The Court allowed, in part, an appeal by the Law Society from an order of the Appeal Panel of the Law Society setting aside decisions of a Hearing Panel of the Discipline Committee

Administrative law – Decisions of administrative tribunals – Law Societies – Barristers and solicitors – Disciplinary proceedings – Professional misconduct or conduct unbecoming – Penalties and suspensions – Hearings – Interpretation of Evidence – Failure to provide adequate reasons – Witnesses – Judicial review – Procedural requirements and fairness – Standard of review – Reasonableness simpliciter – Correctness

Law Society of Upper Canada v. Neinstein, [2007] O.J. No. 958, Ontario Superior Court of Justice, March 19, 2007, P.T. Matlow, K.E. Swinton and J.C. Murray JJ.

The Respondent was a 60-year-old personal injury litigation lawyer who was alleged to have sexually harassed three women: two former clients and a former employee. The Discipline Committee of the Law Society heard from ten witnesses over seven days and concluded that the allegations of two of the women were proved in accordance with the applicable standard of proof, and that the allegations of the third woman were not. Following a penalty hearing, the Hearing Panel ordered the respondent disbarred and fined him $10,000.00. A five-member Appeal Panel set aside the findings of professional misconduct and the penalty of disbarment and ordered a new hearing into the allegations of professional misconduct. It concluded that the Hearing Panel had misdirected itself in interpreting R. v. W.(D.) (1991), 63 C.C.C. (3d) 397 (S.C.C.), failed to assess credibility properly, erred by giving inadequate reasons, and assessed a penalty that was unreasonable. The Law Society appealed the decision of the Appeal Panel and raised five issues.

First, what was the appropriate standard governing the Appeal Panel’s review of the Hearing Panel’s decision? The Court found that the Appeal Panel held that the Hearing Panel made errors of law in its assessment of credibility and in failing to give adequate reasons. As a result, the Appeal Panel reviewed the decision of the Hearing Panel on a standard of correctness which was the appropriate standard of review on a question of law that is not within the specialized expertise of a tribunal. With respect to the issue of penalty, the Appeal Panel appropriately applied a standard of reasonableness to the Hearing Panel’s decision.

The second issue on appeal was what is the appropriate standard for the Court’s review of the Appeal Panel’s decision? The Court held that since the Appeal Panel’s decision turned on questions of law that were not within its specialized expertise, the appropriate standard of review to be applied by the Court in reviewing the Appeal Panel’s determination of questions of law was correctness. It was further held that on this appeal, the standard of reasonableness applied to the Appeal Panel’s decision on penalty.

The third issue on appeal was whether the Hearing Panel erred in its assessment of credibility of the witnesses. The Appeal Panel held that the Hearing Panel erred in assessing the credibility of witnesses because it engaged in a credibility contest between the complainants and the respondent. The Appeal Panel found that the Hearing Panel adopted a two-step approach and did not consider the third alternative from W.(D.), namely whether the respondent’s evidence, although not believed, would prevent the trier of fact, in the context of the evidence as a whole, from finding clear and convincing proof. The Court held that the W.(D.) jury instruction was developed in a criminal context where it was important that the trier of fact be aware that even if he does not believe the defence evidence, the evidence as a whole may leave the trier with a reasonable doubt. However, the Court concluded that the strict application of the test in W.(D.) was not required in the context of disciplinary hearings before administrative tribunals, provided the trier of fact applied the correct burden and standard of proof. In this case, the Court found that the Hearing Panel correctly identified the standard of clear, convincing and cogent evidence and was not required to apply W.(D.) in its deliberations. Accordingly, the Appeal Panel had erred by requiring the Hearing Panel to apply the W.(D.) test in the administrative context.

A fourth issue raised on appeal was whether the decisions of the Hearing Panel met the legal requirements for decisions of administrative tribunals. The Appeal Panel held that the Hearing Panel failed to give adequate reasons for its decision, as it did not discuss the contradictions in the evidence with respect to material issues, and ordered that the Hearing Panel explain why it disbelieved the respondent in light of those inconsistencies. The Court held that the appropriate test for reviewing the adequacy of reasons was whether the reasons provided adequately demonstrated the rationale for the Hearing Panel’s conclusions on credibility and the standard of proof so as to permit meaningful appellate review of the decision. The Court accepted that failure to provide some form of reasons will constitute a denial of procedural fairness where that failure thwarts any meaningful right of appeal. However, the Court concluded that the reasons provided by the Hearing Panel met the adequacy standard and were sufficient to permit meaningful appellate review. The Hearing Panel expressly turned its mind to the evidence and made clear findings with respect to credibility. The Court concluded that the Hearing Panel’s failure to give reasons for rejecting the credibility of witnesses was not necessarily a reversible error.

On the final issue of whether the Appeal Panel erred in concluding that the Hearing Panel’s penalty was unreasonable, the Court accepted the conclusions of the Appeal Panel. The Appeal Panel had found that the penalty of disbarment was unreasonable because the Hearing Panel’s decision was based on three flawed premises. First, the Hearing Panel equated a breach of trust associated with the sexual harassment of a client to a breach of trust respecting the misappropriation of funds which, absent extraordinary circumstances, results in disbarment.  Second, the Hearing Panel concluded that disbarment was the only penalty available to address general deterrence. Third, the Hearing Panel drew an adverse inference from the respondent’s failure to acknowledge the misconduct.

On review, the Court agreed with the Appeal Panel’s conclusion that the analogy between sexual harassment and misappropriation of funds was inappropriate. The Court also concluded that to treat any conduct constituting sexual harassment as grounds for disbarment ignores the fact that some of this conduct is much more serious than other conduct, and a disciplinary sanction should reflect the degree of misconduct. The Court further accepted that while acknowledging misconduct to a guilty plea may be a mitigating factor in determining penalty, to treat a failure to acknowledge misconduct as an aggravating factor is an error in principle. In doing so, the Hearing Panel failed to consider the respondent’s right to defend the allegations and to conduct his defence as he saw fit. The Court also accepted that the Hearing Panel was correct in concluding that the penalty of disbarment was demonstrably unfit, having regard to the range of penalties for professional misconduct of this kind and in light of the historical context of the misconduct. The Court noted that the longest penalty imposed by the Law Society of Upper Canada for sexual harassment was an 18-month suspension.

The Court accepted that the Hearing Panel was correct in saying that stare decisis does not apply to administrative tribunals, but concluded that a comparison of similar cases was an essential component when considering the appropriate penalty. The Court further concluded that it is inappropriate to impose a penalty without placing the conduct in its historical context. To this end, the Court noted that the conduct at issue occurred over a decade before the disciplinary proceedings when community and professional attitudes regarding sexual harassment were different. The Court found that a penalty should be proportionate to the degree of non-compliance with the standards of the profession at the time the misconduct occurred. Accordingly, the Appeal Panel’s conclusion that the penalty could not stand was a reasonable one and that aspect of the Law Society’s appeal was dismissed. However, the Court did conclude that it would be unfair to the respondent to substitute the penalty of a 12-month suspension without giving the Law Society an opportunity to respond. The matter was referred back to the Appeal Panel to amend its formal order to reflect its decision that a 12-month suspension should be substituted.

To stay current with the new case law and emerging legal issues in this area, subscribe here.