Law Times

Page 4 April 25, 2016 • lAw Times www.lawtimesnews.com $ $ SURVEY CLOSES MAY 9, 2016 Untitled-2 1 2016-04-20 2:39 PM Ruling despite LSUC investigation, suspension of lawyer Lawyer can proceed against lawyer who bought firm BY MICHAEL MCKIERNAN For Law Times A retired Dundas, Ont. lawyer can proceed with his $700,000 claim against the law- yer who bought his firm despite an ongoing law society investiga- tion into his former practice, a judge has ruled. David Stevens sold his solo practice to new-call Casey Vandeputte in September 2013, but he sued the younger lawyer after he stopped making pay- ments under the transfer agree- ment signed by the pair. The agreement provided for Vandeputte to pay Stevens a per- centage of billings from his old clients on a declining scale, up to an agreed maximum of around $370,000. However, Vandeputte halted his regular payments in Septem- ber 2014, shortly after the Law Society of Upper Canada began a spot audit of Stevens' former practice. The investigation is on- going, but Stevens has agreed to a suspension of his licence in the meantime. Vandeputte has launched his own counterclaim against Ste- vens, seeking damages for breach of contract because he failed to maintain his good standing with the law society, and alleging he overstated the value of his prac- tice. Vandeputte wants the $80,000 he has already paid to Stevens under the transfer agreement returned to him, plus $25,000 in punitive damages. The younger lawyer applied for a temporary stay of the ac- tion until the completion of the law society investigation, argu- ing that the value of the good- will in Stevens' practice will be directly affected by the outcome. However, in an April 8 decision, Ontario Superior Court Justice David Broad ruled there was not enough of an overlap between the two proceedings to justify a stay. "I am not satisfied that a tem- porary stay will prevent unnec- essary and costly duplication of judicial and legal resources, given that the findings of the Law So- ciety will be unlikely to be found admissible in evidence in this proceeding. It will be necessary for the defendant to lead independent evidence in support of his allega- tion that the plaintiff breached the practice transfer agreement," Broad wrote. "Conversely, I am of the view that the granting of a temporary stay will result in an injustice to the plaintiff in that it will deny his access to the court or will substantially delay or impair his rights to have his case heard." "Although I believe allow- ing the civil suit to continue will result in duplicated costs on both sides, I still appreciate the judge's well-reasoned decision," Vandeputte tells Law Times. "I will continue to co-operate with the law society investiga- tion. . . . if they produce new evi- dence, then we may come back with a more compelling argu- ment." After articling on Bay Street with Blake Cassels and Graydon LLP, Vandeputte says his parents put him in touch with Stevens, as they were clients of his. Af- ter setting up his own practice alongside Stevens at his Dundas office, they agreed to the transfer in September 2013. Vandeputte says he had no concerns about Stevens' prac- tice before the law society audit, which began in September 2014. "I was a fairly junior lawyer, and having articled in a very dif- ferent environment at Blakes, I didn't feel in a position to judge. After all, he had been operating for 30-plus years," he says. Stevens declined an opportu- nity to comment, but a January 2015 decision by the law society's tribunal on his interim suspen- sion revealed the regulator's con- cerns with his practice, which centred around two estates files in which money was transferred out of the lawyer's trust account into investment funds associated with his wife. According to the law society decision, Stevens said the trans- fers, worth more than $430,000 in total, were made by mistake, but the law society had only found evi- dence that about half that amount was returned to the trust. In March 2015, Stevens con- sented to a suspension, and in September that year, he launched his action against Vandeputte, seeking $600,000 in damages for claims related to breach of con- tract, defamation, and conver- sion, plus a further $100,000 for punitive damages. In a statement of claim filed with the superior court, Ste- vens claims Vandeputte has en- gaged "in a systematic effort to besmirch" his reputation in the small community where they both practised. According to the claim, none of which has been proven in court, Vandeputte told a private investigator that Stevens had been disbarred, and told other people in Dundas that he had ceased practice "because he was forced to do so" by the LSUC and not voluntarily. Vandeputte denies making any defamatory statement about Stevens, and says when clients ask him about the retired law- yer, the law society has advised him to tell them that he has been suspended, and point them in the direction of the regulator for more details. The spot audit was not Ste- vens' first run-in with the law society. Back in 1992, he was rep- rimanded by the LSUC Convo- cation following his conviction for defrauding the Government of Canada of more than $1,000. According to the Convoca- tion decision, Stevens had bought a 1975 Triumph from a man in Florida, and then smuggled the car back into Canada using the Ontario licence plates of another vehicle he owned. He then swore a false affida- vit to get the vehicle registered in Ontario, avoiding a tax bill of $1,800 in the process. Bill Northcote, a business law partner at Toronto firm Shibley Righton LLP, says he hasn't come across many transfer agreements during his time in practice. "It tends to be confined to solo practitioners, because larger firms have their own internal succession processes," he says. "I think part of the reason you don't see too many is because the lawyers will act for themselves, which I think is a mistake." In the Dundas case, he says he thinks the judge was right to deny a temporary stay because, even if a law society panel decides to sanction Stevens in the future, it would not be binding on a court when it comes to deciding whether or not the goodwill in his practice was damaged. LT The Law Society of Upper Canada is investigating a retired Dundas, Ont. lawyer. A recent ruling said the lawyer can proceed with a $700,000 claim against the lawyer who bought his firm. Although I believe allowing the civil suit to continue will result in duplicated costs on both sides, I still appreciate the judge's well-reasoned decision. I will continue to co-operate with the law society investigation. . . . if they produce new evidence, then we may come back with a more compelling argument. Casey Vandeputte

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