A recent Divisional Court decision could push the Law Society of Upper Canada to have a less rigid approach to disclosure when it comes to its disciplinary proceedings, lawyers say.
The potential shift comes after the court overturned a disciplinary tribunal’s finding that Ottawa real estate lawyer Luigi Savone had been involved in fraudulent transactions from 2000 to 2003, echoing the findings of the law society’s appeal division.
The Divisional Court ruled the law society erred in not disclosing certain files that could have been relevant to the proceedings against the lawyer.
Lawyers say this decision could force the law society to rethink its approach to disclosing information in disciplinary matters.
“The prosecutor — in this case the law society — doesn’t get to decide what’s relevant to the charges and doesn’t get to decide not to produce something because they don’t intend to rely on it,” says Savone’s lawyer, Brian Radnoff, a partner at Lerners LLP.
The files in question were those of lawyers who had represented the purchasers in transactions involving Savone, which the LSUC alleged were fraudulent. Savone had represented the vendor.
The law society argued the documents could not be disclosed as they were received as part of another investigation, but Radnoff says the files were relevant and could contain exculpatory evidence.
The law society’s argument rested on an interpretation of s. 49.12 of the Law Society Act, which says the LSUC cannot disclose any information that comes out of another investigation.
In its decision, the appeal division said the section should not be applied as a blanket prohibition and that there is an exception in the act that allows disclosure.
The Divisional Court agreed with the appeal division’s interpretation of the act.
“The law society’s argument misconceives the prosecutor’s obligation to disclose,” Justice Michael Dambrot wrote in the decision.
Lawyer Bill Trudell, who represents lawyers before law society tribunals, says the law society has developed a “we-they” culture that needs to change.
“The law society has said we’re not your protectors. We’re you’re regulators,” says Trudell, who was not involved in Savone’s case. “Well, I’m sorry. There has to be a dual role. You have an obligation to be fair to the licensees.”
Trudell says the decision is a wake-up call for the law society to review its disclosure procedures.
“It’s disappointing that so much litigation has to be undertaken by the law society to realize that they have a duty of fairness. It is preposterous,” he says.
“I just think the rigid approach to disclosure is something that has got to change,” he added.
In Savone’s case, the law society’s proceedings were based on allegations he had knowingly participated and assisted a client in defrauding mortgage lenders in 12 different transactions, through a real estate scheme that involved flipping houses at inflated prices.
Before his hearing, Savone brought a motion requesting the law society provide him with the files of the lawyers who represented the purchasers, but was turned down.
When he appealed the tribunal’s findings, the appeal division affirmed that disclosure was necessary to ensure a fair hearing.
Michael Binetti, a lawyer with Affleck Greene McMurtry LLP, says the decision reinforces that the law society’s tribunals have a duty to provide procedural fairness to defendants through disclosure.
“I think the message it sends to the law society is that they should err on the side of disclosing documents and information that could potentially be relevant rather than determining themselves what’s relevant based on how they frame the case,” says Binetti. Binetti has defended lawyers in law society tribunals, but was not involved in the case.
“That will be a bit of a shift because it requires them to put themselves in the place of the licensee rather than the place of the prosecutor.”
The law society also said the files were irrelevant as they were not reviewed for the investigation and were not relied upon for the proceedings.
The Divisional Court disagreed.
“The law society argues that the state of the knowledge of the lawyers for the purchasers which may be disclosed by an examination of the content of their files is irrelevant to the material issue in this proceeding,” Dambrot wrote in the decision.
“The only relevant issue, according to the law society, concerns the respondent’s knowledge. This is simply wrong. The files of the other lawyers may, for example, tend to prove or disprove whether the lender was defrauded at all. Whatever may have been in the mind of the respondent, he could not have participated in a fraud if there was, in fact, no fraud.”
Trudell says a defendant should not have to explain how certain undisclosed files are relevant.
“I like to say defending a case is like performing an operation for a doctor. You get the X-rays,” he says.
“Well the law society in this case and some others hold their hand over the X-rays… it’s ridiculous.”
Radnoff agrees.
“The Divisional Court decision confirms that the law society cannot determine disclosure based on what it wants to rely on at hearings to prove its case or based on what it considers relevant,” Radnoff says.
“It also means that the law society cannot refuse to disclose relevant documents because discipline counsel has decided not to ask for them from the investigation department.”
When reached for comment, a LSUC spokeswoman said the law society does not comment on court decisions.
Savone was awarded $15,000 in costs in addition to the $12,500 the appeal panel awarded to him.
Savone now faces a second law society tribunal hearing to determine if he is guilty of the misconduct he was originally accused of.
The potential shift comes after the court overturned a disciplinary tribunal’s finding that Ottawa real estate lawyer Luigi Savone had been involved in fraudulent transactions from 2000 to 2003, echoing the findings of the law society’s appeal division. The Divisional Court ruled the law society erred in not disclosing certain files that could have been relevant to the proceedings against the lawyer.
Lawyers say this decision could force the law society to rethink its approach to disclosing information in disciplinary matters.
“The prosecutor — in this case the law society — doesn’t get to decide what’s relevant to the charges and doesn’t get to decide not to produce something because they don’t intend to rely on it,” says Savone’s lawyer, Brian Radnoff, a partner at Lerners LLP.
The files in question were those of lawyers who had represented the purchasers in transactions involving Savone, which the LSUC alleged were fraudulent. Savone had represented the vendor.
The law society argued the documents could not be disclosed as they were received as part of another investigation, but Radnoff says the files were relevant and could contain exculpatory evidence.
The law society’s argument rested on an interpretation of s. 49.12 of the Law Society Act, which says the LSUC cannot disclose any information that comes out of another investigation.
In its decision, the appeal division said the section should not be applied as a blanket prohibition and that there is an exception in the act that allows disclosure.
The Divisional Court agreed with the appeal division’s interpretation of the act.
“The law society’s argument misconceives the prosecutor’s obligation to disclose,” Justice Michael Dambrot wrote in the decision.
Lawyer Bill Trudell, who represents lawyers before law society tribunals, says the law society has developed a “we-they” culture that needs to change.
“The law society has said we’re not your protectors. We’re you’re regulators,” says Trudell, who was not involved in Savone’s case. “Well, I’m sorry. There has to be a dual role. You have an obligation to be fair to the licensees.”
Trudell says the decision is a wake-up call for the law society to review its disclosure procedures.
“It’s disappointing that so much litigation has to be undertaken by the law society to realize that they have a duty of fairness. It is preposterous,” he says.
“I just think the rigid approach to disclosure is something that has got to change,” he added.
In Savone’s case, the law society’s proceedings were based on allegations he had knowingly participated and assisted a client in defrauding mortgage lenders in 12 different transactions, through a real estate scheme that involved flipping houses at inflated prices.
Before his hearing, Savone brought a motion requesting the law society provide him with the files of the lawyers who represented the purchasers, but was turned down.
When he appealed the tribunal’s findings, the appeal division affirmed that disclosure was necessary to ensure a fair hearing.
Michael Binetti, a lawyer with Affleck Greene McMurtry LLP, says the decision reinforces that the law society’s tribunals have a duty to provide procedural fairness to defendants through disclosure.
“I think the message it sends to the law society is that they should err on the side of disclosing documents and information that could potentially be relevant rather than determining themselves what’s relevant based on how they frame the case,” says Binetti. Binetti has defended lawyers in law society tribunals, but was not involved in the case.
“That will be a bit of a shift because it requires them to put themselves in the place of the licensee rather than the place of the prosecutor.”
The law society also said the files were irrelevant as they were not reviewed for the investigation and were not relied upon for the proceedings.
The Divisional Court disagreed.
“The law society argues that the state of the knowledge of the lawyers for the purchasers which may be disclosed by an examination of the content of their files is irrelevant to the material issue in this proceeding,” Dambrot wrote in the decision.
“The only relevant issue, according to the law society, concerns the respondent’s knowledge. This is simply wrong. The files of the other lawyers may, for example, tend to prove or disprove whether the lender was defrauded at all. Whatever may have been in the mind of the respondent, he could not have participated in a fraud if there was, in fact, no fraud.”
Trudell says a defendant should not have to explain how certain undisclosed files are relevant.
“I like to say defending a case is like performing an operation for a doctor. You get the X-rays,” he says.
“Well the law society in this case and some others hold their hand over the X-rays… it’s ridiculous.”
Radnoff agrees.
“The Divisional Court decision confirms that the law society cannot determine disclosure based on what it wants to rely on at hearings to prove its case or based on what it considers relevant,” Radnoff says.
“It also means that the law society cannot refuse to disclose relevant documents because discipline counsel has decided not to ask for them from the investigation department.”
When reached for comment, a LSUC spokeswoman said the law society does not comment on court decisions.
Savone was awarded $15,000 in costs in addition to the $12,500 the appeal panel awarded to him.
Savone now faces a second law society tribunal hearing to determine if he is guilty of the misconduct he was originally accused of.
