2018 QCCQ 2544, 2018 QCCQ 2544

Ordre des comptables professionnels agréés du Québec c. Reinblatt 2018 QCCQ 2544 COURT OF QUEBEC Practice Division CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL “Civil Division” No: 500-22-242474-172 DATE: April 23, 2018 ______________________________________________________________________ BY THE HONOURABLE JEFFREY EDWARDS, J.C.Q. ______________________________________________________________________ ORDRE DES COMPTABLES PROFESSIONNELS AGRÉÉS DU QUÉBEC Plaintiff v.

GERALD REINBLATT Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] The Ordre des comptables professionnels agréés du Québec (Quebec Order of Professional Chartered Accountants) ( Order ) seeks the homologation by the Court of a Decision on Penalty of its Disciplinary Council rendered on January 27, 2017 [1] ( Decision ). Background Facts [ 2 ] Gerald Reinblatt is a former member of the Order. [ 3 ] On April 6, 2014, he obtained status of a retired member of the Order [2] . [ 4 ] In June 2011, Mr.

Reinblatt was sued by a former client regarding amounts that had been remitted to him.

The events regarding that suit are summarized in the Decision as follows: “CONTEXT [16] The client was a 78 years old widow with no experience in financial matters, when respondent, a long-time family friend and the purchaser of her late husband’s accounting practice, began filing her income tax returns and generally acting as her financial advisor. [17] In order to increase the return on her capital, respondent suggested that funds be remitted to him for investment purposes, assuring her that he provided the same service to many widows and that her money would be returned to her, if and when she so requested. [18] The client placed her complete trust in respondent.

After all, she had known him and his family for years and had been best friends with his late mother.

[19] She wrote checks on a regular basis to respondent for all financial services rendered on her behalf. [20] From March 23, 2004 to March 12, 2007, respondent received approximately $175,000 of the client’s capital for investment purposes. [21] Respondent proceeded to loan the funds to other accounting clients. [22] Respondent effectively used her money in a loan scheme that was high in risk. [23] The client was not aware of the high risk nature of respondent’s “loans” to third parties and was duped into remitting sums to him on the promise that her money would be returned to her on demand. [24] The client’s funds were also co-mingled with other funds, as well as respondent’s own personal property. [25] Through a power of attorney, respondent also had access to the client’s line of credit which was secured by the collateral of the condominium she had purchased following the sale of her house. [26] Respondent used it to transfer additional funds directly from the line of credit to his trust account. [27] It was later discovered that respondent also used funds belonging to the client in order to make 5 payments directly to credit card companies in relation to credit cards which were not held by the client. [28] Over the years, respondent paid monthly or periodically sums to the client, however, no accounting was provided to her. [29] At times, payments to the client were made by the accounting firm in which respondent was a partner, Reinblatt & Co.

L.L.P. (“LLP”) and a related company, Services Financiers Reinblatt Inc. (“Inc.”). [30] In 2009, checks issued by respondent personally to the client were returned by the bank with the mention of “insufficient funds” (the NSF checks). [31] At that point, the client asked respondent for the return of her capital but was told that he was not in a position to do so. [32] An accounting of sorts was provided following the involvement of family members. It was determined that the amount of $158,000 was owing. A repayment

schedule was proposed by respondent by which he was to pay $86,800 during 2011 and the balance of $71,200 by the end of December 2011. An agreement was signed to this effect. [33] In fact, respondent paid a total of $19,800 during 2011. When the payments ceased, the client instituted proceedings (“the Proceedings”) against respondent, LLP and Inc.

[34] In the Proceedings, the client claimed the balance due of funds remitted for investment purposes in the amount of $138,200, plus moral damages in the amount of $75,000 (pursuant to the Charter of Human Rights and Freedoms (the Charter) and punitive damages in the amount of $15,000. Finally, the client also claimed legal fees, invoking

Article 54.1 and following of the Code of Civil Procedure of Quebec . [35] Respondent filed an acquiescence to judgment in the amount of $145,963.78, representing the capital, plus legal interest and the special indemnity. He then sought

summary dismissal against the other two co-defendants, LLP and Inc. [36] The Court rendered a judgment against respondent but refused respondent’s request for

summary dismissal against the other co- defendants. The Court therefore proceeded to hear all of the evidence. [37] A judgment was then rendered against respondent and the two co-defendants by the Honorable Judge Mark Schrager, J.S.C., on December 17, 2012 (the Judgment [3] ). [38] In addition to the amount to which respondent acquiesced in his confession to judgment, the Court found respondent and the co- defendants solidarily liable for moral damages in the amount of $10,000 pursuant to

Article 49 of the Charter , punitive damages in the amount of $15,000 and an additional sum of $16,528.25 for legal fees. [39] During the hearing on conviction, Council thus learned that after several failed attempts to collect on the Judgment, the client and respondent arrived at an agreement for a lesser sum than that which was owing pursuant to the Judgment. This lesser amount was eventually paid in full by respondent.” [ 5 ] In June 2015, based on those events, the Assistant Syndic of the Order made a disciplinary complaint against Mr. Reinblatt. [ 6 ] On June 26, 2015, Mr.

Reinblatt denied any wrongdoing whatsoever [4] . He stated that the complaint of the Syndic was “frivolous” and amounted to “nothing more than a personal vendetta and harassment” given that at that time he only had status in the Order as a “retired member”. [ 7 ] Nonetheless, Mr. Reinblatt submitted his resignation from the Order [5] . [ 8 ] Mr. Reinblatt did not appear at the hearing on the complaint. [ 9 ] On May 25, 2016, the Disciplinary Council of the Order ruled on the complaint and found Mr. Reinblatt guilty on both counts alleged against him.

These complaints and rulings are summarized in the Decision as follows: “[2] Complainant alleged that from March 2004 to June 2009 inclusively, while administering sums entrusted to him by his client, respondent failed to act with integrity and dignity, thereby engaging in conduct derogatory to the honor of his profession (Court 1). Complainant further alleged that respondent signed two checks payable to his client, which were returned with the mention: “insufficient funds”, thereby committing a further act derogatory to the dignity of the profession (Count 2).

[3] Based on the evidence presented, Council concluded, in connection with the first count, that while administering the funds of the client referred to in the complaint, respondent:

a) failed to act with integrity and dignity within the meaning of

article 23 of the Code of Ethics of Professional Chartered Accountants , then in force ( Code of ethics applicable to Count 1 );

b) engaged in conduct lacking in dignity and likely to damage the profession’s reputation within the meaning of

article 5 of the Code of ethics applicable to Count 1 ;

c) engaged in conduct derogatory to the discipline, honor or dignity of the profession with the meaning of

article 59.2 of the Professional Code . [4] As regards to the second count, Council found that the issuance of the checks referred to therein and the failure to honor them under the circumstances constituted a failure to act with integrity and that such conduct was damaging to the reputation of the profession, in contravention of

article 5 of the Code of Ethics of Chartered Accountants then in force ( Code of ethics applicable to Count 2 ).” [ 10 ] The Decision for which homologation is requested is on the appropriate penalty in light of the fact that Mr. Reinblatt was found guilty of the offences described on both counts. [ 11 ] Mr. Reinblatt did not appear either at the hearing on the penalty. [ 12 ] The Decision of the Council meticulously analyzed the evidence as well as the jurisprudence regarding cases of similar complaints.

The Decision is 20 pages in length. [ 13 ] The Committee concluded as follows: “[94] An offense of this nature, in and of itself, would not necessarily result in the revocation of the professional’s permit. However, in the context of the present case, and in light of the absence of repentance on the part of respondent, the Council concludes that it is the appropriate remedy. [95] Council is therefore of the view that the context of the commission of this second offense and the aggravating factors common to both offenses justify the imposition of a similar penalty for both.

DECISION FOR THESE REASONS, THE COUNCIL, UNANIMOUSLY: ORDERS the revocation of respondent’s permit with respect to Counts 1 and 2; ORDERS that a notice of the present decision be published in an English language newspaper having general circulation in the place

where respondent had his professional domicile, pursuant to

article 156 of the Professional Code ; CONDEMNS respondent to pay all costs pursuant to

article 151 of the Professional Code , including the costs associated with the publication of the present decision.” Costs awarded in virtue of the Decision [ 14 ] The conclusions of the Decision condemned Mr. Reinblatt to pay all costs, in accordance with

Article 150 of the Professional Code resulting from the complaint. [ 15 ]

Article 151 of the Professional Code reads in part as follows: 151. Le conseil peut condamner le plaignant ou l’intimé aux déboursés ou les condamner à se les partager dans la proportion qu’il doit indiquer. … Lorsqu’une condamnation aux déboursés ou aux frais engagés par l’ordre pour faire enquête devient exécutoire, le secrétaire du conseil de discipline dresse la liste des déboursés ou des frais engagés par l’ordre pour faire enquête et la fait signifier conformément au Code de procédure civile (chapitre C-25.01).

Cette liste peut être révisée par le président en chef ou le président en chef adjoint, sur demande présentée dans les 30 jours de la date de sa signification, dont avis écrit doit être donné aux parties au moins cinq jours avant la date à laquelle cette demande sera présentée. Cette demande de révision n’arrête ni ne suspend l’exécution de la décision. La décision sur la révision de la liste est sans appel. 151.

The disciplinary council may condemn the complainant or the respondent to pay the costs, or it may apportion the costs between them in the proportions it indicates. … Where a condemnation to costs or to the expenses incurred by the order to conduct an inquiry becomes enforceable, the secretary of the disciplinary council shall draw up a list of costs or of the expenses incurred by the order to conduct an inquiry and shall have the list served in accordance with the Code of Civil Procedure (chapter C-25.01).

The list may be revised by the senior chair or the deputy senior chair on a motion filed within 30 days of the date of service. At least five days’ notice in writing of the filing must be given to the parties. A motion for revision does not prevent or suspend the execution of the decision. The decision concerning the revision of the list is not subject to appeal. [ 16 ] In accordance with this provision, the list of costs were compiled and totaled the amount of $1,844.42 [6] . The details of these costs were served on Mr. Reinblatt [7] . Mr.

Reinblatt did not make a motion to revise this amount of costs. [ 17 ] On October 16, 2017, the Order instituted the present proceedings seeking homologation of the Decision. [ 18 ] On October 18, 2017, Mr. Reinblatt filed an Answer and Contestation. Mr. Reinblatt argues that the process undertaken by the

Order was useless since he had agreed to resign and that he should not have to pay the costs that the Order incurred needlessly in his view. In particular, the contestation reads in part as follows: “13. Given that RESPONDENT had retired and resigned in 2014, which was acknowledged in PLAINTIFF’s Notice (paragraph 4 point 1), the costs incurred by the OCPA could have been completely avoided had the OCPA not proceeded with this needless process 2 years after the retirement and resignation. …. 15.

The OCPA incurred these costs on their own account, at their own expense and due to their own decision to pursue an unenforceable claim against a non-member of their organization. 16. PLAINTIFF had the legal obligation to take measures to mitigate their costs and did not take reasonable steps to mitigate these costs in light of the facts herein proven.” [ 19 ] In his representations before the Court, Mr.

Reinblatt stated: “I will not go into further detail as I have submitted documents demonstrating the ill will and misleading tactics have been used in order to continue to harass me as can be seen from my original response to this frivolous motion. It is my understanding that this motion is being presented in order to give the Order a legal right to try and collect these funds which they allege are owing. I am asking your honour to deny them the right to continue harassing me and to allow me to enjoy my retirement in peace without the steady flow of bailiffs at my door.

The Order had the power to stop this nonsense without incurring any fees whatsoever given the above and chose not to do so. Their costs are theirs alone to bear.” Analysis and Decision [ 20 ] The Application seeking homologation of the Decision is based upon

Article 156 of the Professional Code , which reads in part as follows: Une décision du conseil de discipline condamnant le plaignant ou le professionnel aux déboursés, imposant une amende à celui-ci ou ordonnant au professionnel ou à l’ordre, ou à l’un et l’autre, le paiement des frais visés au septième alinéa peut, à défaut de paiement volontaire, être homologuée par la Cour supérieure ou la Cour du Québec suivant leur compétence respective selon le montant en cause et cette décision devient exécutoire comme un jugement de cette cour.

A decision of the disciplinary council condemning the complainant or the professional to costs, or imposing a fine on the professional or ordering him or the order, or both, to pay the expenses referred to in the seventh paragraph may, in default of voluntary payment, be homologated by the Superior Court or the Court of Québec according to their respective jurisdictions, having regard to the amount involved, and such decision shall become enforceable as a judgment of that Court. [ 21 ] The application is also based upon Articles 527 and 528 of the Civil Code of Procedure ( C.C.P. ) which read as follows:

527. La demande visant à obtenir une autorisation, une approbation ou une homologation est, lorsqu’il y a litige, présentée au tribunal à la date fixée dans l’avis de présentation qui y est joint, laquelle ne peut être fixée à moins de cinq jours de la notification de la demande. 527. An application for authorization, approval or homologation is, when there is a dispute, presented before the court on the date specified in the attached notice of presentation. The presentation date cannot be less than five days after notification of the application. 528.

L’homologation est l’approbation par un tribunal d’un acte juridique de la nature d’une décision ou d’une entente. Elle confère à l’acte homologué la force exécutoire qui se rattache à un jugement de ce tribunal. Le tribunal chargé d’homologuer un acte ne vérifie que la légalité de cet acte; il ne peut se prononcer sur l’opportunité ou le fond de l’acte, à moins qu’une disposition particulière ne lui attribue cette compétence . 528. Homologation is approval by a court of a juridical act in the nature of a decision or of an agreement.

It gives the homologated act the same force and effect as a judgment of the court. The homologating court only examines the legality of the act; it cannot rule on its advisability or merits unless a specific provision empowers it to do so . [Emphasis added.] [ 22 ] As Article 528 (2) C.C.P. states, the authority of the Court is limited at this stage.

The Court cannot rule on the advisability or merits of the Decision. [ 23 ] It only examines its legality, namely whether it has been issued by a competent authority and whether the fundamental rules of natural justice have been followed in the process. [ 24 ] Examples similar in nature apply to the homologation process for arbitration decisions. In that regard,

Article 646 C.C.P. reads as follows:

646. Le tribunal ne peut refuser l’homologation d’une sentence arbitrale ou d’une mesure provisionnelle ou de sauvegarde que si l’un des cas suivants est établi: 1° une

partie n’avait pas la capacité pour conclure la convention d’arbitrage; 2° la convention d’arbitrage est invalide en vertu de la loi choisie par les parties ou, à défaut d’indication à cet égard, en vertu de la loi du Québec; 3° le mode de nomination d’un arbitre ou la procédure arbitrale applicable n’a pas été respecté; 4° la

partie contre laquelle la sentence ou la mesure est invoquée n’a pas été dûment informée de la désignation d’un arbitre ou de la procédure arbitrale, ou il lui a été impossible pour une autre raison de faire valoir ses moyens; 5° la sentence porte sur un différend qui n’était pas visé dans la convention d’arbitrage ou n’entrait pas dans ses prévisions, ou encore elle contient une conclusion qui en dépasse les termes, auquel cas, si celle-ci peut être dissociée des autres, elle seule n’est pas homologuée.

Le tribunal ne peut refuser d’office l’homologation que s’il constate que l’objet du différend ne peut être réglé par arbitrage au Québec ou que la sentence ou la mesure est contraire à l’ordre public. 646.

The court cannot refuse to homologate an arbitration award or a provisional or safeguard measure unless it is proved that (1) one of the parties did not have the capacity to enter into the arbitration agreement; (2) the arbitration agreement is invalid under the law chosen by the parties or, failing any indication in that regard, under Québec law; (3) the procedure for the appointment of an arbitrator or the applicable arbitration procedure was not observed; (4) the party against which the award or measure is invoked was not given proper notice of the appointment of an arbitrator or of the arbitration proceedings, or it was for another reason impossible for that party to present its case; or (5) the award pertains to a dispute not referred to in or covered by the arbitration agreement, or contains a conclusion on matters beyond the scope of the agreement, in which case only the irregular provision is not homologated if it can be dissociated from the rest.

The court cannot refuse to homologate the arbitration award on its own initiative unless it notes that the subject matter of the dispute is not one that may be settled by arbitration in Québec or that the award or measure is contrary to public order. [ 25 ] Mr. Reinblatt has raised no valid grounds of illegality with respect to the Decision. Mr. Reinblatt was at all times made aware of the disciplinary process and the steps taken by the Order. [ 26 ] He was given every opportunity to present his arguments of contestation. [ 27 ] Mr.

Reinblatt duly received notices to appear at all the hearings leading to the Decision. He chose not to attend any of them. [ 28 ] Mr. Reinblatt complains that the Order was too aggressive in advising him of the process and sending him notices which, he alleges, disturbed his family and his personal peace. [ 29 ] Mr. Reinblatt’s complains that the Order continued its proceedings against him after he resigned from the Order.

[ 30 ] The Order took the position that the protection of the public, the reputation of the Order and of its members and the lack of remorse on the part of Mr. Reinblatt regarding the complaints justified the continuance of the proceedings and the imposition of a penalty against him. [ 31 ] This is not a question of legality but rather of advisability. The relevant

article of the Code of Civil Procedure requests that the Court, on an Application for Homologation, not intervene or disturb the decision on such an issue. [ 32 ] As no valid ground of contestation has been established, the Decision will be homologated by the Court. FOR THESE REASONS, THE COURT: HOMOLOGATES the Decision of the Disciplinary Council of the Ordre des comptables professionnels agréés du Québec, no. 47-15- 00156 dated January 27, 2017 (Exhibit P-1); CONDEMNS Gerald Reinblatt to pay the Ordre des comptables professionnels agréés du Québec the amount of $1,844.42, with legal interest of 5% per year, plus the additional indemnity provided at

Article 1619 of the Civil Code of Quebec , starting from July 6, 2017 (Date of Service of Demand Letter, Exhibit P-6). WITH LEGAL COSTS. __________________________________ Jeffrey Edwards, J.C.Q. Me Lyne Tétreault Ordre des Comptables Professionnels Agréés du Québec Attorneys for Plaintiff Mr. Gerald Reinblatt Representing himself Date of hearing: April 17, 2018