CITATION: Cusack v. The Law Society of Upper Canada, 2015 ONSC 2045
COURT FILE NO.: CV-14-510396
DATE: 20150330
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
PATRICK LEO WAYNE CUSACK
Applicant
– and –
THE LAW SOCIETY OF UPPER CANADA
Respondent
Patrick L.W. Cusack, self-represented
Sharon Greene for the Respondent
HEARD: March 23, 2015
PERELL, J.
REASONS FOR DECISION
[1] The Applicant Patrick Leo Wayne Cusack, a self-represented lawyer, against whom discipline proceedings have been commenced, professes that he is not seeking judicial review of the actions of an administrative tribunal but rather is seeking an interpretation of s. 49.3 of the Law Society Act, R.S.O. 1990, c. L.8, which states:
Investigations
Conduct
49.3 (1) The Society may conduct an investigation into a licensee’s conduct if the Society receives information suggesting that the licensee may have engaged in professional misconduct or conduct unbecoming a licensee.
Powers
(2) If an employee of the Society holding an office prescribed by the by-laws for the purpose of this section has a reasonable suspicion that a licensee being investigated under subsection (1) may have engaged in professional misconduct or conduct unbecoming a licensee, the person conducting the investigation may,
(a) enter the business premises of the licensee between the hours of 9 a.m. and 5 p.m. from Monday to Friday or at such other time as may be agreed to by the licensee;
(b) require the production of and examine any documents that relate to the matters under investigation, including client files; and
(c) require the licensee and people who work with the licensee to provide information that relates to the matters under investigation.
Capacity
(3) The Society may conduct an investigation into a licensee’s capacity if the Society receives information suggesting that the licensee may be, or may have been, incapacitated.
Powers
(4) If an employee of the Society holding an office prescribed by the by-laws for the purpose of this section is satisfied that there are reasonable grounds for believing that a licensee being investigated under subsection (3) may be, or may have been, incapacitated, the person conducting the investigation may,
(a) enter the business premises of the licensee between the hours of 9 a.m. and 5 p.m. from Monday to Friday or at such other time as may be agreed to by the licensee;
(b) require the production of and examine any documents that relate to the matters under investigation, including client files; and
(c) require the licensee and people who work with the licensee to provide information that relates to the matters under investigation
[2] Section 23 of the Law Society’s By-Law 11 provides that the exercise of powers and performance of duties under subsections 49.3(2) and (4) of the Law Society Act may be undertaken by the office of Executive Director, Professional Regulation, and the office of Senior Counsel, Professional Regulation.
[3] Section 49.3 of the Act is part of a comprehensive scheme under the Law Society Act, Law Society Regulation 167/07, and the Law Society Tribunals Rules of Practice and Procedure for the investigation and hearing of discipline matters. The scheme provides for preliminary jurisdictional motions to the Tribunal, appeals to the Law Society Tribunal – Appeal Division and either appeal or judicial review by the Divisional Court.
[4] Mr. Cusack, who was called to the bar in 1985 and who up until recently has had an unblemished discipline record with the Law Society, is the subject of two discipline proceedings about the matter for which he seeks an interpretation; i.e. his obligations under s. 49.3 of the Law Society Act (which obligation he does not deny) to produce documents that relate to the matter of an investigation.
[5] Mr. Cusack says, however, that the Law Society brought its discipline proceedings precisely to stymie his application under Rule 14 of the Rules of Civil Procedure for an interpretation of s. 49.3 of the Law Society Act.
[6] For its part, the Law Society submits that it did no such thing, but, rather, it was Mr. Cusack who has brought a premature application for judicial review of an investigation and an administrative proceeding. The Society submits that Mr. Cusack cannot disguise his application so as to fit under Rule 14 because it is not an interpretative matter about rights under an Act and, moreover, the material facts are in dispute. It submits that Mr. Cusack will have an opportunity to challenge the Law Society’s conduct pursuant to s. 49.3 of the Act in due course as part of the discipline proceedings. Then, if Mr. Cusack is dissatisfied with the outcome, he can properly seek judicial review. By way of preliminary motion, it seeks to quash Mr. Cusack’s application.
[7] As will appear from the factual background that I will briefly discuss below, Mr. Cusack has begun to push back against the Law Society’s investigative practices. He submits that he has been the victim of a rogue investigator and that the Law Society has developed investigative practices beyond its legislated authority.
[8] In the opening of his argument, Mr. Cusack said that he was bringing this application for an interpretation to determine the parameters of the Law Society’s investigative powers not only on his own behalf (so that he could make a decision about the Law Society’s persistent and accelerating demands for documents) but also on behalf of fellow licensees subjected to the Law Society’s investigative excesses.
[9] In short, Mr. Cusack has had enough of the Law Society’s alleged overreaching investigations.
[10] The background to Mr. Cusack’s application and to the Law Society’s motion to quash his application begins in December 2011. At that time, Mr. Cusack, who is a sole practitioner, ran the real estate side of his practice out of an office at 177 Sheppard Avenue West, Toronto. The office was leased by Ms. Jamile Sabbagh Novin, (referred to as Ms. Sabbagh) who was its office manager. Mr. Cusack used two other Toronto offices for his litigation practice.
[11] In December 2011, Mr. Cusack provided independent legal advice to John and Laura Campbell, who were mortgaging their matrimonial home in order to finance an investment. Mr. Campbell was investing funds, unfortunately, with a fraudster. The investment failed, and the Campbells defaulted on their mortgage. They sued Mr. Cusack amongst others. Mr. Cusack defended and, for reasons not explained to me, joined Ms. Sabbagh as a party to a counterclaim. In May 2013, with the litigation still before the court, the Campbells’ lawyer filed a complaint against Mr. Cusack with the Law Society with respect to the delivery of the Campbells’ file to him.
[12] The Law Society initiated an investigation as to whether Mr. Cusack had participated in a fraudulent mortgage scheme and whether he had acted against his client’s instructions.
[13] Pamela Pereira was the investigator for the Law Society, and she asked Mr. Cusack to produce, amongst other things, his client trust ledgers from January 2011 and also data about his real estate transactions. Mr. Cusack objected, but Ms. Pereira said that when an allegation is made of a fraudulent transaction, it was standard procedure to conduct what was essentially an audit. Mr. Cusack provided the information requested.
[14] In July 2012, Mr. Cusack closed his real estate practice and parted company with Ms. Sabbagh, and later that year, in December, Ms. Sabbagh filed a complaint about him to the Law Society. Ms. Sabbagh was demanding that he pay her $10,000. The Law Society decided that there was no regulatory issue involved, and it did not prosecute her complaint.
[15] However, apparently because of Ms. Sabbagh’s unprosecuted complaint, Ms. Pereira was authorized to investigate whether Mr. Cusack: (a) had an improper relationship with a non-licensee; (b) failed to assist in the prevention of the unauthorized practice of law; (c) improperly delegated tasks to a non-licensee; and (d) failed to assume complete professional responsibility for his law practice.
[16] In pursuance of the investigation, Ms. Pereira required Mr. Cusack to produce among other things, all the client files on which Ms. Sabbagh had worked. Mr. Cusack provided the information requested.
[17] Several years then passed until January 2014, when Mr. Cusack was advised that the Law Society had closed the Campbells complaint file because of the ongoing civil litigation with the Campbells.
[18] But the investigations still continued, and in June, 2014, pursuant to s. 49.3 of the Law Society Act, Ms. Pereira demanded that Mr. Cusack produce client trust ledgers. She asked him to produce 37 listed files (plus one duplicate).
[19] Mr. Cusack asked why the files were being sought because along with 36 real estate files, there was an estate litigation file, in which Mr. Cusack had acted as counsel for Joseph Di Iorio, the lawyer who was estate trustee. None of the Campbells, Ms. Sabbagh, or the real estate files had anything to do with that estate file. Ms. Pereira provided no explanation for the inclusion of the file, but she threatened to institute discipline proceedings if Mr. Cusack did not produce all the files she had demanded.
[20] On August 15th, 2014, Mr. Cusack brought an application, which was amended on September 15th to seek an interpretation of the Act. In its initial iteration, the application closely resembled judicial review. Mr. Cusack initially sought a declaration that the Law Society had exceeded its jurisdiction under s. 49.3 of the Law Society Act and he sought an order staying the Law Society’s investigations.
[21] On October 1st, 2014 Ms. Pereira filed a new complaint alleging that Mr. Cusack had misappropriated or mishandled trust funds related to the estate file. This allegation was based on two entries in Mr. Cusack’s trust ledger, which he had provided to the Law Society in 2012 and which had been the subject of a Law Society audit back in 2010. The entries concerned a payment from the estate trustee into the trust account but made payable to Mr. Cusack’s wife.
[22] Mr. Cusack said that the payment was credited to his account for his services in the estate litigation, which had been resolved by a successful trial. The Law Society’s auditor in 2010 had taken no issue with this payment.
[23] The investigator appointed for this third investigation of Mr. Cusack is Anita Witkowski. She demanded the production of the estate file pursuant to s. 49.3 of the Act. Mr. Cusack refused to provide any more files without an explanation as to why Ms. Pereira made the complaint that launched the investigation into the estate matter.
[24] After the proceedings now before the court were launched, the Law Society commenced two discipline proceedings for Mr. Cusack’s failure to provide the information requested. On December 4, 2014, the Law Society’s Proceeding Authorization Committee authorized the Law Society to apply to the Law Society Tribunal for a determination by its Hearing Division of whether Mr. Cusack had engaged in professional misconduct by failing to cooperate with the Law Society’s investigation. A second proceeding was authorized recently. Hearings are scheduled for April 2, 2015.
[25] As noted above, Mr. Cusack professes that he is not bringing judicial review proceedings. He submits that the demands made by the Law Society exceed its authority under s. 49.3 of the Law Society Act and that this is a matter of interpreting the Act for himself and for others.
[26] Having cross-examined the Law Society’s affiants for this application, Mr. Cusack submits that the investigators of the Law Society have exceeded their power to require the production of documents under s. 49.3(2) (b) of the Law Society Act, which authorizes the employee to have documents produced if the employee has “a reasonable suspicion that a licensee being investigated … may have engaged in professional misconduct or conduct unbecoming a licensee.”
[27] More precisely, to quote from his factum, Mr. Cusack asks the following questions, which he says are matters of interpretation of the Act; namely:
(a) whether, and if so under what circumstances, sub-section 49.3 (1) of the Act authorizes LSUC to investigate matters that are not the subject of either a specific complaint or the information on which LSUC purports to act in conducting an investigation;
(a) when LSUC purports to investigate a specific complaint against a licensee pursuant to sub-section 49.3 (2) of the Act, whether the sub-section authorizes LSUC to go on a fishing expedition to determine whether documents and client files that a licensee is required to produce may disclose some other matter, unrelated to the complaint or the matter under investigation, that might form a basis for discipline proceedings against the licensee.
(b) when the Law Society purports to investigate a specific complaint against a licensee pursuant to subsection 49.3 (2) of the Act, whether the subsection authorizes the Law Society to investigate other matters and require the production of documents and client files related to those other matters, where the investigation of such other matters has not been disclosed to the licensee.
(c)when the Law Society conducts an investigation pursuant to subsection 49.3 (1) of the Act:
(i) whether the employee of the Society holding an office prescribed by the by-laws for the purpose of section 49.3 of the Act is required to consider the licensee’s response to the matters under investigation before forming what is purported to be a reasonable suspicion that the licensee may have engaged in professional misconduct or conduct unbecoming a licensee;
(ii) whether the authority granted by clause 49.3 (2) (b) of the Act to require production of documents, including client files, extends to and includes production of documents and client files:
(A) that are prima facie not related to the matters under investigation; or,
(B) that are not known to be related to the matters under investigation; or,
(C) where it is unknown whether those documents and files are related to the matters under investigation.
(iii) whether the authority granted by subsection 49.3 (2) of the Act entitles the Law Society to conduct what amounts to an audit of all or part of a licensee’s practice, and if so:
(A) the difference between an audit and the investigation authorized by subsection 49.3 (2) of the Act;
(B) under what circumstances the Law Society is authorized by that subsection to conduct what amounts to an audit;
(C) what limitations, if any, apply to the authority to conduct such an audit pursuant to that subsection.
[28] As noted several times above, the Law Society submits that the court should dismiss Mr. Cusack’s application on jurisdictional grounds. I agree with its argument.
[29] Mr. Cusack’s application is brought pursuant to rules 14.05(3)(d) and (h) of the Rules of Civil Procedure, which state:
14.05(3) A proceeding may be brought by application where these rules authorize the commencement of a proceeding by application or where the relief claimed is, …
(d) the determination of rights that depend on the interpretation of a deed, will, contract or other instrument, or on the interpretation of a statute, order in council, regulation or municipal by-law or resolution; …
(h) in respect of any matter where it is unlikely that there will be any material facts in dispute.
[30] I agree with the Law Society’s argument that notwithstanding Mr. Cusack’s disavowal of having brought a judicial review application that is precisely what he is attempting to do. His factum is replete with administrative law references about the proper exercise of delegated statutory authority and the proper exercise of investigations and prosecutions by an administrative agency and tribunal.
[31] I also agree with the Law Society’s submission that the material facts are in dispute and Rule 14 is not an appropriate procedure to resolve the factual disputes.
[32] Mr. Cusack is entitled to challenge that the Law Society is acting outside its jurisdiction, but in the first instance, he should raise his challenge with the Law Society Tribunal.
[33] Save in extraordinary circumstances, courts should avoid regulating the interlocutory orders or the proceedings of an administrative tribunal prematurely, and courts should avoid fragmenting the proceedings of an administrative tribunal. See: Carter v. Phillips (1988), 1988 4533 (ON CA), 66 O.R. (2d) 293 at pg. 295; Coady v. Law Society of Upper Canada, [2004] O.J. No. 4576 (Div. Ct.); Coady v. Law Society of Upper Canada, [2008] O.J. No. 2862 (Div. Ct.); Talarico v. The Law Society of Upper Canada, 2012 ONSC 2493 (Div. Ct.); Drennan v. K2 Wind Ontario Inc., 2013 ONSC 2831.
[34] In the absence of extraordinary circumstances, courts ought not to entertain applications for judicial review of the proceedings of an administrative tribunal in the absence of a final result and a full record from the tribunal: Ontario College of Art v. Ontario (Human Rights Commission), 1993 3430 (ON SCDC), [1993] O.J. No. 61 (Div. Ct.); Gent (Canada) Inc. v. Ontario (Workplace Safety and Insurance Board), [2000] O.J. No. 2297 (Div. Ct.); Mundulai v. Law Society of Upper Canada, 2011 ONSC 3733; Talarico v. The Law Society of Upper Canada, supra at paras. 19-20.
[35] Generally speaking, a court should allow an administrative proceeding including the scheme for investigations, hearings, and appeals run its course before entertaining an application for judicial review: Landry v. Law Society of Upper Canada (2011), 2011 99902 (ON SCDC), 106 O.R. (3d) 728 (Div. Ct.).
[36] In C.B. Powell Ltd. v. Canada (Border Services Agency), 2010 FCA 61, [2011] 2 F.C.R. 332 (C.A.), leave to appeal to S.C.C. refused [2011] S.C.C.A. No. 267, Justice Stratas stated at paragraphs 30 and 31:
The normal rule is that parties can proceed to the court system only after all adequate remedial recourses in the administrative process have been exhausted. ….
Administrative law judgments and textbooks describe this rule in many ways: the doctrine of exhaustion, the doctrine of adequate alternative remedies, the doctrine against fragmentation or bifurcation of administrative proceedings, the rule against interlocutory judicial reviews and the objection against premature judicial reviews. All of these express the same concept: absent exceptional circumstances, parties cannot proceed to the court system until the administrative process has run its course. This means that, absent exceptional circumstances, those who are dissatisfied with some matter arising in the ongoing administrative process must pursue all effective remedies that are available within that process; only when the administrative process has finished or when the administrative process affords no effective remedy can they proceed to court. Put another way, absent exceptional circumstances, courts should not interfere with ongoing administrative processes until after they are completed, or until the available, effective remedies are exhausted.
[37] Mr. Cusack relied on Bell Canada v. Ontario (Minister of Finance) (2005), 2005 38892 (ON SC), 79 O.R. (3d) 143 (S.C.J.), but the case is distinguishable. In that case, the application was to interpret a taxing statute. Justice Colin Campbell doubted that there were any material facts in dispute, and he concluded that the relief requested would not go beyond the determination of the interpretation of the statute. In my opinion, Mr. Cusack’s case is more about the conduct of the Society under its enabling statute than it is about interpreting that statute. He is prematurely seeking judicial review of the work of an administrative tribunal.
[38] Mr. Cusack’s circumstances bare a resemblance to those of Rita Anne Hartmann, who, like Mr. Cusack, questioned the authority of the Law Society’s investigator to require a response from her under s. 49.3 of the Act. Unlike Mr. Cusack, however, Ms. Hartmann brought a preliminary motion before the Law Society Tribunal to dismiss the Law Society’s proceedings. The Law Society Tribunal held that the investigation was lawful, but at the discipline hearing, the Tribunal ruled that Ms. Hartmann was not required to answer certain questions on the basis that the questions were not related to matters under investigation. In the result, the application against Ms. Hartmann was dismissed. See Law Society of Upper Canada v. Rita Anne Hartmann, 2012 ONLSHP 177 and 2013 ONLSHP 7.
[39] For the above reasons, I dismiss Mr. Cusack’s application without ruling on its merits. His application is premature. I grant the Law Society’s motion. If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with the Law Society’s submissions within 20 days of the release of these Reasons for Decision followed by Mr. Cusack’s submissions within a further 20 days.
Perell, J.
Released: March 30, 2015
CITATION: Cusack v. The Law Society of Upper Canada, 2015 ONSC 2045
COURT FILE NO.: CV-14-510396
DATE: 20150330
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
PATRICK LEO WAYNE CUSACK
Applicant
– and –
THE LAW SOCIETY OF UPPER CANADA
Respondent
REASONS FOR DECISION
PERELL J.
Released: March 30, 2015