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Representation - Compensation Fund. Barnwell v. Law Society of Ontario
In Barnwell v. Law Society of Ontario (Div Ct, 2025) the Divisional Court dismissed an LSO JR, here against Appeal and Hearing Panel decisions of the Law Society Tribunal that "found that the appellant engaged in professional misconduct and concluded that nothing less than revocation or permission to resign would prevent the appellant from committing similar misconduct, deciding on the latter".
Here the court considers payments from the 'Compensation Fund' to complainants [under LSA s.51], thus illustrating aspects of the Fund's operation:Compensation Fund
[124] The appellant challenges the Appeal Panel’s decision to uphold the Hearing Panel’s order that the appellant pay up to $100,000 for payments out of the Compensation Fund. Two of the complainants in this matter had requested compensation from the Fund, up to that amount. It is Convocation, not the Law Society, which grants compensation in its absolute discretion, as set out in s. 51(5) of the Law Society Act.
[125] The appellant submits that there was no jurisdiction to make the order because the requests for compensation from the Fund were still active – Convocation had not yet made a decision to make a grant from the Fund. The appellant further submits that the Appeal Division’s interpretation is unconstitutional under unwritten constitutional principles acknowledged in the Reference re Remuneration of Judges of the Provincial Court (P.E.I.), 1997 CanLII 317 (SCC), [1997] 3 S.C.R. 3. The appellant raised the constitutional issue for the first time in this Court, on the basis that it arises from the Appeal Panel’s reasons for decision. The Hearing Panel did not give reasons regarding jurisdiction to make this order.
[126] The Appeal Panel considered the issue of the Hearing Panel’s jurisdiction to make the order and interpreted s. 35(1) of the Law Society Act, specifically paragraphs 14 and 21, which provide as follows:35 (1) Subject to the rules of practice and procedure, if an application is made under section 34 and the Hearing Division determines that the licensee has contravened section 33, the Division shall make one or more of the following orders: …
14. An order requiring the licensee to pay to the Society, for the Compensation Fund, such amount as the Hearing Division may fix that does not exceed the total amount of grants made from the Fund as a result of dishonesty on the part of the licensee.
21. Any other order that the Hearing Division considers appropriate. [127] The appellant submits that the Appeal Panel erred in not interpreting paragraph 21 as constrained by paragraph 14.
[128] The Appeal Panel fairly acknowledged that they would have greater difficulty finding jurisdiction under s. 35(1) paragraph 14 because it is worded in the past tense. That paragraph contemplates an order requiring a licensee to pay to the Law Society not more than the total amount of grants made from the Fund. The Appeal Panel referenced another hearing panel decision that held that there was no authority in s. 35(1) paragraph 14 to order payment prior to the amount having been fixed and paid”: Law Society of Upper Canada v. Sarko Mohammed Mortala Muslim, 2006 ONLSHP 54.
[129] The Appeal Panel did not make a definitive interpretation of paragraph 14, instead proceeding to find jurisdiction under paragraph 21, discussed below. The Law Society submits that paragraph 14, properly interpreted, does authorize the Hearing Panel’s order. It submits that the words “grants made from the Fund” should be interpreted to include grants that may or will be made, particularly where there is evidence of a pending application for compensation from the Fund. We return to this submission below, after considering what the Appeal Panel did do.
[130] The Appeal Panel went on to consider paragraph 21, which provides jurisdiction to make any other order that the Hearing Division considers appropriate. The Appeal Panel addressed the interpretive issue of whether paragraph 21 is limited by the more specific paragraphs in s. 35(1) or is a broad discretion that is not limited by the other paragraphs. The Appeal Panel followed Tribunal decisions, concluding that paragraph 21 is a broad discretion to fashion a remedy that is appropriate in the circumstances, taking into account relevant penalty principles and regulatory goals, and is not constrained by paragraph 14, citing Law Society of Ontario v. Diamond, 2024 ONLSTA 8, citing Law Society of Ontario v. Hans, 2021 ONLSTH 40.
[131] The appellant submits that the above interpretation is an error of law.
[132] The principles of statutory interpretation are well-established. The words of the Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of the Legislature: Rizzo & Rizzo Shoes Ltd. (Re), 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27.
[133] In interpreting s. 35(1) we have regard for the objects of the Law Society Act. The Act provides for the Law Society’s broad public interest mandate and broad regulatory powers to accomplish that mandate. The appellant accepts that the statutory powers of a professional regulator, including the Law Society, must be interpreted sufficiently broadly to allow for effective regulation in order to enforce professional standards and to provide for the good governance of the profession, citing Green v. Law Society of Manitoba, 2017 SCC 20, [2017] 1 S.C.R. 360, at paras. 26, 28-30.
[134] In addition to providing for regulation of the profession through discipline, the Act provides the regime under which grants are made from the Compensation Fund and grants are reimbursed. As set out in s. 51(5), Convocation may, in its discretion, make grants in order to relieve or mitigate loss sustained by a person due to dishonesty, among other grounds. Under s. 51(7), the Law Society is subrogated to all rights and remedies of the recipient to the extent of the amount of the grant. The Act expressly contemplates that the amount of a grant may be recovered from the licensee.
[135] Moving to s. 35(1), the appellant submits that while there is some flexibility, statutory provisions that impose penalties must be interpreted narrowly, and any ambiguity must be resolved in favour of the licensee. The appellant relies on R. v. McIntosh, 1995 CanLII 124 (SCC), [1995] 1 S.C.R. 686, interpreting the Criminal Code self-defence provision in a murder case. The majority cited the general principles for interpreting penal provisions that are ambiguous and equivocal. They found that the Code section was clear. However, they noted, at paras. 27-29, that if it had been ambiguous, it should be interpreted in favour of the accused since the liberty of the subject was at stake.
[136] The compensation order does not implicate the liberty of the appellant. However, s. 35(1) is a penalty provision. We have considered this interpretive principle to the extent that it informs the different legislative context of professional misconduct in a regulated profession.
[137] The appellant then submits that the Appeal Panel erred in interpreting paragraph 21 to have “no limits” and an “unfettered authority” to do what it wants. That is not so.
[138] Following the words of the statute, the Appeal Panel held that the discretion under paragraph 21 permitted an order in appropriate circumstances. Further, the Appeal Panel held that the broad discretion was consistent with the prior cases cited. Those tribunal cases provided that the discretion also had to be exercised having regard for the circumstances of the case and considering relevant penalty principles and regulatory goals. These principles also focus the exercise of the discretion and they do not permit an approach based on no limits or give an unfettered discretion. The appellant’s constitutional argument is predicated on his submission that the interpretation amounts to an unfettered discretion. Therefore, that argument need not be addressed.
[139] Moving to the plain and ordinary meaning of s. 35(1), we are not persuaded that the Appeal Panel erred in its conclusion that, in this case, there is jurisdiction under paragraph 21. Bearing in mind the objects of the Act, the statutory provisions regarding grants and the role of this order to facilitate compensation, and because there were applications to the Fund in progress, the Hearing Panel order meets the statutory wording of being “appropriate” in its plain and ordinary meaning and within the larger context required for statutory interpretation. This is consistent with the intention shown in s. 51 that the Law Society recover grants and does not conflict with s. 35(1) paragraph 14, providing for an order to pay for grants made. In the particular circumstances of this case, the Appeal Panel did not err. We need not decide whether, in other circumstances, paragraph 21 would provide jurisdiction, nor do we need to rule on the Law Society’s alternate interpretation of paragraph 14.
[140] Some of the appellant’s submissions, both to the Appeal Panel and to this Court, challenge whether a grant should be made by Convocation. The appellant submits that he was not dishonest and the applications to the Fund were late. These are matters for Convocation in exercising its discretion regarding whether to make a grant. To the extent that they may be relevant to the exercise of discretion under s. 35(1) paragraph 21, the Appeal Panel did not make an error of principle or palpable and overriding fact in their treatment of these issues in their decision.
[141] We therefore dismiss this ground of appeal.
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