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Appeal panel finds bias at LSUC hearing

|Written By Michael McKiernan

A Toronto lawyer has won his appeal of disciplinary findings against him after a Law Society of Upper Canada appeal panel ruled the original proceedings had “compromised the appearance of fairness” and created a “reasonable apprehension of bias.”

‘To me, it demonstrates that the law society can be robust and very fair in its self-regulating function,’ Matthew Wilton says of the appeal ruling.

Licio Cengarle will get a new disciplinary hearing after the appeal ruling that interventions by the original panel, led by chairman and law society Bencher Ross Murray, gave the appearance of “descending into the arena and assuming the role of the prosecution.”

Bencher Larry Banack, writing for the majority in the appeal, identified 16 interventions that crossed the line.

“The panel chair intervened almost from the outset of the case,” he wrote. “The nature and form of his lengthy questions during the examination-in-chief of the lawyer departed from the proper role of neutral fact-finder and appeared to be cross-examination.”

Cengarle’s lawyer, Matthew Wilton, says his client was rattled by Murray’s approach.

“He was essentially suggesting that [Cengarle’s] entire legal position defied logic,” Wilton says.

“That’s a fairly strong characterization to make about a lawyer’s evidence during their direct examination. It was obviously very off-putting to my client to be giving evidence in direct examination when essentially the chair was heaping scorn upon the position he was taking.”

At one stage, according to Wilton, Murray asked him to get Cengarle to change his position.

“I think a party has a right to put forth their defence and give evidence in support of their defence, and it would be unusual for a trier of fact to suggest that the party not put forth that defence,” Wilton says.

The panel made 56 interventions in total during examination of the lawyer and his expert witness, asking a total of 214 questions.

However, the appeal panel, ruling that most of those interventions were entirely appropriate, denied Cengarle’s assertion that the sheer volume of questions created the appearance of bias.

In 2004, the law society charged Cengarle with professional misconduct for conflict of interest while acting as an estate trustee and solicitor without adequate disclosure to the beneficiaries.

It also alleged he had breached his fiduciary duty as trustee by making nine imprudent unsecured loans from the estate.

In 2008, after the hearing panel had found him guilty, Cengarle received a two-month suspension and a lifetime prohibition from acting for both borrowers and lenders in private mortgage transactions.

The original trustee used Cengarle to make a probate application after the death of the testator in 1979. In 1988, the same person asked Cengarle to take over the trustee role with the estate valued at $250,000.

Cengarle admitted to making the loans but denied they were imprudent. They included one for $118,000 to his legal assistant, who in turn lent it to borrower clients of the firm with cash-flow problems who were receiving threats from their lender.

It was supposed to be repaid within weeks, but the clients eventually went bankrupt. The loan was eventually repaid after the law society’s investigation began.

At the original hearing, Cengarle argued he was acting only as estate trustee and not in his capacity as a lawyer. He said there’s no such thing as a “solicitor for the estate” in law and claimed he owed no other duties because of his law licence.

The appeal panel highlighted passages from the original hearing in which Murray challenged Cengarle after admitting to holding funds in his firm’s trust account.

“Well, in doing it that way, you are acting as a solicitor,” Murray said. “You are putting that money into your trust account . . . for a client, and the client is Sykes estate; isn’t that right?”

Murray later told Cengarle that “it defies logic for you to say that you weren’t acting as an estate solicitor, and that is as I see it based on the evidence so far.”

Taken together, the interventions “appear to be attempts to extract a clear admission from the lawyer that, contrary to the theory of the defence, he was indeed acting as a solicitor for ‘the estate’ and not only as an estate trustee,” Banack wrote.

In his dissenting opinion on the appeal, Bencher Bradley Wright defended Murray and the rest of the panel, saying there was no appearance of bias.

“It is my contention that the hearing panel’s interventions were the product of their genuine and understandable puzzlement at several of Mr. Cengarle’s positions and the panel’s desire to express their doubts about them and to give him and his counsel opportunities to address those doubts,” he wrote.

Wright also said that by expressing doubts with qualifiers such as “so far” and “at the moment,” Murray showed that his mind was open.

“Given that no miscarriage of justice occurred and given the lack of bias, the fairest result would be to uphold the findings of the panel and trust that Mr. Cengarle comes to realize that the penalty they imposed was at the low end of the range for the misconduct established in this matter.”

Wilton says he couldn’t find any other examples of a law society appeal panel making a finding of reasonable apprehension of bias as he prepared for the case. He says the unique dynamics among benchers hearing the case made the decision even more noteworthy.

“An appeal panel of benchers is being called upon to find against fellow benchers, so these are individuals who they interact with on a regular basis.

The panel was prepared to make this difficult decision even if it makes implied criticisms of fellow benchers. To me, it demonstrates that the law society can be robust and very fair in its self-regulating function.”

However, Wilton says the decision to order a new hearing rather than put an end to the matter was a disappointment. “In many ways, it’s a pyrrhic victory. He won but he didn’t win and he’s back to Square 1 again.

I think we have some really strong defences and I’ve always believed that. So I’m optimistic we’ll have a positive result next time.”

  • Decision

    Perhaps the original panel members should have remained silent throughout the evidentiary aspects of hearing. Then, instead of letting the Cengarle understand their concerns, the panel could have clobberred him in their reasons. In this way, no one could claim a reasonable apprehension of bias and Cengarle would have no opportunity to respond to (presumably) genuine concerns of the panel.
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