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Representation - Lawyers - Law Society Tribunal. Rappaport v. Law Society Ontario [stay pending appeal]
In Rappaport v. Law Society Ontario (Div Court, 2024) the Divisional Court granted a stay pending appeal, here of a decision of the Appeal Division of the Law Society Tribunal that "imposed a five-month suspension" for professional misconduct:[4] The onus is on Mr. Rappaport to demonstrate that it is in the interest of justice to grant him a stay of the Appeal Division’s decision pending the outcome of his appeal in this Court: Louis v. Poitras, 2020 ONCA 815at para. 16. When considering whether it is in the interest of justice to grant a stay, I must consider three interrelated factors: (1) whether there is a serious issue to be determined on the appeal; (2) whether Mr. Rappaport will suffer irreparable harm if the stay is not granted; and (3) whether the balance of convenience favours granting or denying the stay: RJR-MacDonald Inc. v. Canada (Attorney General, 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311, at p. 334, Kitmitto et al. v. Ontario Securities Commission, 2023 ONSC 1739 at para. 5.
[5] For the following reasons, I grant Mr. Rappaport’s motion.
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[7] The threshold for establishing a serious issue on appeal is low. My task is not to engage in a thorough analysis of the merits of Mr. Rappaport’s appeal. So long as I am satisfied that some of the grounds Mr. Rappaport advanced in his Notice of Appeal are neither vexatious nor frivolous, I should consider the second and third elements of the tests, even if I think he is unlikely to succeed on his appeal.
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C. Irreparable Harm
[13] Irreparable harm is a harm that cannot be quantified in monetary terms or a harm that cannot be cured: RJ-MacDonald Inc. v. Canada, 1994 CanLII 117 (SCC), [1994] 1 SCR 311 at p. 341. Evidence of possible, or likely, harm is not enough to satisfy this element of the test. The evidence must show that the party will suffer irreparable harm: Kitmitto et al v. Ontario Securities Commission, 2023 ONSC 1739 (Div. Ct.) at para. 13. Similarly, something more is required to establish irreparable harm than the usual financial loss, loss of professional identity or reputational loss that results from the suspension or revocation of a licence to practise a regulated profession: Kitmitto, at para. 14.
[14] In his affidavit, Mr. Rappaport describes the harm he will suffer if he is required to serve the five-month suspension before his appeal is heard. First, he says he will lose all his clients because, as a sole practitioner, he will have to refer all his clients to another lawyer. Second, he argues he will suffer significant financial harm if he loses his income for five months but has to continue paying his business expenses. Mr. Rappaport was not cross-examined on his affidavit.
[15] The Law Society argues the type of harm Mr. Rappaport describes in his affidavit does not meet the test for “irreparable harm.” The Law Society relies on the decision of this Court in Kitmitto et al v. Ontario Securities Commission, 2023 ONSC 1739 in support of its position. In that case, the three appellants were found to have committed insider trading contrary to the Securities Act, RSO 1990, c.S.5. The Capital Markets Tribunal banned each appellant from market participation for 10 years or more and ordered them to pay financial penalties ranging from $600,000 to $1,000,000. Justice Schabas was not satisfied that denying the appellants a stay of the Tribunal’s decision pending their appeals to the Divisional Court would cause them irreparable harm. Two of the appellants, Kitmitto and Vannatta, argued that they may have to declare bankruptcy if a stay was not granted. Justice Schabas found that their evidence did not establish irreparable harm because bankruptcy was only a possibility, not a certainty. The third appellant, Goss, argued that the trading ban would cause him irreparable harm because he would lose his clients and that would have a devastating impact on his own sense of identity and self-worth. Justice Schabas did not accept Goss’s evidence. Justice Schabas was not convinced that Goss would lose all, or even most, of his clients because other advisors in Goss’s firm could manage his accounts until the appeal was decided.
[16] In my view, Kitmitto is distinguishable on its facts from Mr. Rappaport’s case for two reasons. First, I accept Mr. Rappaport’s evidence that he will lose all or most of his clients if he is required to serve his five-month suspension now. Mr. Rappaport is a sole practitioner who practises family and estates law in Ottawa. His affidavit states that most of his clients have upcoming court appearances. Unlike in Kitmitto, Mr. Rappaport does not have partners or associates who can manage his files or appear on behalf of his clients during his suspension. Mr. Rappaport’s clients will have to be referred to other lawyers while Mr. Rappaport is serving his suspension. I accept that few, if any, of those clients will return to Mr. Rappaport five months later.
[17] Second, if the Appeal Division’s decision is not stayed, Mr. Rappaport will likely have served the entire five-month suspension before his appeal can be heard and decided. That was not true in Kitmitto where the appellants would only have served a fraction of their market ban while the appeal was ongoing. In my view, fully serving an administrative suspension before an appeal can be heard is the sort of harm that cannot be quantified and could be cured if Mr. Rappaport is ultimately successful on his appeal.
[18] I am, therefore, satisfied that Mr. Rappaport will suffer irreparable harm if the Appeal Division’s decision is not stayed.
D. Balance of Convenience
[19] Under the third branch of the test, I must consider which party will suffer greater harm by granting or refusing a stay: Urbancorp Toronto Management Inc, at para. 20.
[20] I have already found that Mr. Rappaport will suffer irreparable harm if he is denied a stay.
[21] On the other hand, granting a stay could damage the reputation of the legal profession and the public confidence in the Law Society’s ability to regulate its members. Mr. Rappaport has been found to have committed professional misconduct by failing to serve his clients and by failing to encourage respect for the administration of justice and ordered to serve a suspension. While Mr. Rappaport was granted a stay of the suspension pending his appeal to the Appeal Division of the Law Society Tribunal, that appeal has now been dismissed and the original finding has been upheld.
[22] The Law Society Act specifically states that filing an appeal does not stay the decision of the Law Society Tribunal unless this court orders otherwise: Law Society Act, s. 49.41(1). The Law Society argues that there is a public interest in Mr. Rappaport serving his suspension without delay. The Law Society also argues granting a stay will undermine the reputation of the profession and the public’s confidence in the Law Society’s ability to fulfil its regulatory role. Finally, the law society argues the public interest outweighs Mr. Rappaport’s private interest in delaying his suspension.
[23] In my view, the harm Mr. Rappaport will suffer if a stay is not granted is greater than the potential harm to the public confidence in the Law Society’s ability to regulate the profession. There is no evidence of any ongoing concerns about Mr. Rappaport’s competence or professionalism. The allegations all relate to one family law matter in 2018. If Mr. Rappaport is unsuccessful on his appeal, he will serve his suspension, thus satisfying the public interest in ensuring professional misconduct is properly sanctioned by the Law Society. However, if Mr. Rappaport is successful on his appeal, he could not be compensated for serving a suspension that has been overturned. I, therefore, find that the balance of convenience favours granting Mr. Rappaport a stay of the suspension pending the appeal. . Khan v. Law Society of Ontario
In Khan v. Law Society of Ontario (Div Court, 2024) the Divisional Court dismissed an appeal that the appellant brought to challenge an earlier Law Society Tribunal Appeal Panel ruling, here involving "professional misconduct by, among other things, knowingly participating in mortgage fraud and misappropriating client funds". At the Law Society Tribunal level the LSO filed an extensive (and administrative) 'request to admit' ['deemed admissions' under LST Rule 11.3], which the LSO felt was improperly addressed by the appellant:[3] The panel of the Hearing Division that heard several preliminary motions concluded Mr. Khan’s responses to the request to admit did not meet the requirements of the Tribunal’s deemed admissions rule. It found Mr. Khan had sought “to circumvent the deemed admissions rule entirely and oppose any meaningful attempt at the introduction of evidence over which there is no true dispute”: Law Society of Ontario v. Khan, 2021 ONLSTH 47, at para. 36. It ruled the facts in the request to admit were deemed to be admitted and the documents deemed to be authenticated.
[4] In his appeal to the Appeal Panel, Mr. Khan raised over 30 grounds of appeal. In careful and comprehensive reasons, the Appeal Panel upheld the decisions of the Hearing Division, including its treatment of the deemed admissions. Mr. Khan now repeats and adopts the same submissions before this court and adds additional submissions addressed below. I would dismiss the appeal on the issues raised before the Appeal Panel substantially for the reasons given by the Appeal Panel. I add the following comments on the deemed admissions issue and to address the new issues in this court.
Deemed Admissions
[5] The Appeal Panel noted the Hearing Division’s conclusion that Mr. Khan sought to circumvent the deemed admissions rule and reiterated that it was clear that Mr. Khan “was refusing to engage in the admissions process provided for under [the request to admit rule]. There is no doubt that [Mr. Khan] elected to respond in a manner that was not compliant with the Rule”: Law Society of Ontario v. Khan, 2023 ONLSTA 17, at para. 20.
[6] The finding that Mr. Khan was refusing to engage in the admissions process was amply supported by the record. Mr. Khan provided only general denials and standardized objections to each proposed admission and document even though, as the Hearing Division found, the Law Society was attempting to introduce evidence over which there was no true dispute. Many of the documents and facts the Law Society included in the request to admit were not controversial. The Hearing Division found the documents included registered instruments, title abstracts, pleadings and other publicly available documents. Many of the facts arose from Mr. Khan’s client files or from his emails and correspondence.
[7] Mr. Khan was afforded multiple opportunities to respond to the Tribunal’s deemed admissions rule in a meaningful fashion. When the Law Society received a response from Mr. Khan in which he admitted the authenticity of none of the documents and denied the truth of all but three facts, it brought a motion for an order that the facts and documents were deemed to be true and authentic. The Hearing Division motion panel agreed that Mr. Khan’s response was inadequate but permitted Mr. Khan a further opportunity to respond to the request to admit.
[8] Mr. Khan then provided a further response in which he repeated the same refusals/denials and added objections to the motion panel’s ruling. When the motion panel reconvened, it made an order deeming Mr. Khan to admit the facts and the authenticity of the documents. However, it also expressly left it open to Mr. Khan to rebut any deemed admission or document by raising contradictory evidence at the hearing of the application on the merits. The hearing panel also invited Mr. Khan to present a fresh motion to be relieved of his admissions, but he declined to do so.
[9] This is not a case where a member of the Law Society made reasonable efforts to engage in the request to admit process but included some repetitive responses and denials. Instead, as the underlying decisions found, Mr. Khan’s overall course of conduct amounted to a refusal to engage in the process. The Appeal Panel made no reviewable error in reaching that conclusion and in upholding the Hearing Division’s decision that the facts and documents were deemed to be admitted as true and authentic.
Appeal Panel’s Reasons
[10] Mr. Khan submitted that the Appeal Panel failed to sufficiently address the issues he raised and the cases he cited.
[11] His position on this issue is misguided. The Appeal Panel’s reasons appropriately focused on the most substantive issue Mr. Khan had raised, which was the treatment of his response to the request to admit. The panel’s reasons also addressed multiple other issues Mr. Khan had raised as the panel understood them. As the panel stated at para. 7 of its reasons:The Lawyer raised more than 30 grounds of appeal in his amended notice of appeal. These are articulated in various ways in the Lawyer’s factum along with additional claims of errors by the motions and hearing panels. We have sought in these reasons for decision to address the issues raised by the Lawyer as we understand them. [12] It is evident the panel made a thorough effort to comprehensively address the issues Mr. Khan had raised. There was no error in providing brief reasons on issues that were without merit. There also was no requirement for the Appeal Panel to refer to the cases Mr. Khan cited, so long as it properly applied the law, which it did. This ground of appeal is dismissed. . Law Society of Ontario v. A.A.
In Law Society of Ontario v. A.A. (Div Court, 2024) the Divisional Court allowed a stay pending JR motion (heard on the RJR test), where the JR was of the Law Society Tribunal (Appeal Division)'s dismissal of an appeal of the Law Society Tribunal's finding that the respondent was of good character:[5] This is a motion for a stay of the Appeal Division’s decision pending the hearing of the Law Society’s judicial review application. In the alternative, if a stay is not granted and the Law Society is required to license AA before its judicial review application is heard, the Law Society is seeking an order allowing it to disclose AA’s identity to anyone who inquires about his status.
[6] The burden is on the Law Society to establish that it is in the interests of justice to grant a stay of the Appeal Division’s decision. The Law Society must showa. there is a serious issue to be determined on its judicial review application;
b. irreparable harm will occur if the stay is not granted; and
c. the balance of convenience favours the imposition of a stay. . Law Society of Ontario v Schulz
In Law Society of Ontario v Schulz (Div Court, 2023) the Divisional Court considered flaws in the composition of the hearing panel, here that of a Hearing Division of the Law Society Tribunal where there was (contrary to statute) no lay member. An LSO Regulation could have allowed such a panel variation on a discretionary basis, but there was no evidence that such discretion had been exercised:Did the Appeal Division Err in Finding that the Hearing Panel had Jurisdiction to Hear the Application?
[19] The LSO is a self-regulatory body whose role is to protect the public interest. In Pharmascience v. Binet, 2006 SCC 48, [2006] 2 S.C.R. 513, at para. 36, the Supreme Court of Canada observed that “[t]he privilege of professional self‑regulation therefore places the individuals responsible for enforcing professional discipline under an onerous obligation.”
[20] Under s. 4.2 of the Law Society Act, the LSO, in carrying out its functions, duties and powers, is required to have regard to the following principles:1. The Society has a duty to maintain and advance the cause of justice and the rule of law.
2. The Society has a duty to act so as to facilitate access to justice for the people of Ontario.
3. The Society has a duty to protect the public interest.
4. The Society has a duty to act in a timely, open and efficient manner.
5. Standards of learning, professional competence and professional conduct for licensees and restrictions on who may provide particular legal services should be proportionate to the significance of the regulatory objectives sought to be realized. [21] Section 1 of O. Reg. 167/07 (the “Regulation”) under the Law Society Act governs the composition of a hearing panel and states as follows:1(1) The chair [of the Law Society Tribunal] or, in the absence of the chair, the vice-chair shall assign three members of the Hearing Division to a hearing to determine the merits of any proceeding other than an application [that may be heard by a single adjudicator]
(2) If the person who is the subject of the proceeding is a [lawyer],
(a) at least one of the members assigned under subsection (1) shall be an elected bencher licensed to practise law in Ontario as a barrister and solicitor; and
(b) at least one of the members assigned under subsection (1) shall be,
(i) a lay bencher, or;
(ii) a [lay adjudicator] approved by the Attorney General for Ontario.
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(4) Subsection (2) ... does not apply if the chair or, in the absence of the chair, the vice-chair is of the opinion that,
(a) compliance with the subsection would unduly delay a hearing or otherwise hinder the timely and efficient scheduling of the hearing;
(b) assignment of a member in accordance with the subsection would likely give rise to an actual or perceived conflict of interest on the part of the member; or
(c) the subject matter or nature of the hearing is such that the assignment of one or more members with specific expertise or experience is advisable. [22] In addition, s. 4.2(2) of the Statutory Powers Procedures Act, R.S.O. 1990, c. S.22, requires that in assigning members of the tribunal to a panel, the chair “take into consideration any requirement imposed by another Act or a regulation that applies to the proceeding that the tribunal be representative of specific interests[.]”
[23] In this case, the hearing panel that heard the LSO’s application against the Respondent was composed of three lawyers and, contrary to the requirement in s. 1(2)(b) of the Regulation, did not include a lay adjudicator.
[24] In the circumstances of this case, where the record does not support a finding that the Chair or Vice-Chair exercised their discretion under s. 1(4) of the Regulation to assign a panel with no lay adjudicator, the lack of a lay adjudicator resulted in the hearing panel being improperly constituted. Because the hearing panel was improperly constituted, it lacked jurisdiction to hear the application.
[25] I recognize that s. 1(4) of the Regulation gives the Chair or Vice-Chair of the Tribunal the discretion to depart from the mandatory requirements of s. 1(2) of the Regulation in three specific circumstances: (i) to avoid undue delay and ensure a timely hearing; (ii) where assignment of a member could give rise to an actual or perceived conflict of interest;[2] or (iii) where the subject matter makes it advisable to assign one or more members with certain expertise. Where the Chair exercises the discretion to assign a panel with no lay adjudicator for one of the grounds provided in the Regulation, it is clear that the panel would have jurisdiction over the matter. In this case, however, and as further explained below, there is nothing to suggest that the discretion was exercised for a ground provided in s. 1(4).
[26] As noted above, the LSO regulates the legal profession in the public interest. The Supreme Court of Canada has expressly recognized that the presence of members of the public on discipline panels plays an important role in furthering public confidence in the administration of justice, which is a central concern of professional regulation:There will always be one lay person on a panel of the Committee by operation of s. 55(4) [of New Brunswick’s Law Society Act]. Although they will presumably have less knowledge of legal practice than judges or the members of the Law Society, lay persons may be in a better position to understand how particular forms of conduct and choice of sanctions would affect the general public’s perception of the profession and confidence in the administration of justice. Since these are central concerns in the Act, the lay member of a Discipline Committee provides an important perspective for the tribunal in carrying out its duties.
Law Society of New Brunswick v. Ryan, 2003 SCC 20, [2003] 1 S.C.R. 247, at para. 32. [27] In addition to their broader perspectives, lay benchers and adjudicators are independent from members of the profession. They are appointed by the Lieutenant Governor in Council (for lay benchers) or approved by the Attorney General (for lay adjudicators). The regulatory requirement that they sit on every hearing panel is prescribed by a government-promulgated Regulation. As independent representatives of the public, who are neither elected nor subject to re-election by their professional colleagues, lay adjudicators serve to legitimize the tribunal’s decisions in the eyes of the public.
[28] In the circumstances of this case, where the misconduct related to a conviction for possession of child pornography, the presence of a lay adjudicator on the panel was essential to ensure that the hearing panel included a public interest perspective regarding the profession to maintain confidence in the administration of justice. Moreover, the absence of a lay adjudicator in a case of this nature gives rise to a concern that the public could potentially perceive the hearing panel as lacking the necessary degree of impartiality or independence. My comments should not be taken as suggesting that the panel that heard the application lacked impartiality or independence. In this case, however, the absence of a lay adjudicator on the panel raises a concern that the panel could be perceived by the public to be insufficiently impartial or independent.
[29] Moreover, the absence of a lay adjudicator on a hearing panel could give rise to the perception that the Tribunal, in disciplining a fellow member of the profession, was inappropriately or unjustifiably lenient in imposing a penalty. In the paragraph quoted above from the Supreme Court’s decision in Ryan, the Court specifically mentioned the “choice of sanctions” and how that might affect the public’s perception of the profession and confidence in the administration of justice.
[30] The Appeal Division’s conclusion that there was no error in the exercise of discretion by the Chair or Vice-Chair was based on its finding that there was no record upon which the panel might find some impropriety in excluding a lay adjudicator from the panel and no evidence on which it might conclude whether the discretion was “properly or improperly” exercised. The Appeal Division further found that the Chair is under no obligation to “record or document” the reason for appointing an all-lawyer panel. I find this reasoning problematic for the following reasons.
[31] First, in this case, there is nothing in the record to suggest that the Chair or Vice-Chair actually exercised their discretion to proceed with a panel of three lawyers, let alone that the discretion was exercised for one of the available grounds under s. 1(4) of the Regulation. The hearing panel made no mention of the composition of the panel at the outset of the hearing or at any other time.[3] In the absence of an order, statement or any indication that the discretion not to assign a lay adjudicator to the panel was exercised, it is impossible to conclude that the discretion was exercised and that it was exercised for a ground provided in s. 1(4) of the Regulation. In my view, it cannot simply be assumed that the discretion was exercised, and that it was exercised for a ground available under the Regulation.
[32] Second, the Chair’s discretion to depart from the requirements of s. 1(2) is not absolute. Because the Chair can only exercise their discretion for one of the grounds stated in s. 1(4) of the Regulation, the issue is not whether a party challenging the composition of the panel can demonstrate impropriety in the Chair’s exercise of discretion. Rather, the issue is whether the discretion was exercised in accordance with s. 1(4) of the Regulation.
[33] A party challenging the composition of the hearing panel would rarely be able to put forward evidence that the exercise of discretion was not in accordance with s. 1(4) of the Regulation. It is for this reason that the Appeal Division’s finding that the Chair is under no obligation to “record or document” the reason for appointing an all-lawyer panel is particularly problematic. If this were the case, a party would never know whether the discretion to depart from s. 1(2) of the Regulation was exercised in accordance with the Regulation. In my view, because the Regulation requires that the Chair assign a lay adjudicator to the hearing panel and provides only limited grounds for departing from that requirement, the Chair must provide the basis for the exercise of discretion.
[34] One of the bases the Appeal Division gave for finding that the Chair was not required to notify the parties of the panel’s composition was that an agenda naming the adjudicators was published a week before the hearing, and the parties could have checked the adjudicator biographies on the Tribunal website. I agree that the parties can and ought to check that the panel is properly constituted. However, the burden of ensuring that the composition of the panel complies with the Regulation is not on the parties, but on the Chair.
[35] My finding is not intended to suggest that the Chair must render a written decision and/or provide extensive reasons when assigning a panel that departs from the requirements of s. 1(2) of the Regulation. The Tribunal’s current practice is to send out an agenda prior to the hearing identifying the panel members. Where the Chair has exercised their discretion under s. 1(4), the agenda could include a statement indicating under which of the three grounds the discretion was exercised.
[36] Alternatively, the information could be stated on the record at the outset of the hearing. While this could give rise to an objection to the composition of the panel at the outset of the hearing, it would be preferable that the objection be raised and addressed at the hearing stage rather than on appeal before the Appeal Division. It would also be open to the Chair to issue an order in advance of the hearing.
[37] Nothing in my reasons should be interpreted as constraining the discretion of the Chair under s. 1(4) of the Regulation to assign panels that depart from the requirements of s. 1(2).
[38] Given that the composition of the hearing panel raised an issue of jurisdiction, it was appropriate for the LSO to raise the issue on appeal, despite having failed to make an objection before the hearing panel. In any event, in my view, the test for raising a new issue on appeal was met. Because the issue was a question of law and/or procedural fairness, the sufficiency of the evidentiary record was not an issue. Moreover, there was no reason to believe that the LSO’s failure to raise the issue at the hearing was a tactical one. Finally, the refusal to raise the new issue would have resulted in a miscarriage of justice.
[39] Alternatively, if I am mistaken that the hearing panel lacked jurisdiction over the application because it was improperly constituted, I find that the Appeal Panel erred in failing to find that the absence of a lay adjudicator on the panel was a procedural defect that gave rise to a breach of procedural fairness. Given the societal harms that arise from child pornography and the exploitation of children, it was crucial that the public interest perspective be incorporated in this proceeding. The Regulation contemplates that this be done through the participation of a lay adjudicator on every hearing panel where a lawyer is subject to discipline. In my view, in this case, the absence of a lay adjudicator on the hearing panel raises an issue as to the fairness of the proceeding from a public interest perspective.
[40] In summary, the Appeal Division erred in law in finding that the composition of the hearing panel did not give rise to a lack of jurisdiction and in failing to remit the matter to a properly constituted panel.
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