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Page 4 January 15, 2018 • Law Times www.lawtimesnews.com bankruptcy and had listed the property without informing the Alfanos. The judge also found that Piersanti had misappropri- ated more than $1 million from the company. Piersanti disputed these find- ings in an appeal, but the Court of Appeal upheld them, deter- mining that the lawyer had tak- en advantage of his position as the Alfanos' lawyer. The lawyer had argued that there was insufficient evidence to find liability against him for damages arising from the company's bankruptcy, but the Court of Appeal disagreed. "In my view, there was a strong case that Mr. Piersanti assigned Osler into bankruptcy as part of a fraudulent scheme to deprive the Alfano trusts of their interests in Osler," wrote then-associate chief justice of Ontario, Dennis O'Connor. The Court of Appeal also upheld the $250,000 in punitive damages. Piersanti then sought leave to appeal the decision to the Su- preme Court of Canada, but his application was dismissed. The law society brought what's called a CUPE Motion under the tribunal's rules, which would allow the regulator to de- pend on the courts' findings of fact rather than re-litigating the issues. The tribunal granted the order and Piersanti unsuccess- fully tried to appeal it to the Ap- peal Division of the Law Soci- ety Tribunal and the Divisional Court. He then filed a motion to vary or set aside the Divisional Court's decision to quash his appeal and requested an ad- journment of the law society's conduct hearing until that mo- tion was heard. The tribunal, however, declined to provide an adjournment. Christopher Wirth, partner with Keel Cottrelle LLP, who was not involved in the mat- ter, says the decision confirms that findings of fact in other proceedings in which a party is involved can be used as prima facie evidence of the conduct in question. "What it confirms is that when you are a party to a pro- ceeding and findings of fact are made against you, your profes- sional regulator is entitled to rely on those findings of fact," he says. "It will only be in exceptional circumstances that it will per- mit you to attempt to relitigate those findings." He says that if a lawyer is not a party in the proceed- ing but serves as counsel, then those findings may not be used against them as easily, or they may be given more latitude to introduce additional evidence. He adds that the decision highlights that in administra- tive proceedings a party can- not appeal interlocutory orders until the completion of the pro- ceeding, when it would form one of the many issues on the appeal from the final decision. It's only in extraordinary circumstances that an appeal of an interlocutory issue would be allowed to go ahead before the completion of the proceedings, Wirth says. The tribunal determined that based on the facts established by the court decisions, Piersanti had committed professional misconduct. ". . . [I]ntegrity is the funda- mental hallmark of professional legal conduct," wrote Frederika Rotter, a member of the tribunal panel. "The lawyer's significant mis- appropriation of funds, his at- tempted sale of the Osler build- ing, the improper assignment of Osler into bankruptcy, and the lawyer's creation of a fraudulent shareholders' agreement — each of these acts constitutes conduct unbecoming that would tend to bring discredit on the legal profession. These acts involve dishonesty and are conduct that undermines the administration of justice." This summer, a judge refused to throw out a negligence claim a non-client brought against Piersanti concerning a mort- gage transaction that turned out to be fraudulent. The plaintiff in that case, Chegancas v. Godo, was a lend- er on a transaction and alleged that Piersanti, who had been retained by the borrower to pro- vide independent legal advice, was negligent. Piersanti brought a sum- mary judgment motion to ask the judge to throw out the claim arguing lawyers do not owe a duty of care to non-clients. The judge dismissed the mo- tion, finding that it was arguable that there was "sufficient prox- imity" in the relationship be- tween Piersanti and the plaintiff that could give rise to a potential duty of care. Ross Morrison, the lawyer who represented Piersanti in the discipline matter, did not respond to requests for com- ment. LT fers of employment from Kazen, one of which offered a salary at 20-per-cent lower than what he had been paid previously. But Krazen contended that the law clerk resigned. After he brought his claim, Teixeira filed a motion request- ing Kazen be removed as coun- sel for HOLPC, arguing he could be a likely witness, as he was involved in the employment negotiations that took place. Sugunasiri found that Ka- zen's role as a potential witness did not disqualify him from act- ing as counsel alone. But when that potential role was coupled with Kazen's "dem- onstrated and understandable attachment" to the case, as the head of HOLPC, it disqualified him, the master said. "In my view, a fair-minded and reasonably informed mem- ber of the public would con- clude that Mr. Kazen is too close to this litigation, and should not act as counsel of record," Sugu- nasiri wrote. Kazen brought a cross mo- tion requesting he be allowed to act for HOLPC as its sole officer and director. Sugunasiri, however, dis- missed the cross motion and determined that Kazen could not "take off his lawyer hat and act as an agent." The master added that to do so "would defeat the court's con- cern about Mr. Kazen's involve- ment as HOLPC's representa- tive." Kazen says it is troubling that he, as the sole shareholder, of- ficer and director of HOLPC, cannot defend himself in court. He adds that this is contrary to the rulings of higher courts and that the master's decision draws an arbitrary distinction between a lawyer representing themselves and representing their one-person corporation. Stephen Wolpert, who is rep- resenting Teixeira in the matter, says he was happy with the mas- ter's decision to remove Kazen as the lawyer of record. "We were also pleased to see the master's recognition that Mr. Kazen was too close to this case to act as either lawyer of record or as agent for the corpo- rate defendant," says Wolpert, who is an employment litigator with Whitten & Lublin PC. "In doing so, the master highlighted the importance to our system of lawyers who act with objectivity and detach- ment." Lawyer Simon Chester, who was not involved in the matter, says it is rare for a lawyer to find themselves the defendant, wit- ness and counsel. He says the main takeaway from the decision is that lawyers need to be careful when act- ing for themselves and that the court is going to look very care- fully at how lawyers behave as impartial advocates. "It's a reminder to all of us that we should be careful about the hats that we wear," says Ches- ter, who is counsel at the Toronto office of Gowling WLG (Cana- da) LLP and focuses on conf licts and regulatory matters. Kazen has served a notice of appeal requesting that Suguna- siri's decision be set aside. The lawyer says he also in- tends to reach out to the Informa- tion and Privacy Commissioner of Ontario to urge him to inter- vene in what he says could be a disastrous precedent for the in- tegrity of the legal profession. LT Continued from page 1 Lawyer says decision is troubling Misappropriated $1 million Continued from page 1 NEWS NEWS NEWS A legal classic for your bankruptcy and insolvency practice Always up to date – two editions a year The Annotated Bankruptcy and Insolvency Act continues to be the resource you can rely on for authoritative guidance and current law and policy at a moment's notice. This practical softcover is a condensed version of the fi ve-volume classic Bankruptcy and Insolvency Law of Canada, 4th Edition. It's the perfect quick reference you can rely on for immediate access to primary law and concise commentary. New in this edition This release includes all recent legislative amendments. Also included is the following recent case law dealing with the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act: • Dalcor Inc. v. Unimac Group Ltd. (2017 Ont. S.C.J.) • Guthrie v. Abakhan & Associates Inc. (2017 B.C. C.A.) • L-Jalco Holdings Inc. v. Bell (2017 Ont. 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