A Superior Court master had no jurisdiction to make a finding that a Toronto lawyer was guilty of professional misconduct, according to a judge who granted the embattled counsel leave to appeal an endorsement accusing him of sharp practice.
The comments came in Superior Court Justice Edward Morgan’s assessment of Master Ronald Dash’s findings against lawyer Murray Teitel in Haider Humza Inc. v. Mohammed Rafiq.
“In my view, Master Dash’s venture into an area that is not in the master’s jurisdiction needs to be revisited by an appellate court given its centrality to his assessment of costs against Mr. Teitel,” wrote Morgan on May 30.
In an earlier endorsement dated Oct. 30, 2012, Dash found Teitel had engaged in sharp practice when he failed to notify the opposing counsel about a payment arrangement he made following a previous cost order.
In Haider Humza, Dash had made a cost order payable to both Rafiq and his lawyer, Aswani Datt. But Teitel, who didn’t read the master’s decision entirely because he was “so upset” by what it contained, arranged to have the money payable only to Rafiq’s creditor, the Ministry of Revenue.
In his endorsement, the master said Teitel was “lulling Mr. Datt into a false sense of security.” His actions amount to sharp practice, the master found as he ordered Teitel to pay $3,000.
But in his decision last month, Morgan said the master had overstepped his jurisdiction in making the finding in relation to the Rules of Professional Conduct. The authority to make such rulings lies exclusively with the Law Society of Upper Canada, Morgan said.
“It is one thing to use a phrase such as ‘sharp practice’ in the legitimate way it was used by Wilson J. in Garten — i.e. as shorthand for an aggressive tactic that is disapproved by the courts,” wrote Morgan.
“It is another thing for a master, sitting in motions court and writing an endorsement on a question of costs, to cite a specific provision of the Rules of Professional Conduct, to analyze a solicitor’s conduct in reference to the terms of that rule, and to make a specific finding that the solicitor has breached the rule.”
Davis LLP partner Gavin MacKenzie, author of Lawyers and Ethics: Professional Responsibility and Discipline, calls Morgan’s ruling “a welcome decision.”
“I think the importance of it is that it reinforces the exclusive jurisdiction of the law society to make findings of breaches of the Rules of Professional Conduct,” he says.
“I think that’s important as far as the self-governance of the profession is concerned and I think it’s also partly a matter of fairness.”
In his decision, Morgan noted the court offered Teitel neither the time nor the defence he would have put into the matter had the complaint been before the law society.
“In the context of an argument over costs, Mr. Rafiq and Mr. Datt did not prove their case against Mr. Teitel with viva voce evidence and witnesses subject to cross-examination the way that discipline counsel would be required to do at a law society hearing,” wrote Morgan.
“Certainly, Mr. Teitel did not muster the kind of defence that would have been available to him at a law society discipline hearing. Indeed, the fact that a relatively small amount of money was at stake in the costs award adds to the sense that it was not defended by Mr. Teitel in the way that a charge of professional misconduct by the law society doubtless would be defended.”
Morgan also said Dash’s conclusion about sharp practice shouldn’t arise in any subsequent law society proceedings in a way that might prejudice Teitel, something MacKenzie, a former law society treasurer, was happy to see.
“I agree with him entirely about that. There have been cases in which law society hearing panels relied on findings made by judges in parallel pleadings as either conclusive or prima facie proof and that makes [Morgan’s comment] particularly important.”
Law society hearing panels should rely on such findings “only when the findings are justified and Justice Morgan found here they weren’t,” MacKenzie adds.
For Teitel, who declined to comment for this story, the trouble with the master’s decision was more about errors and inconsistency than jurisdiction. He argued Dash had at one point accepted his submission when he said he was genuinely unaware that the cost order was for both Rafiq and Datt but then went on to make a decision contrary to that acknowledgment.
“In argument before me, Mr. Teitel put the point rather philosophically,” wrote Morgan.
“As he explained it, the master ‘cannot say that he [i.e. Mr. Teitel] was unaware of the mistake and that he took advantage of the mistake.
This violates Aristotle’s law of the mistaken middle.’ It is a narrative that cannot hold together as a logical whole.”
According to Morgan’s decision, Teitel had stopped reading Dash’s April 23, 2012, endorsement, which was “very critical” of him, midway through it. He read only the conclusion that didn’t say the costs were payable to both Datt and Rafiq.
When Teitel explained this to Dash, the master said, “I can totally accept that,” according to court transcripts. He reiterated the same understanding when he told Teitel on the same day, “I thoroughly believe that you had absolutely no knowledge that Mr. Datt was seeking costs for himself.”
Yet according to Datt, the fact that Teitel didn’t read the documents fully and therefore didn’t know who the costs were payable to wasn’t the only problem. He points to a paragraph in Dash’s decision where the master takes issue with Teitel’s handling of the payment arrangement.
Datt says he was under the impression his client would receive the payment instead of his creditors.
“It’s the orchestrating this whole elaborate scheme of paying this garnishment . . . and not only that, telling me in writing that he’s going to pay it,” says Datt.
“If you read the decision, he wrote to the master twice telling him the cost will be paid. Once the garnishment is issued, my client has no recourse. He can’t negotiate with the ministry; he can’t bring a motion to seek direction.
Once it’s issued, the payee has to pay the garnishment,” adds Datt, who notes his client will appeal Morgan’s decision.