Make it easier to award costs against LSUC: lawyer

An Ottawa lawyer who acts for fellow licensees facing disciplinary proceedings says the bar for awarding costs against the Law Society of Upper Canada should come down in order to force the regulator to think harder about which cases it prosecutes.

Currently, claims for costs against the law society from vindicated lawyers can only succeed if they show the proceedings were “unwarranted” from the outset or that they became unwarranted at some point during the prosecution, but defence lawyer Christopher Moore says that high standard is unfair on lawyers who successfully fight off charges.

“Just having a proceeding commenced against you ultimately becomes the punishment. From a financial perspective, it’s devastating, whether you win or lose,” he says. “I think the law society should have a little more exposure on these costs. That word ‘unwarranted’ is a tough one to get around. I’m not saying we should open the door to a civil litigation-style loser-pays regime, but I think the wording could be changed to give hearing panels more room to award costs in certain circumstances.”

Moore says the realistic prospect of a costs award would prompt the law society to enhance its investigation and vetting of cases, particularly weaker ones, at the proceedings authorization committee, a panel of benchers that decides which cases should go to a public hearing.

“The PAC doesn’t consider costs because it’s not really an issue. There’s no real downside risk for the law society in proceeding, other than absorbing its own costs if they lose,” Moore says. “How many times do you see criminal prosecutors not going forward with a case because they conclude there is no reasonable prospect of a conviction. But the law society doesn’t seem to do that. They seem to proceed on everything, regardless of how meritorious, and let the chips fall where they may.”

However, Sean Lawler, a Toronto lawyer whose practice includes professional disciplinary matters, says the law society’s public interest mandate means costs should only be awarded against the regulator in extreme cases.

“Law society prosecutions aren’t like civil cases. They have to protect the public, and sometimes that will mean taking risks with prosecutions. Carefully considered ones, but risks nonetheless,” says Lawler, a partner at Shibley Righton LLP. “You don’t want the prosecution worrying about costs in the event they lose the case.”

Beth DeMerchant and Darren Sukonick, the Torys LLP lawyers cleared of conflict of interest misconduct allegations surrounding their roles in deals involving Conrad Black’s company Hollinger, achieved the largest and highest-profile award for costs back in 2014. A panel concluded the law society should have discontinued its prosecution and awarded the pair $500,000 between them, a total that paled in comparison with the $4 million they actually spent on their defence.

The LSUC’s Rules of Practice and Procedure also allow lawyers to recoup some costs wasted as a result of undue delay or negligence caused by the law society during proceedings. This type of procedural costs award is also rare, according to Moore, who has had some recent success in the area. He and co-counsel Brian Radnoff convinced a law society appeal panel majority to award their client Luigi Savone $12,500 in costs against the law society after it stuck to a restrictive view of its disclosure obligations in the face of case law that conflicted with its position.

The appeal panel had earlier granted Ottawa real estate lawyer Savone a new hearing on allegations he was involved in fraudulent deals between 2000 and 2003 as a result of the inadequate disclosure. The society’s position on the relevance of the documents “was not tenable” and caused “costs to be incurred without reasonable cause,” the panel concluded on May 27.

Savone also claimed the entire costs of his original hearing, but the panel reserved that decision until the end of his new hearing. Moore says his client’s case provides the “perfect example” as to why costs against the law society should be easier to achieve.

“If he succeeds in clearing his name, it will be a Pyrrhic victory. It has been financially devastating and his career has been irretrievably damaged by the publicity surrounding the case,” Moore says.

Disclosure issues also plagued the case of Richard Watson, a Toronto lawyer who was last month denied the costs of his hearing despite seeing the law society withdraw its own case against him 56 days into a public hearing.

A law society notice of application issued in 2009 accused Watson, among other things, of fabricating corporate documents and misappropriating funds received on behalf of a company set up to provide a series of concerts in China to coincide with the 2008 Beijing Olympic Games. However, Watson, who declined an opportunity to comment, claimed he never acted as a lawyer in relation to any of the events, and he insisted he was in fact authorized to act as a business partner of the company’s principal, Sylvia Sweeney, the complainant in the case.

After Sweeney’s 27-day cross-examination by Watson’s counsel, the law society moved to withdraw its application. According to the hearing panel decision, Watson accepted the case against him was not launched maliciously, but he argued that a more thorough and balanced investigation would have turned up the inconsistencies in Sweeney’s story at the preliminary stages, eliminating the need for a hearing.

LSUC spokewoman Susan Tonkin reiterated the position taken by the society that the proceedings against Watson were warranted and that issues of credibility should be left to hearing panels, not investigators, to decide. Applying hindsight to the issue of whether proceedings are unwarranted is not appropriate, the society said  in an argument endorsed by the panel.

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