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OSC sought conviction at all costs: Groia

|Written By Ravi Amarnath

Defence lawyers face a conflict in measuring their conduct against unclear standards of civility, a witness at Joe Groia’s disciplinary hearing testified last week.

The defence’s evidence will be very critical of the Ontario Securities Commission’s approach to the John Felderhof trial, said Earl Cherniak.

“I would much rather defend my client vigorously . . . and take the risk of being criticized later rather than pull my punches because I was concerned about being in these types of proceedings,” said Nicholas Richter, who worked with Groia on the John Felderhof case at the centre of the Law Society of Upper Canada disciplinary hearing.

Richter, who argued the term civility is difficult to define in the context of courtroom behaviour, was testifying at Osgoode Hall last week as the defence began presenting its evidence to the three-member panel on Groia’s behalf.

Representing Groia is Earl Cherniak, a partner with Lerners LLP. Unlike the law society, which relied exclusively on court documents to present its evidence, Groia’s counsel elected to examine witnesses last week.

“The evidence that we will call will be very critical of the [Ontario Securities Commission] and its approach in the case,” Cherniak told the panel Monday morning.

He added that the evidence presented by Groia’s counsel aims to show that Groia and his legal team had a reasonable belief that the OSC was taking an all-costs approach to securing a conviction of his client Felderhof, the former vice chairman at Bre-X Minerals Ltd.

The first witness called to testify on behalf of Groia was Peter Roy, a partner with Roy Elliott O’Connor LLP. Roy said he was representing BMO Nesbitt Burns in a litigation dispute related to the Bre-X affair at the time of Felderhof’s trial and was following the case closely.

Much of Cherniak’s examination of Roy focused on establishing the necessity for Groia’s insistence on full disclosure of various documents.

“You have to know what the company has; otherwise, you’re not building a solid foundation for attacking expert opinion,” he said.

During his examination, Roy was critical of the testimony at Felderhof’s trial of Graham Farquharson, president of Strathcona Mineral Services Ltd., who in a report identified warning signs Bre-X should have noticed when examining for gold deposits in Busang, Indonesia.

“Mr. Farquharson testified that he saw his job as assisting the [OSC] in getting a conviction,” he said. “It was clear to me that this wasn’t what an expert should do in this case.”

Roy added that Farquharson’s report benefited from the perspective of hindsight and that many mining companies were interested in the alleged deposits in Busang at one time.

“It’s safe to say that every major mining company in the world was trying to buy Bre-X,” Roy said.

Felderhof, now 71 and running a restaurant in the Philippines, suggested in his testimony Tuesday morning that the OSC turned to what he felt was a lynch-mob mentality against him as media coverage of the Bre-X affair grew.

“To me, the [OSC] was forced into a position that they needed a scapegoat,” he said.

Felderhof said that while he estimates there were close to 1 million documents to sort through in order to defend himself, the prosecution didn’t use most of them in its case.

“They solely relied on the evidence presented by Mr. Graham Farquharson . . . which to me is very nonsensical,” he said.

While acknowledging he wanted an aggressive lawyer, Felderhof attested to Groia’s character by explaining that he continued to act as his Canadian counsel even though he has been unable to pay him since October 2005. To date, Felderhof owes Groia nearly $2 million.

Richter, who worked with Groia prior to leaving Groia & Co. Professional Corp. to establish his own practice, outlined in detail the concerns the defence team had about the OSC’s objectivity from the time it received initial disclosure in August 1999.

“The thing that was most surprising to me was that we received a number of binders of documents with the covering letter indicating those were documents that the OSC intended to tender at trial,” he said.

“I had never before received disclosure where the disclosures were organized around the case the prosecutor was intending to bring [forth],” Richter added.

According to Richter, members of Groia’s defence team collected more than 235 bankers’ boxes of disclosure between December 1999 and March 2000 following their application for additional hard copy materials. From those, they were able to produce more than 90 binders used in Felderhof’s defence.

Richter was also critical of the conduct of former OSC litigators Jay Naster and Ian Smith, who argued on behalf of the regulator for the first phase of Felderhof’s trial.

He said he noted a difference in the defence’s ability to work with the OSC when lawyers Emily Cole and Frank Marrocco took over from Naster and Smith in the second phase of the trial.

“The atmosphere [between the defence and OSC] was night and day,” Richter said.

During a lengthy cross-examination of Richter, Tom Curry, counsel for the law society and a partner with Lenczner Slaght Royce Smith Griffin LLP, asked him if he agreed with the characterization of Groia’s behaviour by former Ontario Superior Court justice Archie Campbell.

Campbell, who in 2002 rejected the OSC’s request to have Justice Peter Hryn removed from the proceedings, was critical of Groia’s behaviour.

“There is a lot that happens in a courtroom that isn’t reflected in the record,” Richter responded, noting it was difficult to grasp the context of Groia’s statements from the court record alone.

Groia, who joined the OSC in the mid 1980s and was once its head of enforcement, said while testifying Thursday that he had nothing but the highest regard for the regulator and hasn’t had an issue with it since the Bre-X case concluded.

“We still have tough cases [with the OSC] . . . but since Mr. Marrocco and Ms. Cole took over [the Bre-X file], I’ve never had a cross word with anyone there,” he said.

For related content, see "Groia defends 'forceful advocacy'" and "Hearing will send a chill: Groia."

  • wilson
    All Ontario lawyers could pressure the law society to unveil all of the complaints against benchers which it has refused to investigate. Various lawyer and civil liberty groups and the media should be demanding this information but haven't to date. In any event, lawyers do need to organize to secure proper rights to practise law without undue interference.
  • Stoller
    This hearing is so ironic, especially as the society has not banned former benchers from appearing before its tribunals, notwithstanding its policy of NEVER investigating very grave conflicts of interest and other complaints against such benchers, surely far more grave than this stale-dated questionable complaint against Mr. Groia who appears to be among the best of lawyers.The complaint's lateness violates fundamental justice, a foreign concept to many at the society. I hope the society can certify Mr. Cherniak as having never drawn a single complaint while a bencher.
  • annie
    I know of a very grave, well documented valid complaint which the law society, true-to-form, refused to investigate. I hope the media will contact the society on this.
  • Ron
    "It's everyones duty to fight injustice." Mahatama Gandhi

    If Annie knows a complaint so grave ignored by LAW SOCIETY she should hold hunger strike in front of that Victorian Edifice on Osgoode Hall Campus for other Lawyers to join.

    "One good action is better than hundred good thoughts." Viveka Nanda
  • Connor
    Only 12 years after the fact. Just what is the importance of this matter to the LSUC? To buttress other old cases? It has hired outside counsel which usually signifies a conflict at the LSUC with other matters.
  • PR
    You members/lawyers are as shameless as the men and women you allowed to lead (in the wrong direction as Treasurers, Benchers & CEO's etc.) or misrule or misgovern, you are as guilty as they for having brought the profession to the impasse in which it now stands...making and breaking laws to suit their individual purposes.
    OurSAINT BARRISTER, Street Lawyer in his LawTimes comments warned about the self-styled intellectual fraternity which has sown dispute and divergence of views, disagreements and differences in the name of civility and good governance at the LSUC. The tragedy that happened have far reaching consquences to see in the years to come. All that Canada stood for has now been firmly repudiated.
    Why this case is so important to a law society which threatens idialistic lawyers like Mukhtiar Dahiya to stop them from helping poor/street people free who have little (in anything) to celetrate in their lives?

    PR, Street Activist, City Law Centre
  • Annie A. Cheng
    I wonder why the LSUC does not take a closer look at the conduct of the OSC counsel for withholding disclosure etc. and bring them before for disciplinary hearing.
    In my mind, what is good for the goose is good for the gander. Are we levelling the playing field Perhaps we should also look at what triggered Groia's alleged lack of civility. When your client's head is on the line and the other side is behaving unprofessionally, counsel has duty to defend vigorously and not be trampled all over by unreasonable and unprofessional prosecutors.
  • Ernest J. Guise
    This case turns on the characterization of the fault requirement necessary to establish the offence. It would appear that the prosecutors see this as a strict liability offence. How could such a charactirization be consistent with the duty to act fearlessly on behalf of the defendant in a criminal or quasi-criminal matter ? A court down the road will have to tackle the question of the objetive of this initiative; does it impair the right to counsel and to defend as little as possible ? How does the lawyer respond to the opinion of a judge which was communicated in his absence ? What if the factual foundation upon which the judge relies is wrong ?
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