SUPERIOR COURT OF JUSTICE – ONTARIO

DATE: 20150609

RE: DioGuardi Tax Law, Philippe DioGuardi and Paul DioGuardi / Applicants

AND:

The Law Society of Upper Canada / Respondent

AND:

The Attorney General of Ontario / Respondent

BEFORE: Justice Edward P. Belobaba

COUNSEL: Melvyn Solmon and Matthew Valitutti for the Applicants

Glenn Stuart for the Law Society of Upper Canada

Sean Hanley for the Attorney General of Ontario

HEARD: March 4 and May 27, 2015

ENDORSEMENT

[1] This is a relatively short endorsement because the case law on point is clear. Absent exceptional circumstances, courts should not interfere with ongoing administrative processes until after they are completed or until the available effective remedies are exhausted.[^1]

[2] The applicants are involved in an administrative process that should be allowed to run its course. The application to this court is therefore premature and must be dismissed.

Background

[3] The applicants are a tax law firm and its two senior lawyers. Most of their work involves representing clients in their dealings with the Canada Revenue Agency. The two lawyers, father and son, are currently the subject of an investigation under the Law Society Act[^2] (“the Act”) as a result of client complaints.[^3] The applicants have produced the relevant client files (albeit under seal) to the Law Society’s investigator as required under the Act.[^4] The files obviously contain confidential information, most or all of which is protected by solicitor-client privilege. The applicants are concerned that if this confidential information is somehow made public during the course of the disciplinary proceeding and makes its way into the hands of the CRA, some of the clients could face criminal prosecution.

[4] Hence this application. The applicants say the Act is deficient, indeed unconstitutional, because it contains no requirement that the Law Society notify or warn the client-complainant of the risk that his or her privileged or confidential information may become public; no requirement that the Law Society obtain the client-complainant’s written consent and waiver of solicitor-client privilege; and no provision in either the Act or the Law Society Tribunal’s Rules of Practice that provides the client-complainants with the opportunity to protect their own solicitor-client privilege.

[5] The applicants seek an array of orders and declarations relating to the rights and obligations of the client-complainants and the Law Society regarding the protection of confidential and privileged information.[^5] The applicants ask, in particular, for orders directing that the Law Society obtain the client-complainant’s written consent and waiver of solicitor-client privilege before said information can be made public; directing that the Law Society amend its Complaint Form to provide a warning to the client-complainant that his or her confidential information may be disclosed to the public; and declaring that Rule 18 of the Law Society Tribunal’s Rules of Practice (that provides for an in camera hearing “on the motion of a party”) is of no benefit to client-complainants because they are not “parties” to the Law Society proceeding.

[6] The applicants also seek an order pursuant to s. 52 of the Constitution Act[^6] declaring six specific sections of the Act (relating to the production and protection of the client-complainant’s confidential information[^7]) and Rule 18 of the Rules of Practice to be unconstitutional and of no force or effect because they fail to provide the client-focused protections just described and are thus in breach of ss. 7 and 8 of the Charter of Rights.[^8] The application was recently amended to ask that the applicant-lawyers be granted public interest standing to pursue the constitutional arguments and declarations of invalidity on behalf of not just their own client-complainants but client-complainants generally. The Attorney General of Ontario agreed to be added as a party.

Discussion

[7] The applicants, arguing violations of the Charter of Rights, have presented an elaborate argument based on the Supreme Court of Canada’s decisions in Lavallee[^9] and Federation of Law Societies[^10] and the Quebec Court of Appeal’s decision in Chambres.[^11] In each of these cases (none of them dealing with the regulation of lawyers by a provincial law society) the section 8 “unreasonable search and seizure” argument prevailed and the impugned legislative provisions were found to be unconstitutional and were set aside.

[8] The respondents make two points: first, that the application to this court is premature, and secondly, and on the merits, that the Act provides a complete code for the investigation of complaints relating to the conduct of its licensees – a code that carefully balances the protection of solicitor-client privilege with the public interest regulation of the legal profession - and that the impugned provisions of the Act are constitutional.[^12]

[9] I am of course concerned with the merits of the constitutional arguments before me. But I am more concerned that the arguments be heard and decided in the proper forum.

The proper forum

[10] As I have already noted, the case law is clear that absent exceptional circumstances, “a court should not interfere in an administrative proceeding until it has run its course.”[^13] In my view, the applicants are raising issues and seeking remedies that, with one exception, can be considered and granted by the Law Society Tribunal should the two conduct applications proceed to a hearing. Indeed, many if not all of the remedies sought in this application have already been addressed by the Law Society Tribunal in previous cases.[^14] Some of the orders and declarations set out above in paragraph 5 can readily be granted by the Tribunal. As for orders and declarations that flow from the constitutional challenge based on ss. 7 and 8 of the Charter, if the Tribunal agrees that the Charter has been breached and that the impugned provision cannot be saved under section 1, it may disregard the provision on constitutional grounds and rule on the claim as if the impugned provision is not in force.[^15]

[11] The only remedy that cannot be granted by the Law Society Tribunal is a formal declaration of invalidity under s. 52 of the Constitution Act.[^16] However, as the Supreme Court made clear in Okwuobi,^17 the fact that the administrative tribunal cannot issue a formal declaration of invalidity “is not … a reason to bypass the exclusive jurisdiction of the Tribunal.”[^18] The expert administrative tribunal should hear the constitutional challenge and make its ruling. If the applicant loses, it can appeal or seek judicial review. And it is “at this stage of the proceedings” i.e. when the matter makes its way to the court, that a formal declaration of invalidity can be sought.[^19]

[12] The fact that the tribunal-court process may take more time than a direct application to the court is beside the point. The additional time involved by starting in the appropriate forum does not amount to “exceptional circumstances” that would justify skipping the tribunal step altogether. Otherwise, the expert administrative tribunal could be skipped in every case by simply alleging a Charter breach and the well-established proposition affirmed in C.B. Powell[^20] and Volochay[^21] would be eviscerated.

[13] The applicants also argue that during the time that this case makes its way from the Tribunal to the court there is a significant risk that other client-complainants (not involved in this proceeding) may have their confidential information made public – and that this also amounts to an “exceptional circumstance.” But the applicants have filed no evidence in support of this submission and could cite no case where a client-complainant’s solicitor-client information was ever made public during a conduct hearing contrary to the many protections in the Act.

[14] In short, there is every good reason to allow the administrative process in this case to run its course. The Law Society Tribunal should be allowed to decide at first instance whether the constitutional arguments advanced herein are well-founded and, in particular whether there is any room in the legislative design and policy of the Act for the specific client-focused protections being sought by the applicants. The Law Society Tribunal has the expertise and the experience to consider the applicants’ submissions and proposed reforms and make the required determinations at first instance. And the court (should the matter get to court) would benefit greatly from this expert tribunal’s reasons and decision.

[15] It should also be pointed out that this is not a purely altruistic application that is only concerned with the welfare of the client-complaints. Counsel for the Law Society agreed that if the application is successful and the impugned provisions are not enforced by the Law Society Tribunal or (later on appeal or judicial review) struck down by the court, the charges against the applicants could not proceed and would have to be dismissed. In other words, the applicants have a direct and personal interest in the outcome of this application. All the more reason, in my view, why it makes sense to allow Law Society’s administrative process to run its course.

[16] I now turn to the request for public interest standing.

Public interest standing

[17] The lawyer-applicants say they have satisfied the criteria set out by the Supreme Court in Borowkski[^22] and Downtown Eastside Sex Workers[^23] and ask they be granted public interest standing to pursue the constitutional invalidity argument on behalf of all clients who complain to the Law Society and not just their own clients.

[18] In my view, this is not an appropriate case for public interest standing. I say this for two reasons. One, there is no factual basis or underpinning for this broader constitutional challenge. The applicants have filed no evidence from any members of this broader group of client-complainants that the current protections provided under the Act are somehow lacking or deficient and that the issues raised herein could not make their way to court in any other way and thus require public interest litigation. Two, there is a perfectly reasonable and effective way to have these issues decided, namely by proceeding first before the Law Society Tribunal and then later, if necessary, seeking a declaration of invalidity from the court.

[19] In this way, as Stratas J.A. noted in C.B. Powell, “the reviewing court [will] have all of the administrative decision-maker’s findings” that “may be suffused with expertise, legitimate policy judgments and valuable regulatory experience.”[^24]

Disposition

[20] The application is dismissed.

[21] Given this outcome, the Attorney General’s motion to strike portions of Philippe DioGuardi’s affidavit dated April 10, 2015 is rendered moot and need not be decided.

[22] Costs are fixed in the amount of $50,000 all-inclusive to be paid forthwith by the applicants as follows: $20,000 to the Law Society and $30,000 to the Attorney General of Ontario.[^25]

[23] My thanks to counsel for the quality of the advocacy and for their additional written submissions.

Belobaba J.

Date: June 9, 2015

[^1]: C.B. Powell Ltd. v. Canada, 2010 FCA 61, at para. 32 (Fed. C.A.), cited with approval in Volochay v. College of Massage Therapists of Ontario, 2012 ONCA 541, at paras. 68‑71 (C.A.).

[^2]: Law Society Act, R.S.O. 1990, c. L.8.

[^3]: Counsel advise that 13 client-complaints have been lodged with the Law Society of Upper Canada (“LSUC”) – eight of which have resulted in two s. 34 conduct applications not yet at hearing, and five of which are still in the investigatory stage.

[^4]: Supra, note 2, ss. 49.3 and 49.8. The parties have agreed that the sealed material provided by the applicants to the Law Society may be opened and used in camera only by the Law Society investigators, on the understanding that no notice of application under s. 34 will be issued until after this court has released its decision in this matter.

[^5]: There is no dispute that the applicant-lawyers have standing to vindicate the constitutional and related rights of their own clients both as custodians of their clients’ privilege and in their personal capacity: see Law Society of Upper Canada v. Feldman, 2012 ONLSHP 168.

[^6]: Constitution Act, 1982.

[^7]: Supra, note 2, ss. 49.3, 49.8, 49.9, 49.10, 49.12(2)(a) and (b), 49.18(2)(a) and (b).

[^8]: Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982.

[^9]: Lavallee, Rackel & Heintz v. Canada (Attorney General), 2002 SCC 61.

[^10]: Canada (Attorney-General) v. Federation of Law Societies of Canada, 2015 SCC 7.

[^11]: Chambres des notaires du Quebec c. Canada (Procureur General), 2014 QCCA 552.

[^12]: See Federation decision, supra, note 10, at para. 68; also Greene v. The Law Society of British Columbia, [2005] B.C.J. No. 586.

[^13]: Volochay, supra, note 1, at para. 68. Also see Cusack v. The Law Society of Upper Canada, [2015] O.J. No. 1575 (S.C.J.) at paras. 30‑36.

[^14]: Law Society of Upper Canada v. Mundalai, 2008 ONLSAP 4; Law Society of Upper Canada v. Ranieri, 2008 ONLSHP 93; Law Society of Upper Canada v. Feldman, 2012 ONLSHP 168.

[^15]: Okwuobi v. Lester B. Pearson School Board, 2005 SCC 16 at para. 45.

[^16]: Ibid., at para. 44.

[^18]: Ibid., at para. 44.

[^19]: Ibid., at para. 45.

[^20]: C.B. Powell Ltd. v. Canada, 2010 FCA 61.

[^21]: Volochay v. College of Massage Therapists of Ontario, 2012 ONCA 541.

[^22]: Minister of Justice of Canada v. Borowski, 1981 34 (SCC).

[^23]: Canada v. Downtown Eastside Sex Workers United Against Violence Society, 2012 SCC 45.

[^24]: Supra, note 1, at para. 32.

[^25]: Before the hearing on May 27, 2015 counsel advised that if successful they would each be seeking the following costs on a partial indemnity basis, inclusive of the Attorney General’s motion to strike: the applicants $100,000; the Law Society $20,000 and the Attorney-General $35,000. Given the $100,000 amount that would have been sought by the applicants, the respondents’ cost requests of $20,000 and $35,000 are completely reasonable. However, I would reduce the Attorney General’s amount by $5000 to reflect the fact that the motion to strike did not proceed.