverse treatment. These issues are raised again on this appeal. The Appeal Panel considered them, as follows:

• On the Stay motion, also referred to as the Discrimination Motion at the Tribunal, the Appeal Panel did not find an error. They concluded that one of the excerpts relied upon by the appellant was an accurate statement of the appellant’s position at the hearing. Another paragraph reinforced that the Hearing Panel applied the right test – asking whether race was a factor – which was correctly set out in other passages.

• On the PAC Motion, the Appeal Panel saw no error in the reasoning of the Hearing Panel applying the James test. Systemic racial discrimination in Canadian society was not enough, and the appellant did not show tenable or particularized evidence of impropriety in the initiation of the application alleging professional misconduct regarding the IC and L/W transactions.

• On the Recusal Motion, the Appeal Panel also found no error. The Hearing Panel applied the correct test for a reasonable apprehension of bias under Committee for Justice and Liberty et al. v. National Energy Board et al., [1978] 1 S.C.R. 369. The Appeal Panel noted the extensive reasons for decision and found that the Hearing Panel had, without error, concluded that there was no reasonable apprehension of bias. When the issue of race was discussed, it was done respectfully and in the context of the issues raised by the appellant.

2. Knowing Assistance in Dishonesty: The appellant submitted that the Hearing Panel erred in several respects, including both alleged errors of fact and law. The appellant disputed the use of some emails after the L/W transaction to infer fraud, the reliance on the other transactions, whether there was evidence for certain findings, and the requirements for and findings of recklessness and wilful blindness. The Appeal Panel reasons for decision on these issues are discussed below in the context of the overlapping appeal grounds before this Court.

3. Penalty: The appellant submitted that the Hearing Panel erred in respect of the use of presumptive revocation in this case, in analyzing whether the circumstances justified departing from that presumption, and in using the appellant’s own conduct against him in the penalty analysis. The Appeal Panel considered these grounds and found no error.

On presumptive revocation, the appellant submitted that this case was not of the same “register” as a typical presumptive revocation case such as mortgage fraud. The Appeal Panel accepted that dishonesty alone was not enough but this case – knowing assistance in the commission of a fraud involving client’s trust funds – was squarely within the “register” of cases that had been subject to presumptive revocation. This argument is raised again on this appeal.

The appellant raised several other grounds, which are discussed below to the extent that they are raised again on this appeal. On the use of the appellant’s own conduct, the appellant relied on Regina v. Kozy (1990), 74 O.R. (2d) 545 (C.A.). The Appeal Panel considered Kozy and the more recent elaboration of it in R. v. Ellacott, 2017 ONCA 681, upholding the Hearing Panel.

4. Costs/Compensation: The Appeal Panel considered the grounds for the appeal of the costs order, upholding that order. The Panel noted that costs decisions are owed significant deference on an appeal. The Appeal Panel found that the Hearing Panel had approached the conduct of the parties in a nuanced manner, made no error of principle, and ultimately awarded costs that were at the low end of the range of comparable cases.

On the compensation order, the Appeal Panel sought supplementary submissions on the question of whether there was jurisdiction to make the order while the compensation fund claim was still underway. The Appeal Panel then analyzed the statutory provisions, concluding there was jurisdiction and upheld the Hearing Panel. This issue is now the subject of a constitutional challenge in this Court.

[34] The appeal was dismissed. The appellant proceeded with a statutory appeal in this Court.

Standard of Review and Issues

[35] The appellate standard of review applies, as set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235; per Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653 at para. 37. The standard of review is correctness for questions of law and palpable and overriding error for questions of fact and of mixed fact and law: Housen, at paras. 8, 10, 19, 26-37; Law Society of Saskatchewan v. Abrametz, 2022 SCC 29, [2022] 2 S.C.R. 220, at para. 29. For issues of fact and law where there is an extricable legal issue, that issue is reviewed on the correctness standard. The appellant further submits that there are errors of fact that should be reviewed because they are based upon no evidence, however the ground of no evidence is not demonstrated on the record.

[36] The decision under appeal is the Appeal Panel Decision. This appeal is therefore the second appeal, and it is particularly important to note the caution of the Supreme Court of Canada that this appeal is not a re-hearing and re-weighing of the evidence that was before the Hearing Panel: Housen, at para. 23.

[37] On matters of penalty, courts should give considerable deference to penalties imposed by the disciplinary bodies of self-governing professions: William Bishop v. Law Society of Upper Canada, 2014 ONSC 5057 (Div. Ct.), at para. 24. The court should not interfere unless the Panel made an error in principle or the penalty is clearly unfit: Law Society of Ontario v. Schulz, 2023 ONSC 3943 (Div. Ct,), at para. 18.

[38] For issues of procedural fairness, the standard of review is correctness: Law Society of Saskatchewan v. Abrametz, at para. 30.

[39] The appellant has raised many issues on this appeal, which substantially overlap with the issues raised before the Appeal Division. The appellant challenges the findings of misconduct (except for the finding arising from the overdrawn trust account), penalty, the rulings on three interlocutory motions, costs and the compensation order. The more specific issues are set out below.

Misconduct Issues

[40] The first group of appeal grounds relate to the appellant’s submission that the Appeal Panel erred in upholding the Hearing Panel Decision that the appellant engaged in professional misconduct in relation to the IC and L/W transactions. Most of the grounds relate to the knowledge component of the alleged misconduct. The allegation was that the appellant knowingly assisted in dishonest conduct or ought to have known that he was being used (sometimes called being duped). The Hearing Panel found that the appellant ought to have known that he was being used in regard to the IC transaction and knowingly assisted in the dishonest conduct in the L/W transaction. The appellant also challenges the characterization of the L/W transaction as fraudulent and raises other issues.

[41] The appellant focuses on the criminal law of fraud and its requirements. Instead, the starting point should be the applicable disciplinary principles. Those principles may be informed by the criminal law but are not necessarily determined by it.

(i) IC Transaction

[42] The appellant conceded that the IC transaction was dishonest in respect of the actions of the UAE agents. However, the appellant submits that the Hearing Panel erred in finding that he was duped in the IC transaction without finding that he had any knowledge of the fraud. The appellant submits that it was an error of law for the Hearing Panel to do so based on negligence principles and the Appeal Panel did not correct that error.

[43] As noted in the Appeal Panel Decision at para. 20, the Hearing Panel “applied the well-accepted states of knowledge for knowing assistance that are applied at the [Law Society Tribunal]. These were actual knowledge or constructive knowledge (wilful blindness or recklessness). Alternatively, a lesser, although significant degree of blameworthiness would apply where the licensee ought to have known that he was facilitating dishonesty.” The Hearing Panel found that the appellant ought to have known that he was facilitating dishonesty in the IC Transaction.

[44] The Hearing Panel noted that the “ought to have known” level of knowledge uses negligence language to express a lesser, although still significant, degree of blameworthiness, citing Pretam Kaur Purewal v. The Law Society of Upper Canada, 2009 ONLSAP 10.

[45] Purewal expands on this observation at para. 34, holding that “[s]ometimes, there is a mistaken impression that if the [Law Society] fails to prove knowledge, wilful blindness or recklessness, there can be no professional misconduct. This is not so. What it means is that the most serious professional misconduct has not been proven. The Hearing Panel may still find that a licensee’s participation or assistance in a dishonest scheme constitutes professional misconduct because it was blameworthy to a lesser, though significant, degree. For example, the licensee’s conduct may have fallen below the standards of a reasonable practitioner to a point that justifies its characterization as professional misconduct.”

[46] Before this Court, the appellant agrees that negligence can be sufficient, but that it is not inevitably so, citing Law Society of Upper Canada v. Said Mohammedally, 2014 ONLSAP 5, at para. 26.

[47] In Mohammedally, the Appeal Division held that the applicable Rule of Professional Conduct, which makes a lawyer liable for what they ought to have known, was obviously rooted in negligence, and went on to discuss what types of conduct may be enough, citing Purewal and other authorities.

[48] The appellant submits that a single mistake is not enough, suggesting that analogy applies here. The appellant then proceeds to reargue the evidence, seeking to distinguish the prior Honduras and Pun transactions and submitting that other evidence, such as the appellant’s use of his own money, should be weighed differently.

[49] There was ample evidence before the Hearing Panel, from which it concluded that the appellant ought to have known that the IC transaction was dishonest. There were other warnings signs in the IC transaction. Mr. Belende had not acceded to the request to have IC’s counsel be the escrow agent. Mr. Belende repeatedly required money from the appellant’s trust account to fund his personal expenses. And most significantly, the appellant received information from Mr. Belende that a tile and plaster company in the UAE was an agent to acquire a sophisticated international financing instrument. This was a significant warning sign that the transaction was not honest.

[50] The appellant has not shown an appealable error by the Appeal Panel in upholding the finding that the appellant ought to have known. These grounds fail.

(ii) L/W Transaction

[51] The appellant submits that the Appeal Panel erred in its decision about the L/W transaction. The main issues relate to knowledge – specifically the finding that the appellant knowingly assisted in the dishonest conduct on the L/W transaction. However, the appellant also submits that, for the L/W transaction, fraud was not proven, and the appellant raises some other issues.

[52] The appellant advances an analysis of the criminal law of fraud and submits that the Hearing Panel and the Appeal Panel erred in observing that the conduct proceeding before the Tribunal was not a criminal proceeding. That observation was not in error. Nor did they err in finding that the Law Society did not need to prove criminal fraud.

[53] The appellant submits, as he did before the Appeal Panel, that there is no evidence of fraud or dishonesty in the L/W Transaction. The appellant relies on a different interpretation of the Escrow Agreement than that found by the Hearing Panel, submitting that the Agreement is unclear.

[54] The appellant raises other issues that relate to the Escrow Agreement. The appellant challenges the factual findings about L/W’s belief about the transaction because the interpreter used to convey what Mr. Leung was saying was not a professional translator, did not testify, and L/W’s evidence about what they were told by Mr. Leung was hearsay. They testified that Mr. Leung told them that he would try and arrange for a $5 million loan and that if he succeeded for which there would be a $90,000 fee. The Hearing Panel did not use this L/W evidence to prove the truth of what Mr. Leung or the translator said. The Hearing Panel had the signed Escrow Agreement. The appellant would have to show a palpable and overriding error of fact regarding this evidence and he has not done so.

[55] The challenges to the interpretation of the Escrow Agreement and the finding of dishonesty are reviewed as a question of mixed fact and law. There is no error in principle. The Appeal Panel Decision addressed the interpretative issue and dishonesty as follows, beginning at para. 78:

In our view, as the hearing panel found, the Escrow Agreement clearly established an escrow and stipulated that the escrow agent would hold the deposit and distribute it as directed in schedule 1 to the agreement. That schedule provided that the escrowed amount would be released to SGG upon presentation to the escrow attorney (the appellant) of a “SWIFT/WIRE COPY” from SGG. In the event the “Provider” did not deliver the “SWIFT/WIRE” in accordance with the non-existent Financial Management Agreement, the deposit would be returned to L/W’s company.

The hearing panel was entitled to interpret this language in the context of the evidence provided by L and W as to what they understood the terms were under which they had provided the deposit. They testified that they understood from Leung that their money would be kept in the appellant’s trust account until the instrument was ready and if the transaction failed it would be returned to them.

Further, the appellant himself testified that he was the escrow agent for this transaction. His explanation for paying out the funds immediately on receiving them was that he had received instructions from his client, Leung, to disburse the funds and that he had not read the Escrow Agreement.

Given the foregoing, the absence of any indication that any loan was ever applied for, and the expert opinion that the transaction did not look like a legitimate transaction, there was a reasonable basis for the hearing panel’s conclusion that this transaction was dishonest. Its conclusion cannot be said to have been tainted by a palpable and overriding error.

[56] The appellant submits that his “musings” after the fact, when he was raising concerns about the advance fees being fraudulent, were not proof of fraud for the L/W transaction. He also submits that the Hearing Panel erred in considering his emails about the earlier transactions to find the L/W transaction dishonest, suggesting that they needed to meet the test for similar fact evidence. We find no error in the Appeal Panel’s decision on these issues, at para. 72, as follows:

… these submissions are unconnected to the hearing panel’s actual findings that the transactions were dishonest. As outlined earlier, the hearing panel reached that conclusion based on the nature of the transactions themselves – particularly, that there was nothing that resembled a genuine application for any kind of high value international instrument. The hearing panel also pointed out that none of the money deposited was ever placed or held in an escrow account and none of the funds went to an entity capable of administering or issuing any kind of financial instrument. The panel further relied on the expert evidence. The panel did not rely on after-the-fact emails or emails involving other transactions to find that the transactions were dishonest.

[57] The Hearing Panel was entitled to weigh the evidence in arriving at their interpretation of the Escrow Agreement and the conclusion that the L/W transaction was dishonest. The Appeal Panel did not err in upholding those findings.

[58] The appellant then submits that the Appeal Panel erred in upholding the Hearing Panel’s finding that he knowingly assisted in the dishonest L/W transaction. He submits that the knowledge requirement was not met on the law or the facts. The appellant submits that the Hearing Panel erred by using recklessness to find wilful blindness and wrongly failed to require proof of actual suspicion.

[59] Beginning with the law, the Appeal Panel Decision includes a review of the case law including the cases that are again the focus of the appellant’s submissions in this Court, concluding that the Hearing Panel made no legal error.

[60] The appellant focuses on Sansregret v. The Queen, [1985] 1 S.C.R. 570 and The Law Society of Upper Canada v. Nguyen, 2018 ONCA 709, and provided other authorities.

[61] The appellant relies on Sansregret for the principle that where a criminal offence requires knowledge on the part of the accused, it is improper to instruct the jury that a finding of recklessness satisfies that requirement. The appellant submits that the Tribunal case law overlooks this distinction.

[62] This ground of appeal was addressed by the Appeal Panel without error, focusing on the knowledge requirements for professional misconduct rather than for a crime. As held by the Appeal Panel, the knowledge of wrongdoing required in the context of the Rules of Professional Conduct are as stated in Law Society of Upper Canada v. Marshall Stephen Kazman, 2008 ONLSAP 7, which addressed Sansregret and other authorities.

[63] The Appeal Panel quoted relevant passages from Kazman at length. The Appeal Panel noted, as set out in Kazman, that knowledge under the Rules of Professional Conduct contains two elements: knowledge of the risk and knowledge of the possible consequences of engaging in the risk. At paras. 88-89, the Appeal Panel elaborated on the Kazman decision as follows:

In the case of wilful blindness, the licensee is aware that he should open his eyes and become knowledgeable as to both the risk and the possible consequences of engaging in the risk, but chooses not to, preferring to remain blind to them. In the case of recklessness, the licensee is aware of the risk (the first element) but proceeds anyway, reckless as to the possible consequences of engaging in the risk (the second element)”: Kazman, at para. 45.

… in the administrative law sphere, there will normally be little difference in culpability or sanction whether the licensee is wilfully blind or reckless”: Kazman, at para. 48.

[64] The Appeal Panel found that the phrase used by the Hearing Panel, that the appellant was “reckless, at best, and wilfully blind at worst”, reflected the recognition in the jurisprudence that wilful blindness is worse, but recklessness is sufficient for the knowledge component.

[65] On Nguyen, the appellant submits that the Court of Appeal found that the test for knowledge in fraud cases before the Law Society Tribunal was incorrect. On the contrary, at para. 38, the Court of Appeal expressly found the test applied by the Appeal Panel in that case was reasonable (the standard of review at the time). The appeal was granted on other grounds. This argument was also raised and addressed by the Appeal Panel without error.

[66] The appellant then raises issues about the use of some of the evidence. The appellant submits that his emails about earlier transactions, and those after the fact, were not proof of his knowledge of fraud for the L/W transaction. We find no error in the Appeal Panel’s decision on these issues, at paras. 73-76, as follows:

… with respect to the appellant’s knowledge of fraud, the hearing panel did rely on after-the-fact emails in assessing the appellant’s credibility. It contrasted his evidence during the hearing that the IC and L/W transactions (which took place in late 2012 and early 2013) were legitimate with emails sent in the period January to April 2013. The hearing panel concluded that these emails showed that the appellant knew the transactions were shams and therefore that his statements at the hearing about his past state of mind were not credible.

However, the hearing panel did not use the post-transaction emails to infer that the licensee knew the L/W transaction was dishonest at the time it took place. Instead, the hearing panel relied on the red flags it had identified in the period leading up to the L/W transaction, doubts expressed in emails to Belende and others about the soundness of the prior transactions, the fact that he did not receive answers to his inquiries about what was happening with the various transactions, and his explanation that he had not read the escrow agreement which spelled out his obligations to L/W. There is no timing issue here.

As for the suggestion that communications with Belende about other transactions were not a basis to conclude that the appellant knew that the L/W transaction was fraudulent, this ignores the following facts found by the hearing panel:

• all of the transactions were similar in nature, and a number of them had failed by the time of the L/W transaction;

• Belende and his company, Daytomo, were parties to the Pun transaction which immediately proceeded the IC transaction;

• the appellant had repeatedly asked Belende for information about the Pun transaction, including suggesting that a person involved in the transaction had lied and that “[s]omething about this is simply wrong”;

• only a few days before the L/W transaction deposit was made Belende had threatened to cut the appellant out altogether if he kept asking questions; and

• the deposit for the L/W transaction was deposited in the Belende trust ledger and Belende received some of the distribution of those funds.

In our view, the hearing panel did not err in concluding that the appellant’s communications with Belende about other transactions that had failed in the period leading up to the L/W transaction were relevant to his knowledge at the time of the transaction. There is nothing approaching a palpable and overriding error.

[67] In summary, the appellant has not shown an error of law or palpable and overriding error of fact with respect to the Appeal Panel’s review of the findings of professional misconduct.

Penalty

[68] The appellant submits that the Appeal Panel erred in its review of the Hearing Panel’s use of presumptive revocation and in the penalty that resulted from both that analysis and the Aguire analysis.

[69] Beginning with presumptive revocation, as noted by the Appeal Panel, that concept was explained in detail in Law Society of Ontario v. Manilla, 2021 ONLSTA 25. Certain types of misconduct attract a presumptive penalty of revocation because of their inherent seriousness, and it will only be in exceptional circumstances that lesser penalties can be imposed.

[70] The appellant submits, as he did to the Appeal Panel, that the Hearing Panel failed to analyze whether the misconduct was of the same “register” as the typical presumptive revocation case. The appellant then seeks to distinguish the IC and L/W dishonest financial transactions from mortgage fraud, billing fraud and misappropriation.

[71] The Appeal Panel made no error in considering this issue. The Appeal Panel agreed that dishonesty alone was not enough but found that this was not a case involving a lesser form of dishonesty as discussed in the cases. The Appeal Panel concluded as follows, at para. 112:

Dishonesty of the sort involved in this case – knowing assistance in the commission of a fraud involving clients’ trust funds – is squarely within the register of cases that have been subject to presumptive revocation.

[72] The presumption may be rebutted in exceptional circumstances. The Appeal Panel found that the Hearing Panel implicitly found that there were exceptional circumstances. Otherwise, the penalty would have been revocation rather than permission to resign.

[73] The appellant submits that the Appeal Panel erred by failing to overturn the Hearing Panel on its approach to the evidence of racism. The appellant submits that the Hearing Panel required a causal connection between the existence of anti-Black racism in Canada (which they accepted) and the circumstances of the appellant including his reputation in the community, in order to give it a mitigating effect. This submission is made for both the analysis of exceptional circumstances and the Aguire factors.

[74] The Hearing Panel accepted the appellant’s expert Dr. Walker’s evidence that anti-Black racism is still present in Canada and that it prevents Black people from achieving their full potential. In discussing Dr. Walker’s evidence, the Hearing Panel said that Dr. Walker felt that the appellant’s educational and mentoring opportunities were limited because he is Black.

[75] The Hearing Panel further accepted the effect of anti-Black racism on the appellant as a mitigating factor but in what they described as a slightly different way than Dr. Walker saw it.

[76] The Hearing Panel went on to discuss the appellant’s evidence about his educational background, which they described as showing significant accomplishments that did not suggest that systemic discrimination prevented the appellant from achieving his educational goals. The Hearing Panel discussed the appellant’s evidence about seeking out and obtaining mentorship and his efforts to help the Black community. The Hearing Panel also discussed the appellant’s inability to see the inconsistencies in his interactions with Messrs. Blende and Leung and his conduct in relation to the dishonest transactions. The Hearing Panel considered all of the evidence, concluding that the mitigating factors lessened the presumptive revocation to the extent of permission to resign.

[77] The Appeal Panel directly addressed the submission that the Hearing Division wrongly required a causal connection between the existence of anti-Black racism in Canada and the circumstances of the appellant in considering the mitigating effect. They addressed R. v. Morris, 2021 ONCA 680, 159 O.R. (3d) 641 (C.A.), a criminal decision holding that systemic racism against those in the Black community cannot diminish the seriousness of the offence as a consideration in sentencing but can offer an explanation for the commission of the offence. Causation is not required.

[78] For example, in Morris the Court of Appeal found, at para. 100, that it “was open to the trial judge to find that the evidence of anti-Black racism was connected to, or played a role in, Mr. Morris’s strong fear for his personal safety in the community. That state of mind offered a mitigating explanation for Mr. Morris’s possession of the loaded, concealed handgun. … the offender offers an explanation for possessing a loaded gun, which, to some extent, ameliorates the offender’s moral responsibility for that choice”.

[79] As held by the Appeal Panel, at para. 119:

… there must be some connection between the systemic racism and the circumstances or events that are said to explain or mitigate the misconduct at issue. But the licensee does not need to show a direct causal link.

[80] The Appeal Division went on to acknowledge that it could be a fine line between requiring a connection and improperly requiring a causal link. The Appeal Panel expressed a concern that the Hearing Panel’s analysis of Dr. Walker’s evidence verged on a causal analysis, which was not permitted. However, on a review of the findings of the Hearing Panel, the Appeal Panel was not persuaded that the Hearing Panel’s approach to Dr. Walker’s evidence made a difference given the factors that were considered, resulting in some mitigating effect.

[81] Contrary to the submissions of the appellant, the Hearing Panel did not conclude that the “only choice” was presumptive revocation. The Hearing Panel considered both presumptive revocation and ordinary sentencing principles, which may give rise to a range of penalties. The Hearing Panel found that the same penalty was called for whether presumptive revocation principles were used or not. As found by the Appeal Panel, the Hearing Panel was not obliged to follow Law Society of Ontario v. McCullough, 2022 ONLSTH 63, in which a suspension was imposed in different factual circumstances.

[82] The appellant submits that the Appeal Panel erred by failing to overturn the Hearing Panel because they relied on his choices in defending himself, which he was entitled to do. On the contrary, the Appeal Panel analyzed the Kozy decision of the Court of Appeal, quoting from para. 130 that there should be “no perceived impingements upon the manner of presenting the defence.” The Appeal Panel also considered the Court of Appeal’s more recent decision in Ellacott, at para. 25, clarifying that an accused’s attitude towards the crime may be an aggravating factor on sentencing in some unusual circumstances. For example, it would be proper where the accused’s attitude demonstrates a substantial likelihood of future dangerousness and would be a very unusual circumstance.

[83] The Appeal found as follows at paras. 133-136, without error:

In this case, the hearing panel found that the appellant did not show remorse, did not accept responsibility, and did not understand the impact of his misconduct on IC and L/W. However, with respect to each of these factors, the hearing panel was careful to explain that while this was not mitigating, neither was it aggravating. Instead, each of these was a neutral factor in the penalty analysis. This was the correct approach.

The hearing panel did consider the appellant’s continued insistence that the fraudulent transactions were not in fact fraudulent in its analysis of whether the misconduct was “out of character”. Whether or not this crossed the Kozy line, however, is inconsequential because the panel’s conclusion on this factor was that it was mitigating – the hearing panel concluded that the misconduct was in fact out of character for the appellant.

The hearing panel went on to consider the appellant’s denials of fraud in more detail in its assessment whether the misconduct was likely to recur. The hearing panel found that the appellant would be a significant danger to members of the public who give him money to hold in his trust account if he was allowed to continue practising because of the appellant’s inability to recognize, or refusal to recognize, the red flags that should cause all responsible licensees to be on guard against being duped as part of a fraudulent scheme.

The analysis did not drift into the line of reasoning prohibited by Kozy. The hearing panel did not find the appellant’s manner of defending the case to be aggravating because of a lack of remorse or acceptance of responsibility. Instead, the hearing panel carefully considered the evidence of the appellant’s attitude towards the misconduct, which was based on more than a continuing assertion of innocence or denial of the allegations. And it did so for the limited purpose of assessing the likelihood of the misconduct reoccurring. In this regard, the hearing panel’s reasoning was analogous to the “substantial likelihood of future dangerousness” concept in Valentini. This concept may carry greater force in the professional regulation context given the overriding importance of protecting the public interest. Accordingly, we would not give effect to this ground of appeal.

[84] The appellant further submits that his many letters from members of the community prove that the reputation of the profession does not demand revocation. This submission and others essentially ask this Court to re-weigh the evidence and draw different conclusions. That is not the role of this Court. The appellant similarly submits that differing weight should be given to aspects of the Aguire factors, the findings of misconduct, the appellant’s lack of remorse and the appellant’s explanations for the steps he did or did not take in relation to the transactions among other facts.

[85] The appellant further disputes the characterization of permission to surrender a licence as less serious than revocation. The Appeal Panel also addressed this argument, accepting that surrendering a licence is similar in terms of the ability to practice law, but that it carries less stigma than a revocation.

[86] The Appeal Panel did not err in law or make a palpable and overriding error of fact in reviewing the Hearing Panel’s penalty decision. The appellant has not shown that the penalty in manifestly unfit.

Motions and Discrimination

[87] As was done before the Appeal Panel, the appellant submits here that the Hearing Panel erred on three interlocutory motions by requiring a discriminatory motive or intent and a causal connection between the appellant’s status as a Black licensee and his adverse treatment. The appellant relies on not only the three motion decisions but also on the reasons for decision of the Hearing Panel on penalty, discussed above, for the discrimination arguments.

(i) Recusal Motion – April 2021

[88] The appellant initially commenced a motion seeking the recusal of the Chair of the Hearing Panel, but ultimately moved to recuse the whole Hearing Panel. The grounds were a reasonable apprehension of racial bias.

[89] The appellant submits that the Appeal Panel erred in upholding the Hearing Panel’s decision to dismiss the motion. The appellant further submits that having regard for not only the recusal motion decision but also the other Hearing Panel decisions, he has shown not only a reasonable apprehension of bias but actual racial bias. This is not borne out.

[90] The Appeal Panel set out the correct test for a reasonable apprehension of bias and noted that the Hearing Panel had done so as well. The Appeal Panel held as follows, at para. 69:

In its lengthy reasons on the recusal decision, the hearing panel applied these principles in the context of an extensive examination of each example of alleged reasonable apprehension of bias set out by the appellant in his affidavit and in his materials. The panel concluded that “the interactions complained would not, individually or collectively, lead a reasonable observer to find a reasonable apprehension of bias, racial or other, on the part of the panel. When race was discussed it was done so respectfully and in context with the racism issue raised by Mr. Barnwell in the motion to quash.” We see no error in these recusal reasons.

[91] On the appeal to this Court, the appellant repeats many of the same points that he raised before the Hearing and Appeal Divisions, including reliance on numerous excerpts from the hearing transcripts and subsequent reasons for decision that he submits shows bias. He submits that the Hearing Panel took an overly interventionist approach that rose to the level of a reasonable apprehension of bias, that there were process errors such as limiting examinations and that there were inappropriate evidentiary and other rulings, among other issues. He submits that all of this, taken together, should result in the recusal of the Hearing Panel.

[92] We have considered the appellant’s extensive list of indications of bias. Beginning with the evidence and submissions on the recusal motion itself, we find no error with the Appeal Panel’s decision upholding that motion decision. Looking more broadly, the appellant continues to raise issues of the same nature, which were not before the Hearing Panel on the motion and do not give rise to a successful ground of appeal. The appellant has not shown an error in the conclusion that there was no reasonable apprehension of bias, let alone actual bias.

(ii) PAC Motion – January 2022

[93] The appellant moved for a stay due to delay and anti-Black racism amounting to an abuse of process (the Stay Motion). In connection with the Stay Motion, the appellant moved for production of all the investigation and other materials that would have been provided to the Law Society’s Proceedings and Authorization Committee (or PAC), as well as PAC’s report ordering the conduct application. The applicant relied on systemic racism in Canadian society, including the Law Society, as the grounds for disclosure.

[94] This motion arose within the specific legislative regime for PAC, which was summarized in the Hearing Panel motion decision. Under s. 33 of the Law Society Act, the PAC must authorize an application to the Tribunal. It does not conduct the investigation. If authorized, it is the Tribunal that conducted the hearing and determines whether or not there has been professional misconduct. The PAC neither gathers evidence nor decides whether a licensee has engaged in professional misconduct.

[95] Given PAC’s specific and limited role, there is no automatic right to disclosure. There is an accepted test that must be met to obtain the disclosure of the PAC documents.

[96] On the PAC motion, the appellant agreed that the applicable legal test for disclosure of PAC documents was as set out in James. Before this Court, the appellant submits that the Hearing Panel erred in their application of the James test and the Appeal Panel similarly erred in its review of the motion decision.

[97] The Appeal Panel and the Hearing Panel correctly set out the James test:

(1) a licensee must provide particularized and tenable evidence of improper conduct by the Law Society in initiating the application, and,

(2) the licensee must be able to demonstrate that the PAC materials would provide arguably relevant evidence that might assist the licensee in making this claim.

[98] The test is conjunctive. If either part of the test is not satisfied, the motion fails.

[99] As submitted to the Appeal Panel, the appellant submits that if systemic racism exists in Canadian society, as the Hearing Panel found it did, that alone is sufficient to meet the James test. The Appeal Panel disagreed at paras. 65-67, as follows:

The appellant’s primary argument was that impropriety for the purposes of the James test could be implied from the existence of societal, systemic racism which extended to the Law Society as an institution and subconscious or conscious use of stereotypical negative assumptions about Black people by Law Society employees. If one accepted that anti-Black racism existed at the Law Society as an institution, then that alone was sufficient and his request for production of the PAC memo should be granted.

The hearing panel agreed that systemic racial discrimination exists in Canadian society and in its institutions. However, it pointed out that his position would lead to a rebuttable presumption of impropriety in every motion for production of PAC materials where discrimination was argued. This would be inconsistent with the James test, which the appellant had accepted as applicable. In addition, the appellant cross-examined a number of Law Society employees involved in the investigation in aid of his motion yet was unable to provide any “tenable or particularized evidence of impropriety in the initiation of this application.”

We see no error in this reasoning. Again, the primary issue was whether the appellant could point to any evidence to suggest that race was a factor in the decision to initiate the proceedings. He could not. As the hearing panel put it: to get access to the PAC materials on this motion, “the Licensee must show more than that systemic racial discrimination exists.”

[100] The appellant seeks to reargue the evidence that was before the Hearing Panel on the motion, submitting that it was sufficient to show a “reasonable possibility” that race was a factor. The appellant submits that the Hearing Panel erred in their approach to the evidence of the appellant’s expert Mr. Minors. The Hearing Panel found that it was clear that he was unfamiliar with the role of a Law Society investigator and did not recognize the role of the merits hearing before the Tribunal, not the PAC. These findings regarding the foundation of Mr. Minor’s opinions (or lack thereof) and the resulting impact on the weight of that evidence do not give rise to a palpable and overriding error of fact or error of principle. The appellant seeks to recharacterize the evidence on this appeal without showing a palpable and overriding error.

[101] The appellant further submits that the Hearing Panel erred in ruling that the PAC decision was not reviewable, submitting that it could have been the subject of an application for judicial review. It is not clear whether this issue was raised at the Appeal Division. In any event, there was no application for judicial review. And in such an application, the Court would first need to decide whether or not to hear the application and address prematurity.

[102] The appellant also submits that the PAC memo should have been part of the required disclosure obligation of the Law Society, citing R. v. Stinchcombe, [1991] 3 S.C.R. 326. The Law Society does not dispute its disclosure obligations. As cited in James, at para. 32, this Court has set out that disclosure obligation by analogy to Stinchcombe: Law Society of Upper Canada v. Savone, 2016 ONSC 649 (Div. Ct.).

[103] However, as held in James, at para. 48, it is the information gathered during the investigation that must be disclosed under Stinchcombe. The analysis, comments, and opinions of investigators and counsel fall outside that obligation. This distinction is recognized by the need to establish the threshold test for disclosure of the PAC document, as set out in James and agreed to by the appellant.

[104] Despite his agreement with the James test, the appellant submits that under that test, he is caught in a “Catch 22”. He submits that he needs production of the documents and an unlimited cross-examination of the Law Society witnesses to show the discriminatory grounds. This overlooks the role of the test as a threshold that must first be met given the specific and limited role of the PAC. The appellant has not shown that the threshold test for disclosure of PAC documents is in error nor that he satisfied that test. He did not provide particularized and tenable evidence of racial discrimination against him by the Law Society in initiating the conduct application against him for participating in dishonest transactions let alone the second mandatory criteria.

[105] The appellant further challenges the finding that the PAC materials are privileged. The Hearing Panel referred to cases reaching this conclusion. However, the Hearing Panel did not rely on it for its decision. The Hearing Panel relied on the James test, which had not been satisfied.

[106] It is not apparent that all of the above issues were raised before the Appeal Panel. In any event, the appellant has not shown a successful ground of appeal from this motion decision.

(iii) Stay Motion – February 2023

[107] The appellant’s Stay Motion was based on the grounds of delay and anti-Black racism amounting to an abuse of process.

[108] On the issue of delay, the Hearing Panel applied the contextual analysis required under the jurisprudence. They reviewed the timeline in detail, finding that there was no inordinate delay. Further, the delays relied upon did not prevent the appellant from making full answer and defence, nor did they manifest unfairness.

[109] On this appeal, the appellant submits that he was prejudiced by the delay because one of his potential witnesses became ill and was unable to testify. The Hearing Panel found that this witness did not become unavailable due to the passage of time. No palpable and overriding error has been shown to disturb this finding of fact.

[110] On the issue of racial discrimination, the Hearing Panel rejected the appellant’s submission that the proceedings were started and continued because he is Black. The Hearing Panel found that there was ample reason to investigate the impugned transactions and authorize a hearing, giving examples.

[111] The appellant submits that the Hearing Panel erred in not accepting Mr. Minors’ evidence, suggesting that the Hearing Panel did so based on the appellant giving Mr. Minors the incorrect information that the panel consisted of all White women. The Hearing Panel did not consist of all White women. The appellant submits that this error did not change Mr. Minors’ evidence.

[112] This argument misdescribes the grounds for rejecting this evidence. The Hearing Panel also found that Mr. Minors had been provided with a carefully curated set of facts that were not consistent with the transactions at issue and had insufficient preparation time to obtain accurate information about the Law Society’s duties and obligations. The Hearing Panel rejected his evidence for lack of a proper foundation. No appealable error has been shown.

[113] The appellant also relies on this statement at para. 61 of the motion decision to show that there was a prima facie case that race was a factor:

This means [the appellant] also knew there was ample reason, other than his personal characteristics, for the Law Society to investigate the transactions and authorize the hearing. This damages the [appellant’s] position that the reason for the investigation or the hearing is that everyone concerned in the process holds negative stereotypical assumptions about him because he is Black.

[114] The Appeal Panel addressed this without error, finding that it was an accurate statement of the appellant’s position at the hearing.

[115] The appellant also relies on para. 62 of the motion decision, which stated as follows:

There is no evidence at all that any part of the reason that the transactions were investigated, or this hearing was authorized, was because the Licensee is Black or because anyone concerned subscribed to negative stereotypical assumptions about Black people.

[116] Again, this was addressed by the Appeal Panel without error, at para. 60:

In our view, this paragraph simply reinforces that the hearing panel applied the correct test – was the appellant’s race a factor in the investigation or the authorization of the hearing.

[117] The appellant further relies on the other motions, the penalty decision, and the grounds for his appeal of the findings of professional misconduct. Having considered all the submissions put forward, we do not find an error of law or palpable and overriding error of fact by the Appeal Panel in their review of the decision on the Stay motion.

Costs

[118] The Appeal Panel upheld the Hearing Panel costs order for the forty seven day hearing. The costs order was substantially less than the amount sought by the Law Society. The appellant challenges the costs order on grounds that he also raised, and were addressed without error, before the Appeal Panel.

[119] The appellant again disputes the range of costs orders used by the Hearing Panel, submitting that one of the cases relied on is distinguishable and the range is not a matter of discretion. As held by the Appeal Panel, the Hearing Panel had ample justification for the range they selected. Further, the reference to discretion reflects the accepted principle that costs are in the discretion of the Hearing Panel.

[120] The appellant has shown no error in law in the Appeal Panel’s approach to his submission that he was partially successful. The Appeal Panel held that the finding that the appellant “ought to have known” about the dishonesty on the IC transaction was still a finding of professional misconduct. The Appeal Panel held that it was an overstatement to say that success was divided.

[121] Nor did the Appeal Panel err in finding that the Hearing Panel was entitled to consider the conduct of the parties and lengthening of the proceedings. As put by the Appeal Panel, the Hearing Panel approached this on a nuanced basis, differentiating between motions that were merely unsuccessful and those that were ill-founded from the start.

[122] The Appeal Panel also addressed the submission, raised again here, that the appellant should not be subject to an increased costs award for vigorously defending himself. In addition, the appellant again argued, based on his financial circumstances, that costs ought not be punitive in effect. With respect to these arguments, the Appeal Panel noted that costs are not a penalty – they defray the amounts paid by licensees through their fees. The Appeal Panel did not err in this regard. Further, the Hearing Panel had considered the evidence about financial circumstances and expressly considered it in awarding costs at the lower end of the range.

[123] The appellant has not shown a basis to reverse the Appeal Decision on costs.

Compensation Fund

[124] The appellant challenges the Appeal Panel’s decision to uphold the Hearing Panel’s order that the appellant pay up to $100,000 for payments out of the Compensation Fund. Two of the complainants in this matter had requested compensation from the Fund, up to that amount. It is Convocation, not the Law Society, which grants compensation in its absolute discretion, as set out in s. 51(5) of the Law Society Act.

[125] The appellant submits that there was no jurisdiction to make the order because the requests for compensation from the Fund were still active – Convocation had not yet made a decision to make a grant from the Fund. The appellant further submits that the Appeal Division’s interpretation is unconstitutional under unwritten constitutional principles acknowledged in the Reference re Remuneration of Judges of the Provincial Court (P.E.I.), [1997] 3 S.C.R. 3. The appellant raised the constitutional issue for the first time in this Court, on the basis that it arises from the Appeal Panel’s reasons for decision. The Hearing Panel did not give reasons regarding jurisdiction to make this order.

[126] The Appeal Panel considered the issue of the Hearing Panel’s jurisdiction to make the order and interpreted s. 35(1) of the Law Society Act, specifically paragraphs 14 and 21, which provide as follows:

35 (1) Subject to the rules of practice and procedure, if an application is made under section 34 and the Hearing Division determines that the licensee has contravened section 33, the Division shall make one or more of the following orders: …

14. An order requiring the licensee to pay to the Society, for the Compensation Fund, such amount as the Hearing Division may fix that does not exceed the total amount of grants made from the Fund as a result of dishonesty on the part of the licensee.

15. Any other order that the Hearing Division considers appropriate.

[127] The appellant submits that the Appeal Panel erred in not interpreting paragraph 21 as constrained by paragraph 14.

[128] The Appeal Panel fairly acknowledged that they would have greater difficulty finding jurisdiction under s. 35(1) paragraph 14 because it is worded in the past tense. That paragraph contemplates an order requiring a licensee to pay to the Law Society not more than the total amount of grants made from the Fund. The Appeal Panel referenced another hearing panel decision that held that there was no authority in s. 35(1) paragraph 14 to order payment prior to the amount having been fixed and paid”: Law Society of Upper Canada v. Sarko Mohammed Mortala Muslim, 2006 ONLSHP 54.

[129] The Appeal Panel did not make a definitive interpretation of paragraph 14, instead proceeding to find jurisdiction under paragraph 21, discussed below. The Law Society submits that paragraph 14, properly interpreted, does authorize the Hearing Panel’s order. It submits that the words “grants made from the Fund” should be interpreted to include grants that may or will be made, particularly where there is evidence of a pending application for compensation from the Fund. We return to this submission below, after considering what the Appeal Panel did do.

[130] The Appeal Panel went on to consider paragraph 21, which provides jurisdiction to make any other order that the Hearing Division considers appropriate. The Appeal Panel addressed the interpretive issue of whether paragraph 21 is limited by the more specific paragraphs in s. 35(1) or is a broad discretion that is not limited by the other paragraphs. The Appeal Panel followed Tribunal decisions, concluding that paragraph 21 is a broad discretion to fashion a remedy that is appropriate in the circumstances, taking into account relevant penalty principles and regulatory goals, and is not constrained by paragraph 14, citing Law Society of Ontario v. Diamond, 2024 ONLSTA 8, citing Law Society of Ontario v. Hans, 2021 ONLSTH 40.

[131] The appellant submits that the above interpretation is an error of law.

[132] The principles of statutory interpretation are well-established. The words of the Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of the Legislature: Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27.

[133] In interpreting s. 35(1) we have regard for the objects of the Law Society Act. The Act provides for the Law Society’s broad public interest mandate and broad regulatory powers to accomplish that mandate. The appellant accepts that the statutory powers of a professional regulator, including the Law Society, must be interpreted sufficiently broadly to allow for effective regulation in order to enforce professional standards and to provide for the good governance of the profession, citing Green v. Law Society of Manitoba, 2017 SCC 20, [2017] 1 S.C.R. 360, at paras. 26, 28-30.

[134] In addition to providing for regulation of the profession through discipline, the Act provides the regime under which grants are made from the Compensation Fund and grants are reimbursed. As set out in s. 51(5), Convocation may, in its discretion, make grants in order to relieve or mitigate loss sustained by a person due to dishonesty, among other grounds. Under s. 51(7), the Law Society is subrogated to all rights and remedies of the recipient to the extent of the amount of the grant. The Act expressly contemplates that the amount of a grant may be recovered from the licensee.

[135] Moving to s. 35(1), the appellant submits that while there is some flexibility, statutory provisions that impose penalties must be interpreted narrowly, and any ambiguity must be resolved in favour of the licensee. The appellant relies on R. v. McIntosh, [1995] 1 S.C.R. 686, interpreting the Criminal Code self-defence provision in a murder case. The majority cited the general principles for interpreting penal provisions that are ambiguous and equivocal. They found that the Code section was clear. However, they noted, at paras. 27-29, that if it had been ambiguous, it should be interpreted in favour of the accused since the liberty of the subject was at stake.

[136] The compensation order does not implicate the liberty of the appellant. However, s. 35(1) is a penalty provision. We have considered this interpretive principle to the extent that it informs the different legislative context of professional misconduct in a regulated profession.

[137] The appellant then submits that the Appeal Panel erred in interpreting paragraph 21 to have “no limits” and an “unfettered authority” to do what it wants. That is not so.

[138] Following the words of the statute, the Appeal Panel held that the discretion under paragraph 21 permitted an order in appropriate circumstances. Further, the Appeal Panel held that the broad discretion was consistent with the prior cases cited. Those tribunal cases provided that the discretion also had to be exercised having regard for the circumstances of the case and considering relevant penalty principles and regulatory goals. These principles also focus the exercise of the discretion and they do not permit an approach based on no limits or give an unfettered discretion. The appellant’s constitutional argument is predicated on his submission that the interpretation amounts to an unfettered discretion. Therefore, that argument need not be addressed.

[139] Moving to the plain and ordinary meaning of s. 35(1), we are not persuaded that the Appeal Panel erred in its conclusion that, in this case, there is jurisdiction under paragraph 21. Bearing in mind the objects of the Act, the statutory provisions regarding grants and the role of this order to facilitate compensation, and because there were applications to the Fund in progress, the Hearing Panel order meets the statutory wording of being “appropriate” in its plain and ordinary meaning and within the larger context required for statutory interpretation. This is consistent with the intention shown in s. 51 that the Law Society recover grants and does not conflict with s. 35(1) paragraph 14, providing for an order to pay for grants made. In the particular circumstances of this case, the Appeal Panel did not err. We need not decide whether, in other circumstances, paragraph 21 would provide jurisdiction, nor do we need to rule on the Law Society’s alternate interpretation of paragraph 14.

[140] Some of the appellant’s submissions, both to the Appeal Panel and to this Court, challenge whether a grant should be made by Convocation. The appellant submits that he was not dishonest and the applications to the Fund were late. These are matters for Convocation in exercising its discretion regarding whether to make a grant. To the extent that they may be relevant to the exercise of discretion under s. 35(1) paragraph 21, the Appeal Panel did not make an error of principle or palpable and overriding fact in their treatment of these issues in their decision.

[141] We therefore dismiss this ground of appeal.

Order

[142] This appeal is dismissed with costs to the respondent fixed at the agreed upon amount of $8,000, all inclusive.

Matheson J.

Trimble J.

Nakatsuru J.

Date: May 7, 2025