Law Times

Law Times • September 16, 2013 NEWS LawPRO ordered to defend lawyer in mortgage action Admission of judge's comments in Groia hearing challenged BY YAMRI TADDESE Law Times A Law Society of Upper Canada hearing panel erred in admitting a judge's comments during lawyer Joe Groia's civility proceedings, counsel for The Advocates' Society told an appeal panel last week. The hearing panel found Groia guilty of misconduct last year for his actions during his successful defence of Bre-X Minerals Ltd. geologist John Felderhof. Groia is appealing the twomonth suspension and a $247,000 costs order that resulted. According to Terrence O'Sullivan, counsel for The Advocates' Society as an intervener in the appeal, the hearing panel shouldn't have admitted comments about Groia's conduct the judge made during the trial as evidence when the law society prosecuted him years later for misbehaviour that included sarcasm and a "petulant invective." "They were conclusive remarks, not facts or expert opinions," Sullivan told a five-person appeal panel chaired by Linda Rothstein. "They don't constitute admissible evidence." The comments O'Sullivan referenced were statements made by the late justice Archie Campbell in explaining his reasons for a cost endorsement in relation to a judicial review. "As noted in the judgment, the conduct of neither side is completely free from difficulty," wrote Campbell. "The problems were not caused solely by the defence and the prosecution must bear a measure of responsibility for rising to Mr. Groia's bait and for questioning rulings of the court. On the other hand, Mr. Groia's unacceptable conduct was an essential triggering cause of the application." At one point, Campbell also called Groia's conduct "appallingly unrestrained and on occasion unprofessional." Those comments were part of the hearing panel's reasons for its findings against Groia. But O'Sullivan said a principle taught to students in their first year of law school holds that to be admissible, evidence needs to fall under the two categories of fact or expert opinion. When the panel asked O'Sullivan if a member of the public wouldn't find it "quite foolish" if the hearing panel were to ignore the comments of the trial judge, he said: "What matters is the discharge of statutory mandate." "We gain no credit among the public if we treat our members by applying rules we wouldn't to our clients," he continued. To admit the remarks of a judge as evidence is, in essence, to delegate the analysis to another court, O'Sullivan argued. Another unintended consequence of that approach could lead judges to be "unduly cautious" with their words or, on the flip side, berate counsel they don't like, he said. "Neither of those are desirable objectives." Law society counsel Tom Curry disagreed with O'Sullivan. The hearing panel "made no error in finding that those decisions had to Page 3 be applied," he said. Curry also dismissed a suggestion by Groia's counsel, Earl Cherniak, that people should be commending his client for his zealous advocacy that eventually saw Felderhof acquitted. "As toxic and poisonous" as the atmosphere was during the Bre-X trial, Groia's conduct was unjustifiable, Curry added. Whether Groia's conduct amounted to zealous advocacy or professional misconduct has been a matter of debate since the proceedings in his case began. According to the Canadian Civil Liberties Association, which appeared as an intervener in the appeal, the law society should only bring disciplinary proceedings against a lawyer "on the basis of incivility in the clearest of cases where the incivility has caused or is reasonably likely to cause a miscarriage of justice." "Failing to place strict parameters on the interpretation of the civility requirement under the Rules of Professional Conduct will place a chill on the legal profession and impact a lawyer's ability to fulfil the duties owed to their clients and to speak out about concerns with respect to the behaviour of other counsel and members of the judiciary," wrote the CCLA's Cara Zwibel in her factum. According to O'Sullivan, what a lawyer says "in good faith" shouldn't be punishable. "However, the highest level of effective advocacy exhibits forceful persuasion made in a courteous and dignified manner," he wrote in his factum. "As a matter of practice, however, there may be times when an advocate finds that fearless and zealous representation of a client involves pushing up against the boundaries of civility." O'Sullivan also argued that as human beings, lawyers can sometimes be short on patience and have a lapse in judgment. "In such circumstances, the advocate should not feel unduly constrained by the threat of prosecution for incivility." When lawyers have been uncivil, judges are in the best position to address it, according to Zwibel. "The CCLA does not suggest that the law society has no role in regulating issues of lawyer conduct that take place in the courtroom," she wrote. "However, trial judges have both statutory and inherent powers to control proceedings in their courtrooms and a number of tools available to address uncivil behaviour by counsel." Former Supreme Court justice Ian Binnie made similar comments during a panel discussion last year on the Groia case. "In the hothouse of a trial, particularly when you have a vicious battle going on . . . it is extremely difficult for somebody to come after the event and pick it apart and say, 'Well, you really shouldn't have said that,'" he said. "A judge is running a trial in order to achieve a disposition in the case. And if the conduct of lawyers is getting in the way of achieving that, then it's time to do something about it. And if the judge loses control of the courtroom, it seems to me the problem is we're not getting the right judges." LT According to Milton Davis, a Toronto lawyer who often handles professional negligence cases, the judge in this case got it right. Superior Court judge "I thought Justice Morgan has ordered LawPRO was correct," he says. "Historito defend a lawyer cally, the issue of duty to defend is facing negligence aldefined by the scope of the pleadlegations after finding the profesings. Ordinarily, parties and the sional indemnity company can't courts should not look behind refuse coverage simply because the scope of the pleadings. So if a it believes he was complicit in a While LawPRO has a duty pleading claims professional negfraudulent scheme. to report matters to the law According to Justice Edward society, it generally doesn't ligence, as it did in this case, there Morgan's Aug. 28 summary of need to do so, says Kathleen should be a duty to defend." Morgan noted the Court of the facts in Cusack v. The Lawyers' Waters. Appeal made it clear that in such Professional Indemnity Co., Toronto lawyer Patrick Leo Wayne Cusack said his situations, what's important is the legal claim client, John Campbell, had placed a mortgage the insured is facing and not "the particular on his home to invest in "what turned out allegations taken on their own." "The applicant is being sued for profesto be a fraudulent scheme arranged by one Sohail Hamidzadeh." The lender, Crosswind sional malpractice, which is precisely what is Capital Corp., then sought enforcement of covered by the LawPRO duty to defend; the its mortgage against John and his wife, Laura, fact that a claim that sounds in negligence enwho counterclaimed against several parties, tails what is literally an intentional act does not including Cusack. Cusack, in turn, coun- change the true nature of the claim. There is no terclaimed against the Campbells and his claim of fraud and the pleadings make only a former officer manager who he blames for brief factual reference to intentional conduct releasing a certificate of independent legal on the part of the applicant. In these circumstances, the negligence claim is foremost, and advice to Crosswind Capital's lawyer. The issues, according to Morgan's sum- is not derivative of a claim in fraud or deceit. mary, date back to December 2012 when Cu- LawPRO has a duty to defend the applicant." If the allegations against Cusack are proven, sack met John at his office. He expected Laura his seemingly "imprudent" actions could be to be there as well, but Hamidzadeh came instead. John offered to arrange a meeting with tantamount to negligence and a breach of fiLaura that evening to get the mortgage docu- duciary duty, the judge said, but that outcome ments signed and provide the certificate of wouldn't put "a badge of fraud" on the lawyer. LawPRO executive vice president Duncan independent legal advice, but Cusack said he couldn't go. He agreed to send his office man- Gosnell says the Cusack claim arose from an ager instead, Morgan noted. But in the end, the older version of the insurer's policy. The upoffice manager met with someone who "was dated policy, effective this year, specifies a new not Laura Campbell; she was an imposter who definition of dishonesty, he notes. Cusack also made a counterclaim against was apparently part of the scheme to defraud LawPRO for breach of confidence after the Crosswind of the mortgage proceeds." Cusack, according to Morgan, later signed insurer issued a report to the Law Society of the certificate of independent legal advice Upper Canada about his case. LawPRO contended that the informaindicating he had met with and verified the identity of both John and Laura. However, tion it sent to the law society wasn't private he still expected Laura to come to his office and merely repeated what was already in the in order to receive the certificate in person publicly filed pleadings. According to Morgan, the insurer had and intended to keep it in escrow until that time, Morgan noted. Somehow, the mortgage a "prevailing duty" to report the case to the documents and certificate reached Cross- law society. "When it comes to lawyer regulation and wind Capital's solicitor, although Cusack said he didn't know who sent them. Crosswind documentary production, search and seiCapital then released the funds and launched zure of law office materials, etc., the law soits action after the Campbells defaulted. Ac- ciety, as public regulator, enjoys a version of cording to Morgan, they counterclaimed what professor Adam Dodek of University against Cusack alleging he provided poor of Ottawa has called a 'true exception' to the legal advice, accepted a forged document not otherwise strict law of solicitor-client priviactually signed by Laura, and signed a certifi- lege," wrote Morgan. It would have been improper for Lawcate of independent legal advice that inaccurately stated he had met with her. None of the PRO to advocate against Cusack, but the mere reporting of the case to the law society allegations have been proven in court. After investigating Cusack's file, LawPRO isn't problematic, the judge added. "There is no need to remedy this report decided not to defend the lawyer. But according to Morgan, the question of whether by LawPRO as it was not a wrong that needs Cusack's involvement in the fraud was inten- to be put right." Davis says even though there appears to tional is up to the court and not LawPRO. For now, the lawyer's claim isn't so farfetched that be a conflict in reporting a lawyer the insurit results in an automatic refusal of insurance er may have to defend, the duty to do so is a statutory obligation. coverage, the judge said. According to LawPRO president and "In the present case, the applicant is facchief executive officer Kathleen Waters, the ing, and has defended against, claims of professional negligence and breach of fiduciary duty to report has no exceptions. "There is no exception in that rule for a duty," wrote Morgan. "While there may be underlying facts that lawyer who may be employed at LawPRO," allege intentional conduct on behalf of the she says. But she notes that in the vast maapplicant, he and his insurer are not called jority of claims, LawPRO doesn't need to on to defend any claim framed in fraud, de- report a lawyer to the law society. When LawPRO does alert the law society, ceit, or other intentional tort. it doesn't necessarily mean the insurer won't "The fact that some of the factual allegations against him describe intentional conduct defend the lawyer, Waters points out. Cusack didn't respond to a request for comis not the same as a cause of action brought ment by Law Times. LT against him for an intentional tort." BY YAMRI TADDESE Law Times A www.lawtimesnews.com

• Cover