r v. Sunnybrook and Women's College Health, 2011 ONSC 7056

In the Matter of the Thompson Family Trust [Indexed as: Thompson Family Trust (Re)] 108 O.R. (3d) 180 2011 ONSC 7056 Ontario Superior Court of Justice, Lederer J.

November 30, 2011 Civil procedure -- Settlement -- Beneficiaries of trust delivering notices of objection on trustees' application to pass accounts -- Beneficiary filing complaint with Law Society concerning alleged mismanagement by trustee who was member of Law Society -- Trustees and beneficiaries entering into settlement agreement which contained term requiring beneficiary to withdraw Law Society complaint -- Term contrary to public policy and unenforceable. [page181] The trustees of a family trust brought an application to pass their accounts. The beneficiaries delivered notices of objection.

One of the beneficiaries filed a complaint with the Law Society concerning alleged mismanagement by one of the trustees, M, who was a member of the Law Society. The trustees and the beneficiaries entered into a settlement agreement which contained a term requiring the beneficiaries to provide them with a full and final release, including a withdrawal of the Law Society complaint. One of the trustees subsequently objected to that term. The trustees brought a motion for an order requiring her to comply with the minutes of settlement. Held, the motion should be dismissed.

It is improper for a person subject to regulation, such as a lawyer, to require that a complaint about his or her conduct be released or withdrawn in exchange for payment of a benefit as part of a private settlement in a related civil matter. The complaint to the Law Society raised issues of public importance that extended beyond the private interests of the parties to the settlement. The term of the settlement requiring the beneficiary to withdraw the complaint could not be enforced. MOTION by the trustees for an order requiring the beneficiary to comply with the minutes of settlement.

Cases referred toCollege of Physicians and Surgeons of Ontario v. Joshi (January 29, 2004); In the Matter of Wallace, 104 N.J. 589, 518 A.2d 740 (S.C. 1986) ; K. (E.) v. K. (D.), [2003] B.C.J. No. 1961, 2003 BCSC 1296 , 233 D.L.R. (4th) 101, 43 R.F.L. (5th) 403, 125 A.C.W.S. (3d) 678; Law Society of British Columbia v. Gerbrandt, [1993] L.S.D.D. No. 190 (Discipline Hearing Panel); Prior v. Sunnybrook and Women's College Health Sciences Centre, [2006] O.J. No. 2070, 148 A.C.W.S. (3d) 534 (S.C.J.) Statutes referred to Law Society Act, R.S.O. 1990, c.

L.8, s. 4.2 , para. 3 Authorities referred to Fridman, G.H.L., The Law of Contract in Canada, 6th ed. (Toronto: Carswell, 2011) Sender Tator, for moving parties (William D. Martin and Warren Brown). George Callahan, for party supporting the motion (Nancy Thompson). Jenny Stephenson, for responding party (Sandi Thompson). [ 1 ] LEDERER J.: -- This motion arises from the administration of the Sandra Thompson family trust. The trust was settled by Elizabeth Thompson. She has died. The beneficiaries of the trust are her daughters: Sandi Thompson and Nancy Thompson. The trustees, William D.

Martin and Warren Brown, commenced an application to pass their accounts. William D. Martin is a member of the Law Society of Upper Canada (the "Law Society"). [page182] Notices of objection were delivered on behalf of each of the beneficiaries. Following, or as part of, a pre- trial conference which took place on June 14, 2011, minutes of settlement were entered into by the trustees and the two beneficiaries, through their solicitors. It appeared that the matter had been resolved. Sandi Thompson was not present at the pre-trial conference.

Sandi Thompson has concerns about her participation in the negotiations; however, she acknowledges that, in the end, she agreed to the terms of the settlement. [ 2 ] The trustees are the moving parties. The factum filed in support of the motion was made on behalf of only William D. Martin. An order is sought directing Sandi Thompson to comply with the minutes of settlement. [ 3 ] Nearly two years before the pre-trial conference, on September 2, 2009, Sandi Thompson filed a complaint with the Law Society concerning what she believes to be serious mismanagement by William D.

Martin of the Sandra Thompson family trust. It was a term of the settlement that Sandi Thompson and Nancy Thompson shall provide the Trustees with a Full and Final Release, including all pending and possible future complaints filed with the Law Society of Upper Canada, as against the Trustee, William D. Martin, with respect to the administration of the Sandra Thompson Family Trust. [ 4 ] Counsel for Sandi Thompson submitted this provision cannot stand. Any private agreement as between her client and the trustees cannot be enforced against the Law Society.

It is not a party to the agreement and cannot be bound by its terms. More importantly, counsel says that linking the receipt of any benefit in a settlement to the withdrawal of a regulatory or disciplinary complaint is both improper and unethical. It is said that such conduct arguably constitutes obstruction of justice and is contrary to public policy.

[ 5 ] Sandi Thompson says she will abide by all other provisions included in the minutes of settlement. Alternatively, she is prepared to return to the position that the parties were in before the day of the pre-trial conference. In other words, she is prepared to see the entire agreement set aside. [ 6 ] Counsel for William D. Martin says the agreement made between the parties is valid and enforceable. The withdrawal of the complaint was one of the factors which the trustees took into account when agreeing to the settlement.

As consideration for the withdrawal, the trustees agreed to a reduction in their claim for compensation and agreed to be responsible for certain legal fees. [ 7 ] For his part, William D.

Martin is not prepared to be bound by the remaining terms of the settlement unless the [page183] provision requiring the withdrawal of the complaint remains part of the agreement. [ 8 ] Counsel for Nancy Thompson says that she supports the motion, but he played no substantive role in the making of submissions. [ 9 ] Given the position of the parties, if the provision that the complaint to the Law Society be withdrawn is not valid or enforceable, it stands to reason that the minutes of settlement as a whole will be set aside. [ 10 ] The issue raised by this case is not constrained by the fact that the minutes of settlement is a contract between two parties.

To the contrary, public policy, in the present day often referred to as the public interest, provides a third powerful and, to my mind, determinative concern (The Law of Contract in Canada, 6th ed. (Toronto: Carswell, 2011), chapter: Common-Law Illegality, at pp. 361-62): Public policy, as distinguished from what might be called "political policy", with which it has often been confused, is that principle of law which holds that no subject can lawfully do that which has a tendency to be injurious to the public, or against the public good which may be termed, as it sometimes has been, the policy of the law or public policy in relation to the administration of the law.

Such a principle is necessarily incident to every state governed by law. As English cases since the eighteenth century, and Canadian cases following them, have established, the courts may declare a contract invalid and illegal on the ground that its very nature, or the purpose which it is designed to achieve, whether directly or indirectly, contravenes the ends of society. Such contracts offend the basis of legal order, which is founded upon justice, legality and morality. The doctrine of public policy is concerned with the fundamentals of the legal system.

What offends against public policy are acts which support, encourage, permit and foster conduct which is injurious to the very foundation upon which society exists. To recognize and enforce contracts that do this would be to offend the public conscience. [ 11 ] It is improper for a person, subject to regulation, to require that a complaint about his or her conduct be released or withdrawn in exchange for payment or a benefit as part of a private settlement in a related civil matter. [ 12 ] In College of Physicians and Surgeons of Ontario v.

Joshi (heard and decision released: January 29, 2004), a doctor was advised by her patient that if she paid the patient $26,000 to $30,000 (which the patient claimed she was owed), she would not proceed with a complaint against the doctor. The doctor believed the complaint would have a significant effect on her, her husband, who was also a doctor, and her family. The doctor agreed and paid the patient $24,000. The Discipline Committee [page184] of the College of Physicians and Surgeons of Ontario found that the doctor had committed professional misconduct.

It observed: It is entirely unacceptable for a member of the College to make payments to a complainant in exchange for the withdrawal of a complaint. [ 13 ] In Law Society of British Columbia v. Gerbrandt, [1993] L.S.D.D. No. 190 (Discipline Hearing Panel), a Disciplinary Hearing Panel found that a lawyer attempted to obtain the agreement of his former clients to withdraw their complaint to the Law Society as part of an overall release of liability upon a settlement having been reached between them.

The decision of the Discipline Hearing Panel noted: The public must have confidence that the Law Society will investigate the integrity and standards of its Members, notwithstanding individuals' rights to enter into settlements with regard to their private affairs. [ 14 ] In the matter of Brendan Curley, Law Society of P.E.I., a joint submission of Law Society and member, including an agreed statement of facts and joint recommendation, were filed with the formal hearing panel. This included the following: 1.08 In late January, 2001, Curley telephoned Mitchell on behalf of his client, PM.

He told Mitchell that he wished to make a without prejudice offer. . . . . Mitchell's recollection of the conversation is that Curley stated that if the fee issue was resolved, PM would not attend a Law Society hearing into his complaint. 1.09 Although it certainly was not Curley's intention via this conversation with Mitchell, Curley acknowledges that the communication with Mitchell raised the perception that PM was proposing to with draw [sic] his complaint or not cooperate with the Law Society if his complaint could not be withdrawn, if he was paid $5,000.

Curley further acknowledges that he did not take sufficient care in his choice of language and thereby raised the perception of conduct which would not meet the standards set by the CBA Code of Professional Conduct. [ 15 ] In the circumstances, the formal hearing panel found professional misconduct. [ 16 ] In Hendin, Gary Scott (Discipline Cases: 1972-1984, Law Society of Upper Canada, p. 185, First Report), a solicitor mentioned in telephone conversations with a former client that he wished the client to withdraw a letter of complaint to the Law Society.

The solicitor indicated that, subsequent to the withdrawal of the complaint, he would arrange full-time employment for the former client. In recommending that the solicitor be reprimanded, the committee stated:

Your Committee, therefore, concluded that the Solicitor's proposal to Mr. Disher was not only intended to obtain peace, it was also intended as a bribe.

Members must understand that the Society will not tolerate interference with the complaint process. [page185] [ 17 ] In the Matter of Wallace, 104 N.J. 589, 518 A.2d 740 (S.C. 1986) , the Supreme Court of New Jersey said [at p. 594 N.J.]: Public confidence in the legal profession would be seriously undermined if we were to permit an attorney to avoid discipline by purchasing the silence of complainants. (Quoted in Missouri Supreme Court Advisory Committee, Formal Opinion 122) [ 18 ] The mandate of the Law Society is to regulate the legal profession.

The Law Society is concerned with the ethics and honesty of the members of the legal profession. It has a duty to protect the public interest (see Law Society Act, R.S.O. 1990, c. L.8, s. 4.2 , para. 3). What these examples point out is that, across many jurisdictions, it offends the public interest and the public policy where a term of the settlement requires the refraining from filing, withdrawal of or declining to co-operate regarding a complaint made against a lawyer. That this extends to the discipline process of regulated professions, like lawyers and doctors, is confirmed in Prior v.

Sunnybrook and Women's College Health Sciences Centre, [2006] O.J. No. 2070, 148 A.C.W.S. (3d) 534 (S.C.J.) . In that case, an employee sued the employer for wrongful dismissal and libel. She was terminated for cause following 12 years of employment. She pleaded that the employer, a hospital, offered to withdraw the regulatory complaint if she agreed to sign a release. The employer sought to remove the reference to this offer from the pleading on the basis that it mentioned privileged settlement discussions. The motion was dismissed.

The master found the offer could not be regarded as a bona fide offer to settle the issue between the parties. He observed [at para. 5]: . . . it cannot be proper to offer to withdraw an allegation of fraud made to an outside body contingent on a release in a civil proceeding. The court would not countenance a threat to pursue a criminal or quasi-criminal proceeding to obtain an advantage in a civil proceeding. A discipline process that could affect the livelihood of the other party is in the same category. I see no difference in quality between a threat to prosecute or an agreement to withdraw a complaint.

Either of these may be indicia of bad faith and neither should attract the protection afforded to bona fide settlement discussions. [ 19 ] The public policy concern is demonstrated by no less fundamental authority than Halsbury, where the rule has been stated, as follows (Halsbury 8 Hals, (3d) 136, as quoted in K. (E.) v. K. (D.), [2003] B.C.J.

No. 1961, 2003 BCSC 1296 , at para. 30 ): An agreement to stifle or withdraw from a prosecution in respect of an offence of a public nature is against public policy and illegal, because the effect of it is to take the administration of the law out of the hands of the judges and to put it into the hands of a private individual to determine what is to be done in the particular case. [page186] [ 20 ] The case from which this quotation is extracted makes the point that this does not ask whether the offence was "criminal" or "civil", but whether it can be characterized as a "public offence" (see K. (E.) v.

K. (D.), supra, at para. 31 ). The case considered whether an order from a New Jersey court requiring compliance with a settlement agreement in which it appeared that the husband had agreed to pay support for his two children in return for the withdrawal of a charge or complaint of domestic violence. It says [at para. 16]: A provision will be contrary to the public policy of British Columbia if it contains the agreement to withdraw, compound or drop a public offence, stifle a public prosecution or forgo a public right. . . .

Analyzing this matter on a balance of probabilities, I find the impugned provisions should be set aside as contrary to public policy. [ 21 ] The complaint to the Law Society, made by Sandi Thompson, raises issues of public importance that extend beyond the private interests of the parties to the settlement. It raises issues of public policy and implicates the duty of the Law Society to protect the public interest.

It is incumbent on us to ensure that members of the public can trust the work of the lawyers they retain and be sure that those who step outside the rules and ethical principles will be properly disciplined. [ 22 ] Counsel for William D. Martin submitted that the answer to all of this is the acknowledgment made by his client that the settlement cannot bind the Law Society. Counsel says that even with the withdrawal of the complaint, the Law Society would be free to continue any investigation and take whatever disciplinary action is warranted.

This suggests that there would be no impact on the ability of the Law Society to proceed. In a theoretical world, this might be possible. In the practical world, it is not. It is not just that complaints raise matters that have a broader public interest. It is that, by their nature, these matters are important and the way we treat them is demonstrative of the significance we give them. Anything that limits the complainant from willingly and openly taking part would signal a lack of concern for the broader public interest.

In this case, Sandi Thompson and Nancy Thompson would be required to withdraw the complaint and provide William D. Martin with a "Full and Final Release" with respect to "all pending and future complaints filed with the Law Society . . . ". [ 23 ] For the reasons reviewed herein, the motion is dismissed. The term of the settlement requiring Sandi Thompson and Nancy Thompson to withdraw the complaint to the Law Society cannot be enforced. [page187] [ 24 ] No submissions were made as to costs.

If the parties are unable to agree, I will consider written submissions on the following terms: (1) on behalf of the responding party (Sandi Thompson), no later than 15 days after the release of these reasons. Such submissions are to be no longer than four pages, double- spaced, exclusive of any costs outline, bill of costs or case law that may be provided; (2) on behalf of the moving party (William D. Martin) and the party supporting the motion (Nancy Thompson), no later than ten days thereafter.

The submissions for each of them, individually, to be no longer than four pages, double- spaced, exclusive of any costs outline, bill of costs or case law that may be provided; (3) on behalf of the responding party (Sandi Thompson), in reply, no later than five days thereafter. Such submissions to be no longer than two pages double-spaced. Motion dismissed.