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Divisional Court rejects LSO appeal on disclosure

Decision is ‘quite important’
|Written By Alex Robinson
Divisional Court rejects LSO appeal on disclosure
Matthew Wilton says a recent Divisional Court decision will mean the Law Society of Ontario has to provide more disclosure in interlocutory suspension motions.

The Divisional Court has dismissed an appeal by the Law Society of Ontario challenging an order that required the regulator to provide more disclosure to a lawyer facing an interim suspension.

In Law Society of Upper Canada v. Cengarle, the LSO brought an interlocutory suspension motion against lawyer Licio Cengarle for allegations he knowingly or recklessly facilitated a fraud his assistant allegedly ran using his trust account. Before his suspension hearing took place, Cengarle brought a motion requesting the law society disclose all potentially relevant materials.

In the first decision dealing with the issue, the tribunal ordered the law society to disclose all documents that were potentially relevant to the suspension motion and had been reviewed. The Divisional Court has now dismissed a law society appeal of that decision.

Matthew Wilton, the lawyer who represented Cengarle in the proceeding, says the underlying decision will be important for lawyers who face interlocutory suspensions going forward. 

“The law society in every case will now have to make disclosure,” he says.

The law society brought its appeal as a test case despite agreeing to provide disclosure so that the hearing could proceed in the meantime. Cengarle has since been suspended.

In its factum for the appeal, the law society argued that interlocutory suspension hearings are meant to happen quickly, sometimes with as little as three days’ notice. Imposing such disclosure requirements on the law society would delay matters, compromise investigations and undermine the “law society’s very ability to protect the public,” the law society said.

Wilton argued that it would be unfair for lawyers to be “compelled to provide disclosure” to the law society against their own interests but receive no disclosure in return.

The Divisional Court found the issue was moot, as the law society had already provided disclosure, and that the tribunal should be allowed some time for its jurisprudence on the topic to evolve. The Divisional Court dismissed the LSO’s appeal, determining that it could not rule on the matter, as the law society had not appealed through its tribunal system before seeking judicial review.

Increasingly over recent years, the law society has used interlocutory suspensions to bar lawyers accused of serious misconduct from practising while investigations are ongoing. In 2017, the LSO issued 21 notices for interlocutory suspensions — a notable increase since 2012, when it only issued three of them. 

The law society has said that interlocutory suspensions are necessary to protect the public. But some lawyers say such suspensions are draconian tools that have devastating effects on lawyers’ reputations.

Without an interlocutory suspension, allegations against a lawyer would not become public until they were set to face a hearing, which is often after an investigation is complete.

Lawyers say such suspensions can be hard to bounce back from and should only be used sparingly when there is a real demonstrative risk to the public. Interlocutory suspensions take away a lawyer’s income while they face legal costs, for what can be lengthy periods of time, lawyers say.

Lawyer Bill Trudell, who was not involved in the Cengarle matter, says interlocutory suspensions are overused and can often be career ending. He says that the starting point for the law society in interlocutory suspension motions should be to provide full disclosure to the accused.

“In a criminal law matter, the rule is full disclosure; but if there are sensitive items or security issues, then they are often raised with counsel. I would think the same thing should apply at the law society,” he says. He adds that if the lawyer does not have counsel, amicus curiae should be appointed for such issues.

Wilton says interim suspension motions are very difficult for accused lawyers to win, as the legal test does not have a very high bar that the law society needs to meet.

“In Ontario, lawyers are now facing lengthy interim suspensions solely on the basis that their right to continue to practice, even prior to a hearing on the merits, would erode public confidence in the administration of justice,” Wilton wrote in his factum.

Wilton added that given the serious consequences of such suspensions, as well as the fact that it is quite easy for the law society to obtain them, lawyers should be given all “procedural protections under the law” in their defence.

Richard Watson, a lawyer who has represented practitioners in discipline hearings, says the result of the underlying tribunal decision in Cengarle is that lawyers facing an interlocutory suspension will be entitled to a higher level of disclosure than might have been the case before.

“That underlying decision is quite important and quite favorable to lawyers facing suspension, as it carefully analyzes and clarifies the disclosure to be made on an interlocutory suspension application and imposes a higher duty of disclosure on the LSO Discipline Department than they wanted,” says Watson, who was not involved with the matter.

He says the tribunal’s decision provides some useful guidelines as to what to expect in the way of disclosure in various circumstances, as well as the underlying rational for those guidelines.

Wilton says the law society has already changed its practices on disclosure in these kinds of motions since the Cengarle decision was released. He says he has heard from lawyers working suspension cases in which the law society has made more disclosure than it would have done before the decision was made.

A spokeswoman for the law society says the LSO has no intention to appeal the Divisional Court’s decision.

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