Ontario Superior Court Justice Douglas Gray had found Regan in contempt of court for failing to produce documents concerning a dispute involving his former client, Robert Bortolon, that another judge had ordered him to provide.
“As lawyers, we’re officers of the court, and when a court makes an order, we have to comply with them,” says Benjamin Frydenberg, the lawyer who represented Business Development Bank of Canada, the party that brought the contempt motion against Regan.
“We’re the gatekeepers of the system, and when the gatekeepers of the system don’t do their job, the system itself is threatened and I think that’s why the court had to make a serious order as it did in this case.”
In the underlying matter, Business Development Bank of Canada brought an action against Cavalon Inc., of which Bortolon is a principal, after the company defaulted on a $100,000 loan. BDC obtained a judgment in its favour in 2011.
After a fire occurred at Cavalon’s premises in 2013, an insurer valued the assets lost at approximately $98,000.
Another of Bortolon’s companies asserted it was entitled to the insurance proceeds. BDC then brought another action claiming it was entitled to the proceeds.
Regan acted as counsel for Bortolon and some of his companies from 2007 until early 2013, when a dispute arose between the two over unpaid legal fees.
In 2015, Justice William LeMay granted an order that Bortolon and his companies had waived solicitor-client privilege with respect to their relationship with Regan, that the lawyer could be examined and must produce documents related to BDC’s oppression claim.
Regan had sworn an affidavit that he had condensed the files into 14 boxes and delivered them to his former client.
Bortolon’s affidavit in the contempt motion, however, stated he received only five boxes of documents. So BDC brought a motion for contempt.
“We thought that the contempt proceeding would be the appropriate way to resolve the dispute because, with critical documents having been essentially disposed of in this fashion, the bank wouldn’t ever really have an opportunity to have a fair hearing on the merits of its application,” says Frydenberg.
After being found in contempt, Regan brought an appeal arguing that the judge had failed to apply the correct legal framework.
He contended that BDC had failed to prove beyond a reasonable doubt that he was in contempt of the judge’s order.
Bortolon also appealed a finding that he was liable in contempt.
Lawyers say it’s very rare for a lawyer to be found in contempt of court.
Frydenberg says the only other civil contempt case he is aware of involving a lawyer was Carey v. Laiken, on which the Supreme Court of Canada ruled in 2015.
In that case, which was cited in the decision, the lawyer had argued that one of the elements of civil contempt had to be an intention to interfere in the administration of justice.
The court, however, found that was not an element of the offence.
The Court of Appeal decided to cut the penalty of Regan and his former client in half, saying the judge erred with respect to the proportionality of the sentence.
Regan has since been granted a stay on the sentence while a possible appeal plays out.
Alfred Esterbauer, the lawyer who represented Regan in the matter, says Regan intends to seek leave to the Supreme Court.
“The dust may not have settled,” he says.
A Law Society of Upper Canada tribunal has issued an interlocutory suspension against Regan, which shuts down his ability to practise on an interim basis.
In an interview after the LSUC tribunal decision, but before the Court of Appeal heard the case, Esterbauer said it would have been more fair from the lawyer’s perspective to have at least allowed a final determination on the contempt issue before making the interim suspension order.
“It seems a little bit precipitous in a case like this where there is still a live issue about what the facts were and the findings are to levy an interim suspension,” he said.
Doug LaFramboise, the lawyer who represented Bortolon in the matter, declined to comment other than to say his client also intends to seek leave to appeal the decision to the Supreme Court.
Bortolon was issued the same penalty, but the court also stayed his sentence during the leave application and potential appeal. LT