2017 NBCA 32, 2017 NBCA 32

COURT OF APPEAL OF COUR D’APPEL DU NEW BRUNSWICK NOUVEAU-BRUNSWICK 102-16-CA G. KEITH ALLEN APPELLANT G. KEITH ALLEN APPELANT - and - - et - THE LAW SOCIETY OF NEW BRUNSWICK RESPONDENT BARREAU DU NOUVEAU-BRUNSWICK INTIMÉ Allen v. The Law Society of New Brunswick, 2017 NBCA 32 Allen c.

Barreau du Nouveau-Brunswick, 2017 NBCA 32 CORAM: The Honourable Chief Justice Drapeau The Honourable Justice Richard The Honourable Justice Green CORAM : l’honorable juge en chef Drapeau l’honorable juge Richard l’honorable juge Green Discipline Committee of the Law Society of New Brunswick : November 3, 2016 Comité de discipline du Barreau du Nouveau- Brunswick : le 3 novembre 2016 History of Case: Historique de la cause : Decision under appeal: Unreported Décision frappée d’appel : inédite Preliminary or incidental proceedings: N/A Procédures préliminaires ou accessoires : s.o.

Appeal heard: May 30, 2017 Appel entendu : le 30 mai 2017 Judgment rendered: August 10, 2017 Jugement rendu : le 10 août 2017

Reasons for judgment by: The Honourable Chief Justice Drapeau Motifs de jugement : l’honorable juge en chef Drapeau Concurred in by: The Honourable Justice Richard The Honourable Justice Green Souscrivent aux motifs : l’honorable juge Richard l’honorable juge Green Counsel at hearing: For the appellant: J. Kitty Maurey For the respondent: Edwin G. Ehrhardt, Q.C. Avocats à l’audience : Pour l’appelant : J. Kitty Maurey Pour l’intimé : Edwin G. Ehrhardt, c.r.

THE COURT On May 30, 2017, the Court dismissed, with reasons to follow, the within appeal against the order of costs rendered by a panel of the Law Society’s Discipline Committee after it found the appellant guilty of conduct deserving sanction and imposed the sanctions it deemed appropriate, namely a reprimand and a fine. The Court’s reasons for decision are set out in the accompanying text.

LA COUR Le 30 mai 2017, la Cour a rejeté, en indiquant que les motifs suivraient, le présent appel à l’encontre de l’ordonnance de dépens rendue par un sous-comité de discipline du Barreau après que celui-ci a conclu que l’appelant avait fait preuve d’une conduite répréhensible et a infligé les sanctions qu’il jugeait appropriées, à savoir une réprimande et une amende. Les motifs de la décision de la Cour sont exposés ci- après. The judgment of the Court was delivered by DRAPEAU, C.J.N.B. I.

Introduction [ 1 ] In a July 20, 2016 decision on the “merits”, a panel of the Discipline Committee found the appellant, a longstanding Queen’s Counsel and respected member of the Law Society, guilty of “conduct deserving sanction” within the meaning of s. 60(1) of the Law Society Act, 1996, S.N.B. 1996, c. 89 . The conduct in question was particularized in two charges that were set out in the Notice of Complaint served upon the appellant and subsequently amended at the hearing. The first charge alleged the appellant provided legal services falling short of the standards in

Chapter 2 (“Competence”) and

Chapter 3 (“Quality of Service”) of the Law Society Code of Professional Conduct . The second was founded on a claim that the appellant continued to act for his client, the complainant, after a conflict of interest arose, thereby engaging in conduct proscribed by the Code ’s

Chapter 6 (“Conflict of Interest between Clients”). The decision on the “merits”, including the finding of conduct deserving sanction, is not under appeal. [ 2 ] In a follow-up decision, the panel reprimanded the appellant, imposed a fine of $3,000 and

ordered he pay the sum of $16,195.27 towards the costs incurred by the Law Society. Only the last-mentioned order is impugned on appeal. The appellant contends it is unreasonable. Respectfully, I disagree. [ 3 ] After hearing counsel, the Court dismissed the appeal from the bench with reasons to follow. In the text that follows, I articulate the reasons that prompted me to join my colleagues in disposing of the appeal in that fashion. II. Context and

Summary Disposition of Some Issues [ 4 ] As will be seen, and contrary to my general practice, I reproduce lengthy excerpts from the decisions of the Discipline Committee panel. I do so for a host of reasons. First, Law Society of New Brunswick v. Ryan , 2003 SCC 20 , [2003] 1 S.C.R. 247 , instructs this Court to “look to” the panel’s reasons in exercising its appellate function under the Act .

A proper understanding of those reasons requires their consideration in the context fleshed out by the panel in its review of the evidence, both testimonial and documentary, and its findings of fact, credibility and reliability. Second, a verbatim reproduction of those reasons will serve to convey the panel’s unfiltered take on what is inarguably an unusual set of circumstances. Third, the record at our disposal does not include a transcript of the evidence and the representations in first instance. Fourth, neither side takes issue with the panel’s findings of fact, credibility and reliability.

Finally, while the real estate transaction that gave rise to the underlying complaint and charges against the appellant may generate seemingly legitimate concerns over the appropriateness of the purchase’s financing and both the real estate and broker fees charged, there is absolutely no suggestion, let alone evidence, of dishonesty, misappropriation of funds or lack of credibility on the appellant’s part.

The panel’s reasons, as formulated, make that case quite competently. [ 5 ] As noted, the appeal challenges an order of costs by a panel of the Discipline Committee constituted to inquire into two charges, which were set out in a Notice of Complaint dated July 28, 2015. The salient parts of the Notice lay out the kernel of the controversy as it was initially conceived, without the benefit of the appellant’s formal input by way of the statutorily prescribed reply: [1] In or about May of 2012 G.

Keith Allen was retained to act for [Serena Wallace] in the sale of her home (“the Property”). [Serena Wallace] had negotiated an agreement with [Brad MacPherson] of [Madawaska Mortgages] that she would sell her property for $102,000.00 and [Brad MacPherson] would purchase the house and “flip” it. According to that agreement, [Serena Wallace’s] mortgage of $77,000.00 would be paid out from the proceeds from the sale of the property, and she would receive a balance of $24,000.00. [Brad MacPherson] advised [Serena Wallace] that [Marcel Arsenault] would be the purchaser of the property.

In May of 2012 [Serena Wallace] attended G. Keith Allen’s office to sign documents pertaining to the sale to [Marcel Arsenault]. At that time G. Keith Allen’s client, [Serena Wallace], noted that there was a broker’s fee of $59,807.50. When [Serena Wallace] questioned G. Keith Allen, about the broker’s fee he failed to provide her with any explanation for the fee. [Serena Wallace] never received any proceeds from the sale of the property, she failed to receive complete reporting documents from G. Keith Allen and G.

Keith Allen failed to provide her with any detail surrounding her transaction notwithstanding inquiries from her. G. Keith Allen therefore failed to provide his client with competent legal services, failed to keep her reasonably informed during the currency and completion of her matter, and failed to make a complete and prompt report to his client contrary to Rule 2 (Competence), Rule 3 (Quality of Service) of the Law Society of New Brunswick Code of Professional Conduct ; [2] In May of 2012 G. Keith Allen was retained to act for [Serena Wallace] in the sale of her Property. G.

Keith Allen also acted for the purchaser, [Marcel Arsenault], in the same transaction. G. Keith Allen failed to obtain the written consent of the parties that he represent both of them. When [Serena Wallace] attempted to obtain information regarding the progress of her file and her failure to receive sale proceeds, G. Keith Allen failed to provide this to her in a timely manner and continued to act for the purchaser even when it became evident that [Serena Wallace] was questioning the propriety of the transaction and the documentation associated with it. G.

Keith Allen therefore acted in a conflict of interest contrary to

Chapter 6 (Conflict of Interest between Clients) of the Law Society of New Brunswick Code of Professional Conduct . [ 6 ] The essence of the first charge’s particulars (as opposed to anticipated evidence) is that the appellant failed: (1) to provide Ms. Wallace with competent legal services; (2) to keep her reasonably informed; and (3) to make a complete and prompt report to her. As for the second charge, the essence of its pleaded particulars is that the appellant continued to act for both sides of the transaction after it became evident that Ms. Wallace “was questioning the propriety of the transaction and the documentation associated with it”.

[ 7 ] Under s. 56(4) of the Act , the appellant was required to file a reply “[admitting] any charges that are true, [and giving] an explanation of any charges that are not true”. In his August 14, 2015 Reply, the appellant disputed “the complaints of [Serena Wallace] as set out in the Notice of Complaint in their entirety”. The Reply did not go on to provide an “explanation” in accordance with s. 56(4). [ 8 ] The hearing into the charges took place on May 17, 2016.

The panel struck from the second charge the allegation that the appellant failed to obtain the written consent of the parties to his representation of both sides to the transaction. The panel did so on the grounds that the evidence adduced by the appellant established “clearly that this consent had been obtained”.

The panel also heard four witnesses, Serena Wallace, the complainant, solicitor William Craig Kean, who testified on behalf of the Law Society as an expert in the practice of residential real estate law, Richard Moore, the real estate agent, and the appellant. [ 9 ] The panel’s decision on the merits features a detailed review of Ms. Wallace’s testimony and the documentary evidence. I reproduce hereinafter the pertinent parts of that review, adding only sub-headings to break down the text into discrete topics and thereby facilitate a proper understanding of Ms.

Wallace’s perspective on the events surrounding the sale of her home:

a) Ms. Wallace’s background. Ms. Wallace is 43 years old, lives in Zealand, New Brunswick and works as an Administrative Assistant at the Dr. Everett Chalmers Hospital, in Fredericton, New Brunswick. After a one-year collegiate course as a legal assistant, she has worked in the hospital system on and off for 22 years. She has also worked for the Law Society as an assistant to the Registrar of Complaints, from May 2008 to September 2009.

b) The subject property at the time of sale: unoccupied; in need of rehabilitative measures to remove an oil smell; subject to a mortgage of less than $75,000; and assessed at $119,000 for property tax purposes. [Ms. Wallace] acquired a property situated at 1433, Route 104, Zealand, New Brunswick in April 2007 from her grandmother, for $50,000, an amount lower than the then value of the property, which was assessed, for real property taxes purposes at $119,000. Although the property was in good shape, it was a bit dated. Ms. Wallace installed a new furnace, flooring, built a bathroom, painted and renovated. Ms.

Wallace lived on the property until December 13 th 2010 when the property was flooded. Oil entered the basement. She had to leave the premises for the duration of the cleanup. Ms. Wallace received some compensation from the New Brunswick Disaster Assistance Program which allowed her to do some cleanup. There was still a persistent oil smell in the house. Ms. Wallace therefore never occupied the property after the flood. Upon acquiring the property, Ms. Wallace entered into a mortgage with HSBC for $68,000 but later paid it off and re-mortgaged with Scotiabank for $80,000 to obtain a better interest rate.

She maintained her mortgage in good standing after the flood and owed approximately $75,000 in 2012.

c) The involvement of a broker, Madawaska Mortgages: Ms. Wallace’s expectation that it would buy the property for $100,000, pay off the mortgage, renovate and resell, at which time she would be paid the balance of the purchase price owing to her. In 2012, her boyfriend mentioned that a friend of his had sold a property through Madawaska Mortgages, of Grand Falls, New Brunswick. They were in the business of “flipping” properties: buying, renovating and reselling. Since she did not know how to proceed to correct the oil scent situation, she thought they might be able to better help with the sale of her house.

She contacted an agent, Brad MacPherson, from their Fredericton office, in February 2012. Mr. MacPherson assured her he had a “boxful” of clients looking to buy. He made arrangements for [Marcel Arsenault] and himself to visit the property, along with Ms. Wallace.

After the visit, he asked Ms. Wallace how much she wanted for the property and she said she would accept $100,000. Mr. MacPherson agreed and also agreed to buy her furniture for an extra $3,000. Mr. MacPherson explained that he would be “flipping” the property, that is to say he would buy it, renovate it and resell it. The existing mortgage with Scotiabank would be paid in full upon the first sale [to Mr. Arsenault] and Ms. Wallace would receive the balance of her money upon the resale, which would happen within 30 days to 8 weeks of the first sale. On March 8, 2012, Mr. MacPherson sent an email to Ms.

Wallace (Exhibit #5, page 42), reading: Hi Serena. Send me a copy of your payout statement on your home in Zealand. I will try my best to put a deal together for you. Here is what I can do fast if you are in agreement: based on our phone chat ... We buy it and pay-out first mortgage of $75,000 with our private money. Have you come in with a 2 nd mortgage for $25,000; 24 hours after closing. I will then approve a mortgage for one of my buyers (flip), close their mortgage and pay you out an additional $25,000. You walk away with $25,000 and we cover all the fees.

Will take me 30 days to complete the whole deal and you receive $25,000. Does that work for you?

d) The involvement of Richard Moore, the real estate agent, and the execution of the first agreement of purchase and sale (for $100,000). On or about April 10 th 2012, Ms. Wallace met with [Richard] Moore [a real estate agent to whom she had been referred by Mr. MacPherson] to execute an Agreement of Purchase and Sale, with the buyer being Mr. Arsenault, for a purchase price of $100,000 and a closing date of May 15 th 2012. (page 93 of Exhibit #5).

e) The subsequent addition of addendums to the agreement of purchase and sale for $100,000: the purchase price is raised to $102,000, the existing mortgage is to be paid and replaced by another for an unspecified amount and the purchaser is to provide Ms. Wallace with a second mortgage for $24,000 (to be paid upon the property’s resale, which was expected within two months of closing). There were no addendums attached to the contract when she executed it. Mr. MacPherson later emailed Addendums “A” and “B” for her to sign and return. She did. Addendum “A” reads (Exhibit #5, page 40): ADDENDUM “A” TO PURCHASE AND SALE

SUBJECT PROPERTY: 1433 ROUTE 104, ZEALAND, NB Vendor hereby agrees to a vendor take back (VTB) financing of $24,000 secured as a 2 nd security collateral mortgage on the subject property. Purchase price is to be $102,000; of which the vendor will receive $78,000 immediately on closing less the VTB noted above. Addendum “B” attached shall include all listed furniture, appliances and fixtures [ . ] The purchase and sale shall include all window dressings in the home.

The Vendor hereby agrees the VTB is to be paid in full immediately upon the purchasers (sic) re-sale of the home; unless new terms are mutually agreed in writing between the parties hereto. The Addendum was signed by both Mr. Arsenault and Ms. Wallace. The second addendum listed the furniture and equipment included in the purchase price. It was also signed by both the buyer and the vendor. Ms. Wallace says she enquired with Mr. MacPherson about the Vendor Take Back financing. She understood she would be paid the remaining $24,000 no later than two months after closing. According to Ms.

Wallace the timeframe for this last payment kept changing.

f) An evolving transaction, one that ends up with questionable new features: the property gets listed by the real estate agent for $139,000 and then $149,000, even though it had already been sold for much less; a new agreement of purchase and sale (for $145,000) is executed; and Ms. Wallace’s confusion grows. On May 2, 2012, Mr. MacPherson sent the following email to Mr. Moore (Exhibit #5, page 82): Hi Rick; follow these steps ... I want to close this as fast as we can. Please call and meet [Serena] tomorrow to sign the listing of $149,900 [sic] and get property information sheet completed ...

Prepare a purchase and sale for $142,000 for Marcel Arsenault. Then you will bring her the offer from Marc at $144,000; get me back the sign (sic) purchase and sale as soon as possible (If you email it to me tonight Marcel Arsenault will sign it in the morning.) I want to close this sale on or before May 15 th , 2010 (sic); Conditional only on 10 days for bank financing, seller property disclosure statement signed by vendor and home insurance obtained by buyer. Addendum A to state: Vendor agrees to a 2 nd mortgage of $25K and will receive $78,000 immediately on closing.

Buyer agrees to pay legal fees and closing costs. I want to move quick to close it. Keith Allen will close the sale. Brad Ms. Wallace was copied on this email. She tried to contact Mr. MacPherson but was not successful. She thought she was selling for $100,000 but Mr. MacPherson had told her he needed to finance an additional amount, for the improvements. Ms. Wallace was then told she had to meet with Mr. Moore, a real estate agent from Referral Real Estate Services Inc. in Fredericton, in order to list the property for sale, even though a purchase and sale agreement had already been executed. Mr.

MacPherson told her it was all part of the process and she trusted him. A listing for $139,000, (Exhibit #5, page 82) dated May 3, 2012, was executed by Ms. Wallace. Another listing agreement (Exhibit #5, page 86), also dated May 3, 2012, was later signed for $149,000. Ms. Wallace was then shown another Agreement of purchase and sale (Exhibit #5, page 33), this time for $145,000 and dated May 9 th 2012. She recognized her signature on page 5 of the document but said the initials on the first page (where the purchase price is indicated) are not hers.

She testified she never saw that first page prior to closing but only much later, when she filed a complaint, and that she never agreed to sell for $145,000. She does not know why she was asked to sign a second Agreement of purchase and sale. She also said the name of the lawyer to represent the parties was not filled in when she signed and that she did not know Mr. Allen at the time. How the sale was to proceed was still not clear to Ms. Wallace. On May 29th, 2012, she sent the following email to Mr.

MacPherson (Exhibit #5, page 43): Brad, as per our conversation today, could you just please write the details of what is happening (to cover my butt)? Regarding the mortgage payout, then the rest being paid later, people in the house for a month and electricity into their name, etc ... Also we need to discuss insurance. Thanks! Serena. A few minutes later, Mr. MacPherson replied: (Exhibit #5, page 43) The entire deal closes on Friday or Tuesday and after that you have no worries; it is a sale. I don’t understand your question?

On closing you receive $78,000 and you agreed to carry a 2 nd mortgage on the property for $25,000 until we complete the renovations and resell the home as discussed. On closing; insurance, power, property taxes etc. anything to do with the home is our responsibility as the owner. You are free n clear of all responsibility.

g) The appellant’s involvement: a written consent allowing him to represent both sides is executed; Ms. Wallace signs the Letter of Direction purporting to instruct the appellant to pay Madawaska Mortgages a brokerage fee of $59,807.50 (presumably out of the proceeds from the first mortgage); the purchaser is to execute a second mortgage in Ms. Wallace’s favor; and continued confusion on her part regarding the terms of the deal.

[Ms. Wallace’s] first contact with Mr. Allen was on June 5 th 2012. She had been called a few days before to

schedule the appointment. It was later in the afternoon, after she finished her work at 4 PM. The meeting lasted about 20 minutes. A secretary first brought her to a boardroom and left her to review the documents. She met with Mr. Allen, who asked her if she had reviewed the documents and had any questions. She then signed the prescribed written consent agreeing to Mr. Allen representing both parties. She testified she also signed a “Letter of direction”, although it is dated June 6 th 2012. She says she only attended Mr. Allen’s office once and that the handwritten date for this document is not her handwriting.

That document (Exhibit#6, page 11) reads: LETTER OF DIRECTION VENDOR SOLICITOR LETTER OF DIRECTION AGREEMENT Client(S): SERENA WALLACE CURRENT ADDRESS (address) FROM BROKER: Madawaska Mortgages ADDRESS: 191 Caswell Road, Grand Falls, NB E3Z 1A6 In consideration of you arranging a loan/mortgage in the amount required for the purchaser to purchase and improve property located in 1433 route 104 Zealand New Brunswick in accordance with a Statement of Mortgage or any other loan acceptable to Me/Us, I/We the undersigned, agree to pay you a flat brokerage fee of $59,807.50 (fifty nine thousand eight hundred seven dollars and 50 cents) I/We hereby direct the/our solicitor acting on this transaction to pay Madawaska Mortgage your brokerage fee of $59,807.50 (fifty nine thousand eight hundred seven dollars and 50 cents) from the proceeds of this mortgage loan/closing and to pay this fee to Madawaska Mortgage, immediately upon closing.

Should We/I decide not to accept the above named mortgage; Madawaska Mortgages will maintain their full brokerage fee which I acknowledge to be a pre-estimate of damages, and not a penalty of any kind or nature. Dated at Fredericton, this 6th day of June 2011 (sic). Applicant Signature: (SERENA WALLACE) Printed Name: SERENA WALLACE Ms. Wallace also executed an HST certificate, a UFFI warranty and a transfer, all dated June 5 th 2012. Ms. Wallace testified that she asked Mr. Allen about the Letter of Direction and the large brokerage fee as this was the first time she heard of this figure. She says Mr.

Allen shrugged his shoulders and said it was a deal between her and Mr. MacPherson. She asked if the papers said she would be getting her $24,000 and she says he again shrugged his shoulders and did not answer at first but then said he would check with the purchaser and Mr. MacPherson.

Ms. Wallace says she asked about the second mortgage and Mr. Allen said he would follow up on this. She felt he was in a rush to get her to sign and leave. She felt uncomfortable. She does not recall discussing anything else and said the $145,000 Agreement of Purchase and Sale was not reviewed, nor were the numbers (purchase price, adjustments, pay-out etc). She was not told what funds Mr. Allen would receive from the first mortgage financing. She knew someone was buying and renovations were necessary but there were no discussions as to the amount to be spent on improvements.

She thought a second mortgage was a guarantee of payment. There were no discussions as to the terms of her second mortgage. Counsel for the Law Society then showed her Exhibit #6, page 10, which reads: To funds directed to be paid to S. Wallace Pursuant to letter of direction, increased To 103,000.00 To tax credit to Ms. Wallace $469.59 To credit re promissory note $25,000.00 To paid Scotia Mortgage 72,661.93 To funds to S. Wallace 5,807.66 $103,469. [ 5 ]9 $103,469.59 Ms. Wallace denied having been shown that document when she met Mr. Allen.

She also denied seeing other documents showing numbers for the transaction and the first mortgage financing. Ms. Wallace testified she then had no contact with Mr. Allen prior to closing (scheduled for June 8 th 2012). She relied on Mr. Allen to represent her interest in the transaction.

h) The closing and the salient events in its immediate aftermath. At closing, a first mortgage is granted to the National Bank for more than $40,000 in excess of the actual purchase price; Ms.

Wallace is paid $5,807.66 and given a promissory note instead of the agreed-upon second mortgage; the real estate agent is paid a commission of $8,192.50 even though the property was sold before his involvement; Madawaska Mortgages is paid a broker’s fee of $59,807.50 (from which the appellant’s legal fees are deducted), without any readily enforceable assurance that any of those fees will be applied to the required home improvements. Post-closing, Ms. Wallace’s confusion, angst and dissatisfaction mushroom; she seeks clarifications from Mr. MacPherson and

the appellant. About a week after the closing, [Ms. Wallace] called Scotiabank to confirm that her mortgage had been paid. She was told there was an overpayment and that this had been returned to Mr. Allen. She then contacted Mr. Allen’s office to get those extra funds. She was told she had to attend the office to pick up her cheque. She did so and received a cheque for $800 to $900 and asked for copies of her documents. She was told they were in Mr. Allen’s office and he was with a client at the moment. She requested the documents be sent to her.

On cross-examination, it was suggested to her she had received her cheque from Mr. Moore, that the overpayment was only about 300$ and that she received a cheque for $5,807.66. She admitted she did receive that amount but does not remember that it was given to her by Mr. Moore. In July 2012, Ms. Wallace tried to contact Mr. MacPherson about her money. She spoke to Daniel Paradis, Mr. MacPherson’s supervisor and owner of Madawaska Mortgages. She learned that Mr. MacPherson was in a rehabilitation center for cocaine addiction. She was told that her file was their top priority. Ms. Wallace called Mr.

Allen’s office eight to ten times until September 2012 when she then demanded that her documents be given to her by the following Friday. She still had not received her $24,000 and was getting nervous. The following Friday, she attended Mr. Allen’s office and received a small envelope with 5 pages, including: a. The letter of Direction mentioned above. (Exhibit #6, page 11) b. The document identified as Exhibit #6, page 10, mentioned above. c.

A page (Exhibit #6, page 12), containing these figures: 145,000 loan amount -8192.50 real estate fees = 136,807.50 -102,000 amount to [Serena] = 34,807.50 + 25,000 VTB (SECOND MORTGAGE) [Serena] = 59,807.50 less lawyers invoice for both sides. d.

A promissory note (Exhibit #6, page 26), which reads: PROMISSORY NOTE AMOUNT: $25,000.00 DATED: June 8, 2012 MATURITY DATE: June 8, 2013 FOR VALUE RECEIVED, Joseph Marcel Arsenault (the “Borrower”), promises to pay to Serena Dawn Wallace for 1433 Route 104 Highway, Zealand New Brunswick the principal sum of Twenty-Five Thousand Dollars ($25,000) without interest with the principal being due and payable on the Maturity Date or when subject property is sold.

Upon default in payment of any instalment or payment hereunder, all remaining instalments and payments shall immediately become due and payable. The undersigned waive presentation, protest and notice of dishonour of this promissory note. Borrower: Joseph Marcel Arsenault Ms. Wallace says she was shocked. There had never been question of a promissory note. The one-year timeframe was never discussed. The breakdown of numbers didn’t make sense to her. None of the documents she had signed were there. No mortgage documents were included. She asked Mr. Allen’s staff about it.

She was told they would look into it and get back to her. She called Mr. Allen a few weeks later, asked about the promissory note and asked why she still had not received her money. Mr. Allen told her MacPherson and Moore would be coming to his office and he would try to talk to them. She received no reply. Ms. Wallace never got a report on her file. In February 2013, she met with Mr. Paradis and Mr. MacPherson and was told that Mr. Arsenault would sign the second mortgage and that she would be paid shortly.

i) Ms. Wallace finally gets the promised second mortgage, but it proves to be a valueless security: the purchaser defaults under the first mortgage and goes bankrupt; the first mortgagee exercises its power of sale, but recovers less than the amount owing under its mortgage; and Ms. Wallace sues the appellant and others, and achieves a net recovery of only $10,000. A while later, [Ms. Wallace] contacted Mr. Allen’s office. He confirmed the second mortgage had been put in place. No terms were discussed. She felt better, a bit more secure.

She was never explained what a second mortgage is and for how much the first mortgage was for so she enquired by herself. She contacted the first mortgagee and the manager explained to her that her mortgage was no guarantee of payment. Eventually, Mr. Arsenault went bankrupt. The first mortgagee proceeded with a mortgage sale and the property was sold for well below the amount due on the first mortgage. Ms. Wallace did not receive her $24,000. She filed a civil action against Mr. Allen, Mr. MacPherson, Madawaska Mortgages, Richard Moore, Marcel Arsenault and McInnis Cooper.

She eventually received $10,000 net of her lawyer’s fees. It took five years all in all. [paras. 7-48] [ 10 ] The panel was satisfied Ms. Wallace testified honestly and to the best of her knowledge. However, it found her recollection of some events was unreliable. [ 11 ] These are the key features of Mr. Kean’s expert testimony: Mr. Kean testified that the transaction probably closed on June 8th, 2012 as the cheques bear this date and there was a letter to the bank saying the closing was being postponed to June 8 th 2012. He could not find any documentation as to disclosure to Ms.

Wallace of the amount of the first mortgage. His opinion was that when representing both parties, and there is a “Vendor Take Back” financing, the lawyer should inform the seller of this information, make

sure the security is executed and registered. His opinion was that when a lawyer receives a Purchase and Sale Agreement, he/she should review it with his client. A mortgage payout should be obtained, a Statement of Adjustments prepared and reviewed with client. This statement should indicate the purchase price, the deposit paid, the adjustments for taxes, fuel etc. If there is a Vendor Take Back, it should also appear on that document. Closing documents should be prepared and reviewed with client. The lawyer should send a final report to the client, with a copy of closing documents, a report on trusts funds.

The provenance and disbursement of funds should be clear. This final report would ideally be done within a month of closing but can be delayed because of the time it sometimes takes for the releases of prior mortgages to be received. In Mr. Allen’s file, Mr. Kean testified he could not find any reporting documents. When shown the document found on page 10 of Exhibit #6, reproduced above, he said it looked like a Statement of Adjustments but wasn’t sure. The document mentioned a letter of direction with an increase in the funds payable to Ms. Wallace to $103,000 but no such letter could be found. Mr.

Kean elaborated on the Vendor Take Back agreement. Since the documentation was silent on the terms of the Vendor Take Back financing, his opinion was that the lawyer should find out what these terms were: When was the amount due to be paid? Was it to be paid by installments and if so of what amount and when? Is there to be interest payable on the amount due? He could find no documentation as to these points having been reviewed with Ms. Wallace. Mr. Kean added that the lawyer, in a Vendor Take Back financing situation should explain to his client what the legal effect of what the client is getting into.

He should explain the difference between a first and second mortgage, the difference between a mortgage and a promissory note, the risks involved, even if the Purchase and Sale Agreement is already signed. Again he could find no documentary evidence that this was done. He testified a lawyer should have made inquiry with both the seller and buyer re extraordinary brokerage fee of $59,807.50. No documentary evidence was found in the file that this had been done. He could not explain why a promissory note was prepared instead of the second mortgage mentioned in the documents.

Maybe the mortgage was to be collateral to the note but then it was prepared months later. This 9 months’ delay between the date of closing and the execution of the second mortgage seemed highly unusual to him and should not happen. There is a risk that another charge could be registered against the property before the second mortgage is registered. The three months’ gap between the date of execution and registration is also highly unusual. [paras. 54-61] [ 12 ] Here is the panel’s account of Mr. Moore’s testimony: He indicated he is a real estate broker with Referral Real Estate Services Inc.

His first involvement in this matter was a contact from Mr. MacPherson, in early April 2012, saying he had a seller and a buyer and needed a property to be listed. Mr. MacPherson brought both parties to him. Mr. Moore knew Mr. MacPherson as a mortgage broker with Madawaska Mortgages. He met Ms. Wallace at her work place to have her sign the listing agreement (Exhibit #5, page 93). He states he was not aware a purchase and sale agreement had already been executed at the time. He had not seen the $100,000 Agreement of Purchase and Sale until some two years later, when a complaint was filed by Ms.

Wallace against him to the New Brunswick Real Estate Board. He prepared the $145,000 agreement (Exhibit #5, page 33). There were no addendums attached (except the dual agency agreement). He said that normally, such addendums would be mentioned in

section 10 of the agreement. On cross-examination, he admitted the original document was for $144,000 and he changed it to $145,000 and wrote Ms. Wallace’s initials “at her request”. When asked if this is contrary to his profession’s rules, he answered: it is what it is.

He confirmed having Ms. Wallace execute a first listing agreement for $139,000 and a second one for $149,000, to “establish value”. He visited the property after it [was] listed. He testified meeting Ms. Wallace on June 6 th 2012 to have her review and execute the Letter of Direction (Exhibit #6, page 11). The word “Fredericton” is his handwriting. He says he also reviewed the figures found at page 12 of the same exhibit with Ms. Wallace. He then emailed these two documents (separately) to Mr. Allen. (Exhibits #9 and 10). On June 8, 2012, he received a call from Mr.

Allen’s office that his commission cheque for $8,192.50 was ready so he went to the office to pick it up. There was a letter with Ms. Wallace’s name on it so he called her to ask if it was ok to bring it to her. She agreed and thanked him for his work. On cross-examination, he was asked why the parties were paying him a commission of $8,192.50 since the deal was already done prior to the listing. He replied he had to pay back a referral fee to Mr. MacPherson of about $5,000, hence he only netted approximately $3,000.

He first listed the property for $139,000 and then changed the agreement to $149,000 on the instructions of Mr. MacPherson. He testified the reason why the listing was increased to $149,000 was to provide credibility to the appraisal and facilitate financing. Mr. Moore testified he did nothing wrong. Ms. Wallace lost money and filed complaints against him to several authorities. [paras. 63-73] [Emphasis added.] [ 13 ] The panel found the appellant’s testimony was both credible and reliable, and it preferred his testimony where it conflicted with that of Ms. Wallace.

The panel’s understanding of the appellant’s testimony is as follows: Mr. Allen did not know Ms. Wallace prior to opening the file of 2012. His first involvement was when he received the Agreement of Purchase and Sale from Mr. Moore on May 24 th , 2012. (Exhibit #5, page 33). The addendums were not included. He only learned of them on June 6 th 2012. He did the usual conflict search and opened the file on May 28 th , 2012. He then obtained the Service New Brunswick information, printed a copy of the existing mortgages and obtained a Certificate of Registered Ownership. He still had had no contact with Ms.

Wallace at this point. Since he was representing both the vendor and the purchaser, he prepared the financing documentation for the purchaser and asked for the pay-out statements. Two mortgages were on the Certificate of Registered Ownership. He contacted the lawyer that had done the second existing mortgage to have the first one released. He requested the funds and prepared the vendor’s documents, checked taxes, requested and received title insurance etc. A letter of joint representation was prepared and executed. Mr. Allen met Ms. Wallace for the first and only time (prior to closing) on June 5 th 2012.

That meeting had been arranged through his assistants. The assistant brought Ms. Wallace to the boardroom and left her to review the documents, without Mr. Allen being present. Mr. Allen then joined her and asked Ms. Wallace if she had any questions or concerns. The documents were then executed. He does not recall Ms. Wallace having any questions. He explained Ms. Wallace is wrong in saying she had questions about the Letter of Direction or about the figures of page 12 as he only

received these documents the following day. For the same reason, he therefore denies that the Letter of Direction was signed before him, at the June 5 th , 2012 meeting. On June 5 th , 2012, he was therefore only aware of an agreement for purchase and sale for $145,000. He was still not aware of any Vendor Take Back financing or of any second mortgage. He does not recall the question of the payment of $25,000 being discussed at that time. He still thought she was receiving $145,000 upon closing. He did not review the Agreement of Purchase and Sale with Ms. Wallace. He could not negotiate the agreement.

It had already been executed and was binding. The transaction closed on June 8 th 2012. He was not contacted by Ms. Wallace between June 5 th and June 8 th . Upon closing, he paid the existing mortgage and there was an overpayment of $390 since Ms. Wallace had made a payment after the pay-out statement had been issued. That amount, plus the remainder of the funds received at closing, were remitted to Ms. Wallace. It was only later that Ms. Wallace contacted him about not having received her $25,000. He was not involved in negotiating that Vendor Take Back financing.

He admits not having had a second mortgage executed and registered right away. Instead, he prepared a promissory note, payable in one year and bearing no interest, thinking the resale would occur immediately. He assumes responsibility for this mistake. Once the second mortgage was finally executed, it was not registered for months. Mr. Allen could not explain that delay and why there is no hard copy of that mortgage in his file. In between the registration of the first and the second mortgage, there were no intermediate encumbrances registered, nor was the property sold.

He admits there were no formal statements of adjustments and that the numbers were not discussed with Ms. Wallace, even after he received the documents from Mr. Moore on the 6 th . “It was their deal – no obligation to advise client.” Again, Mr. Allen confirmed that no discussions had taken place with Ms. Wallace regarding the second mortgage, the security regarding a second mortgage or [changes] regarding the addendums on page 40 and 41 of Exhibit #5. He admits not having sent any reporting letter to Ms. Wallace.

He could not explain why the document on page 10 of Exhibit #6 referred to a selling price of $103,000 while the calculation sent to him by Mr. Moore (page 12) indicated an amount of $102,000. He said there might have been a corrected letter of direction that he did not print. The price went from $145,000 to $102,000 to $103,000 but Mr. Allen indicated he never contacted Ms. Wallace to ask her if this was correct. On the document found at page 12 there is a mention of “+ 25,000 VTD (Second Mortgage)”. The addendums, also received by Mr.

Allen on June 6 th , mention: “vendor hereby agrees to a vendor take back (VTB) financing of $24,000 secured as a 2 nd security collateral mortgage on the subject property”. No specific terms as to this secondary financing were mentioned. He did not ask Ms. Wallace about these terms prior to closing. He did not inform Ms. Wallace of the amount of the first mortgage having priority to her security.

He assumed Ms. Wallace knew of the risks of the transaction since she had previous mortgage experience and considered she knew whata second mortgage meant and its consequences regarding a first mortgage. He admits not having discussed this with Ms. Wallace but saysshe had to know as she signed the addendums. Mr. Allen stated that Mr. Moore had told him he (Mr. Moore) had discussed the $59,807.50 brokerage fee (Exhibit #6, page 11) with Ms.Wallace. Mr.

Allen accepted this in good faith; no questions, no concern. [paras. 81-102] [Emphasis added.] [14] No representative of Madawaska Mortgages testified. [15] In the panel’s view, the Law Society bore the burden of proving, on a balance of probabilities,the first charge, namely a breach of

Chapter 2 (“Competence”) and

Chapter 3 (“Quality of Service”). As mentioned, the panel found theappellant testified honestly and reliably. Nonetheless, and taking into account his testimonial admissions, the fairly extensivedocumentary record and Mr. Kean’s expert opinion, the panel concluded the Law Society discharged its burden of proof: The first charge alleges a breach of Chapters 2 (Competence) and 3 (quality of service) of the code of conduct. The general rule of

Chapter 2 (Competence) of the Law Society of New Brunswick Code of Professional Conduct reads: The lawyer shallbe competent to perform all legal services undertaken by the lawyer on behalf of the client. […]

Chapter 3 deals with the quality of service. The general rule reads: The lawyer shall serve the client with a quality of service at leastequal to that expected by lawyers generally of a competent lawyer in a like situation. […] The panel finds that Mr. Allen possesses all the required knowledge and expertise to undertake a real property transaction. Mr. Allen has,however, admitted to not having prepared a proper Statement of Adjustments, not having reviewed the numbers with Ms. Wallace andnot having produced an acceptable reporting letter to his client. The Panel finds that the fact that Ms.

Wallace did not receive, to quote the charge “any proceeds from the sale of the property” is not abreach of the Rules of professional conduct. Had she been properly informed, she still might have proceeded as she did and lost money. The evidence clearly demonstrated that Mr. Allen failed to obtain and register a second mortgage in a timely fashion. However, after acareful examination of the charges laid against him, this panel is of the view that this element does not form part of either charge. Thepanel cannot rule on a specific conduct not included in the charges. See Nicholson v.

New Brunswick Institute of Chartered Accountants(1993) (NB KB), 137 N.B.R. (2d) 222 (Q.B.), affd (NB CA), 147 N.B.R. (2d) 158 (C.A.) and LawSociety of New Brunswick [v.] O’Toole, February 21, 2016. The panel accepts the evidence of Mr. Kean that a Statement of Adjustments must be prepared and reviewed with the client as well asdocuments showing the provenance and distribution of funds. The panel does find that Ms. Wallace did not receive proper reporting andwas not kept reasonably informed during the currency and completion of her matter. The panel also finds that Mr.

Allen failed to providehis client with appropriate details surrounding her transaction notwithstanding inquiries from her. The panel finds that Mr. Allen has breached these Chapters, particularly

Chapter 3 (Quality of service) and is therefore guilty of conductdeserving sanction on this count. [paras. 127-128, 130 and 132-136] [16] As noted, the appellant does not take issue with the panel’s finding that the essential elements ofthe first charge were proven, namely: (1) his failure to prepare a proper statement of adjustments for Ms. Wallace; (2) his failure toreview the numbers with her or otherwise keep her informed; and (3) his failure to provide her with an acceptable reporting letter.

[ 17 ] Nevertheless, the appellant underscores the panel found he did not receive the “Letter of Direction” before June 6 and, thus, could not have failed to explain it to Ms. Wallace on June 5, as she alleged. The appellant contends the panel made “very narrow findings” of sub-par conduct, and that it made those findings on the basis of his testimonial admissions.

In his submission, the panel overlooked the fact that some averments in the charges were not proven when it fashioned its order of costs. [ 18 ] The Law Society disagrees, underscoring the essence of the pleaded particulars was proven, the appellant only made those admissions in the course of his testimony at the hearing and he neither conceded having engaged in conduct deserving sanction nor apologized to the complainant or the Law Society for that conduct.

In my view, the Law Society’s point is well taken. [ 19 ] As mentioned, s. 56(4) of the Act obligated the appellant to file a reply to the Notice of Complaint in which he was required to “admit any charges that are true, [and] give an explanation of any charges that are not true”. The Notice of Complaint itself drew the appellant’s attention to that obligation. However, in his Reply, the appellant admitted nothing. He disputed, without the required explanation, the complaints “as set out in the Notice of Complaint in their entirety ” (emphasis added).

Had the appellant included in his Reply the admissions of fact he eventually made in his testimony and an explanation for his objection to the charges, the Law Society would undoubtedly have been spared some of the costs it incurred and for which it obtained an order of reimbursement. Having failed to comply with s. 56(4), the appellant cannot now successfully contend the panel’s decision to order full reimbursement of those costs was unreasonable. There is no merit whatsoever to this contention, and I would summarily reject it.

Nothing further need be said on point. [ 20 ] That is likewise the case for the appellant’s contention that previous decisions of the Discipline Committee compelled a significantly lower award of costs in the case at hand. In my assessment, those decisions do not involve truly comparable circumstances and I conclude none obligated the panel to eschew the order that it made. [ 21 ] As to the second charge, the panel found the appellant bore the burden of showing compliance with the Code ’s

Chapter 6 (“Conflict of Interest between Clients”) and that he failed to discharge this burden: The second charge is somewhat repetitive. It clearly was drafted at a time when it was thought that Mr. Allen had failed to obtain the required written consent to act for both parties. With the striking out of the sentence alleging failure to obtain the written consent of the parties in order to act for both of them, what remains is essentially a charge that Mr. Allen “continued to act for the purchaser even when it became evident that Ms.

Wallace was questioning the propriety of the transaction and the documentation associated with it”. […] Clearly, when Mr. Allen obtained Mr. Arsenault’s signature on the second mortgage and later proceeded to register the same, an “issue contentious to the clients”, had arisen. Ms. Wallace was not happy about not receiving the rest of the purchase price and not having received her second mortgage. Although the execution and registration of a second mortgage was agreed to by the parties, there was to paraphrase comment 2(a) [in

Chapter 6 of the Code ], a serious dispute about the repayment of the vendor take back financing and Mr. Allen should then have recommended to both parties to obtain independent legal representation. The panel finds that Mr. Allen has breached this

Chapter and is guilty of conduct deserving sanction on the second charge. [paras. 137 and 141-142] [ 22 ] While not contesting the finding that the second charge was proven, the appellant points out the panel accepted he was “not aware of any dispute between the parties when he closed the deal on June 8 th ”. As can be distilled from the panel’s reasons, it found against the appellant on the basis that he continued to act for Ms. Wallace after the closing, by taking Mr.

Arsenault’s signature and registering a second mortgage in her favour when an “issue contentious to the clients” had arisen, rather than recommend both parties seek independent legal representation. That finding covers the essence of the second charge. [ 23 ] The hearing on sanctions proceeded on November 2, 2016. The only additional evidence produced at that hearing is Exhibit 1, which particularizes the costs incurred by the Law Society prior to September 24, 2016 ($22,059.41). Those costs include the Law Society’s outlays for counsel and expert fees, reporting charges, the expenses of the panel

members and the cost of the financial audit of the appellant’s practice ($5,864.14). Exhibit 1 was received in evidence with the appellant’s consent. [ 24 ] The panel found the appropriate sanctions for the appellant’s substandard conduct was a reprimand and a fine of $3,000.00. In addition, he was ordered to pay the sum of $16,195.27 towards the costs incurred by the Law Society. This quantum was determined on the basis of the data in Exhibit 1, except for the cost of the financial audit.

That claim was denied, and there is no cross-appeal from that determination. [ 25 ] In his written submission, the appellant challenged all costs incurred after the panel’s decision on “the merits”, arguing the Law Society waived entitlement to their recovery. That allegation was denied: in its written submission, the Law Society asserted it only agreed to forego any claim for costs associated with attendance at the sanction hearing of November 2, 2016.

At the hearing on appeal, the appellant withdrew the parts of his written submission giving expression to the complaint on point. [ 26 ] In my view, the appeal raises only one issue of significance, and it is whether the impugned order of costs is unreasonable by reason of its issuance on the basis of a legal test that is distinct from the one applied in imposing the reprimand and the fine. At the end of the day, the core question is whether an order of costs under s. 60(1)(

e) is a “sanction” that is indistinguishable for analytical purposes from a reprimand, a fine, a suspension or disbarment. III. Analysis [ 27 ] Section 60(1) of the Law Society Act sets out the measures that a panel of the Discipline Committee may choose from following a finding of conduct deserving sanction. It reads as follows:

60(1) If a panel of the Discipline Committeefinds that a respondent, other than a student-at-law, is guilty of conduct deservingsanction, it may do one or a combination ofthe following: (

a) reprimand the respondent; (

b) order that the respondent, within a fixedtime, pay to the Society a fine not exceedingan amount set by the rules; (

c) suspend the respondent from practisinglaw for a fixed period or indefinitely, on suchterms as in its opinion are necessary in thecircumstances; (

d) disbar the respondent; (d.1) order that the respondent, within a fixedtime, pay to the complainant or theCompensation Fund restitution for anyfinancial losses or expenses, or compensationpaid as a result of the actions for which therespondent is being sanctioned; (added July 1, 2009) (

e) order that the respondent pay to theSociety within a fixed time in an amountdecided by the panel, costs of the inquiry,including the costs of an investigation by theRegistrar, the Complaints Committee, or ofan audit or investigation under

Part 11; or (

f) make such other order as in its opinion isnecessary and appropriate in thecircumstances, including any order that couldbe made by the Competence Committeeunder

section 46. 60(1) Le sous-comité de discipline quiconclut que l’intimé — autre qu’un stagiaire— a fait preuve d’une conduite répréhensiblepeut exercer un ou plusieurs des choixsuivants :

a) il le réprimande;

b) il lui ordonne de payer au Barreau, dansdes délais précis, une amende qui ne dépassepas le plafond prévu par les règles;

c) il le suspend de l’exercice du droit pourune période déterminée ou indéfinie, auxconditions qu’il juge nécessaires dans lescirconstances;

d) il le radie; d.1) il lui ordonne d’indemniser le plaignantou le Fonds d’indemnisation, dans des délaisprécis, des pertes financières qui ont étésubies, des dépenses qui ont été engagées oudes indemnités qui ont été payées à cause deces actes répréhensibles; (ajout du 1er juillet 2009)

e) ayant fixé les délais et le montant, il luiordonne de payer au Barreau les frais del’enquête, y compris de celle du registraire oudu comité des plaintes, ou ceux d’unevérification ou d’une investigation effectuéesen vertu de la

partie 11;

f) il prend toute autre mesure qu’il jugenécessaire et utile dans les circonstances, ycompris toute mesure que le comité descompétences a le pouvoir de prendre en vertude l’article 46. [28] As indicated, after finding the appellant guilty of conduct deserving sanction, the panel chose toreprimand him and order he pay a fine of $3,000.

The panel viewed each of those measures as a “penalty”, and found they wereappropriate upon consideration of the factors that commonly inform determinations of that kind: In order to determine the appropriate penalty, this Panel must embark on a “[conscious] comparison” of the relevant factors with similarcases, lest inconsistent results are reached: Stevens v. Law Society of Upper Canada (1979) (ON SC), 55 O.R. (2d)405 (Ont.S.C.). The factors to be considered are enumerated in Law Society of British Columbia v. Ogilvie

(1999) LSDD No. 45,

(1999) LSBC 17 as:

a. The nature and gravity of the conduct proven; b. The age and experience of the respondent; c. The previous character of the respondent, including details of prior discipline; d. The impact upon the victim; e. The advantage gained, or to be gained, by the respondent; f. The number of times the offending conduct occurred; g. Whether the respondent acknowledged the misconduct and taken steps to disclose and redress the wrong and the presence or absenceof other mitigating circumstances; h. The possibility of remediating or rehabilitating the respondent; […] [j].

The impact of the proposed penalty on the respondent; [k]. The need for specific and general deterrence; [l]. The need to ensure the public’s confidence in the integrity of the profession; and [m]. The range of penalties imposed in similar cases. As stated in numerous decisions, the purpose of these proceedings is not to punish the Member. The purpose is to ensure publicprotection. Citing Gavin Mackenzie’s Lawyers and Ethics; Professional Responsibility and Discipline (Carswell 1993), the Panel in the P.P.decision [Law Society of New Brunswick v.

P.P., 2008 NBLSB 2 ] referred to above said: Factors frequently weighed in assessing the seriousness of the lawyer’s misconduct include the extent of injury, the lawyer’sblameworthiness, and the penalties that have been imposed previously for similar misconduct. In assessing each of these factors, theDiscipline Hearing panel focuses on the offense rather than the offender and considers the desirability of parity “and” proportionality insanctions and the need for deterrence. The panel also considers an array of aggravating and mitigating factors, many of which arerelevant to the likelihood of recurrence.

These aggravating and mitigating factors include the lawyer’s prior discipline record, thelawyer’s reaction to the discipline process, the restitution (if any) made by the lawyer, the length of time the lawyer has been in practice,the lawyer’s general character and the lawyer’s mental state. Alcoholism, drug addiction, stress caused by financial and matrimonialdifficulties, and mental illness are common factors in discipline cases and are material to the assessment of penalty in cases where acausal relationship exists between the lawyer’s condition and the misconduct being considered ...

Therefore, although the panel must focus on the offense rather than the offender, it must also consider all aggravating and mitigating

factors including taking into consideration the personal situation of the member being disciplined. Applying the different factors found in Ogilvie above, we have before us two serious breaches, although not as serious as offensesdealing with dishonesty or misappropriation of funds. Mr. Allen has been practicing for over 55 years without ever having beendisciplined, and lawyers and the Courts have recognized his expertise in the field. The impact on the victim is difficult to assess.

We have heard evidence that she filed a civil action against many defendants and settledfor an amount which left her, after her legal expenses, with approximately $10,000 (She had lost $25,000 in the transaction although itcannot be said for sure that the result would have been any different were it not for the breaches to the Code of Conduct). It is unknownwhether the Member paid all or part of this settlement. Although there have been admissions of facts, for example, failing to produce a proper Statement of Adjustment and report to his client,Mr.

Allen never admitted having acted in a manner deserving sanction and has never apologized to the complainant or the law Society. The Panel recognizes that this procedure has been very difficult on the Member. Mr. Allen has not gained any advantage other than his regular fees. There is only one occurrence of the offending conduct. Considering all these factors, the need for specific and· general deterrence and the similar cases, this Panel therefore makes thefollowing order: a. Pursuant to paragraph 60(1)

a) of the Act, the Member is reprimanded. b. Pursuant to paragraph 60(1)

b) of the Act, the Member shall pay, within 60 days of this decision, a fine of $3,000. [paras. 18-28] [29] The panel then turned its attention to the issue of costs. In making its determination on point,the panel did not apply the Ogilvie factors, as it did in connection with the reprimand and the fine.

Instead, and after observing theappellant had been found guilty of both charges in the Notice of Complaint, the panel applied the “general rule” by which reasonablecosts arising from the Law Society’s investigation of the complaint and the ensuing inquiry should be borne by the member found guiltyof conduct deserving sanction, not the profession as a whole. The panel relied upon Groia v. the Law Society of Upper Canada, 2016ONCA 471, [2016] O.J. No. 3094 (QL), at paragraph 234, leave to appeal granted [2016] S.C.C.A. No. 310, as authority for theapplication of that framework.

In the result, the panel determined the Law Society was entitled to an order directing the appellant pay thecosts claimed in Exhibit 1 except, as mentioned, for the cost ($5,864.14) of the financial audit of his practice: There remains the question of costs. The general rule is that the reasonable costs of investigating and conducting a disciplinaryproceeding should not be borne by the profession as a whole where a determination adverse to the defending lawyer has been made. SeeGroia v. The Law Society of Upper Canada, 2016 ONCA 471 , at paragraph 234.

In cases where the lawyer was not found guilty of all charges, costs have sometimes been reduced accordingly. See The Law Society ofNew Brunswick v. Peters, 2013 NBLSB 6 . Here, the Member has been found guilty of both charges. Although it is submitted for the Member that he should not be ordered to pay any cost, there were no questions on the amount claimedexcept for the sum of $5,864.14 paid to Grant Thornton for a practice audit. No explanation regarding the reason for requesting an audit,under the circumstances, were provided to the Panel.

The Law Society indicated that audits are not always requested in investigations and that this particular audit found no irregularity.

Mr. Allen has not been charged with any breach of the Code of Conduct or of the rules adopted under the Act regarding his trust account. The panel is therefore not convinced that this disbursement was necessary for the investigation or of conducting the disciplinary proceeding. Except for this amount, the Panel finds no reason to depart from the general rule. The Law Society is therefore entitled to costs for an amount of $16,195.27, to be paid on or before February 2, 2017. The Law Society has not asked for costs for the sanction hearing. [paras. 29-35] [ 30 ] In Dr. Q. v.

College of Physicians and Surgeons of British Columbia , 2003 SCC 19 , [2003] 1 S.C.R. 226, Chief Justice McLachlin confirmed great deference is owed by a reviewing court to a tribunal’s selection of remedies or administrative responses: A statutory purpose that requires a tribunal to select from a range of remedial choices or administrative responses, is concerned with the protection of the public, engages policy issues, or involves the balancing of multiple sets of interests or considerations will demand greater deference from a reviewing court [ ... ] [para. 31] [ 31 ] Courts have only reluctantly interfered with the measures crafted by professional bodies as responses to objectionable conduct by their members.

In Bouhamdani v. Association of Professional Engineers and Geoscientists of New Brunswick , 2004 NBCA 84 , 276 N.B.R. (2d) 341, Turnbull, J.A. identifies the rationale behind that reluctance: […] courts are generally reluctant to vary any penalty imposed by a profession’s discipline committee. Such judicial deference is derived from the legislated authorization of self-governance, and the consequent belief that the members of that profession, because of their particular expertise, are the best judges of the appropriate penalty for one of their peers. [para. 75] [ 32 ] In Law Society of New Brunswick v.

Ryan , the Supreme Court of Canada ruled this Court should only intervene if the contested panel decision, determination or order “is shown to be unreasonable”. A disposition may be labelled “unreasonable” only if “no line of analysis within the given reasons […] could reasonably lead the tribunal from the evidence before it to the conclusion at which it arrived.

If any of the reasons that are sufficient to support the conclusion are tenable in the sense that they can stand up to a somewhat probing examination, then the decision will not be unreasonable and a reviewing court must not interfere” (see Ryan , at paras. 42 and 55 ). In my view, this unmistakably exacting standard applies to all dispositions, including cost orders, prescribed by panels of the Discipline Committee. [ 33 ] The appellant submits the order of costs is unreasonable because it flows from the application of the general rule described above, instead of the pertinent Ogilvie factors.

While acknowledging this general rule has been recognized and applied in other provinces, the appellant argues it has no traction in this jurisdiction because, unlike the situation elsewhere, an order of costs, such as the one under appeal, is a sanction under the Act . This rather odd equation would arise from: (1) s. 60(1)’s inclusion of costs orders in the pool of measures commonly viewed as sanctions (reprimand, fine, suspension and disbarment) and; (2) the Act ’s failure to invest panels with the power to order the Law Society pay costs to a member found not guilty of conduct deserving sanction.

I respectfully reject this submission for the following reasons. [ 34 ] First, and contrary to the appellant’s understanding, panels do have the power to order the Law Society pay costs to a respondent member in the event he or she is found not guilty of conduct deserving sanction (see s. 60(3)). Second, the appellant’s submission overlooks what s. 60(1) states, and what it does not state. [ 35 ] Indeed, by its very terms, s. 60(1) does no more than enunciate the measures a panel of the Discipline Committee may prescribe following a finding of conduct deserving sanction.

Those measures include, but are not confined to penalties or sanctions. On a plain reading of its wording, s. 60(1) does not provide, explicitly or implicitly, that all measures listed in its sub-paragraphs constitute sanctions; it merely sets out what a panel “may do” once it finds the respondent member guilty of conduct deserving sanction. The French version’s reference to “choices” open to the panel is ambiguous and, in my view, fails to tilt the interpretative scales, one way or the other. [ 36 ] Of the ordinary meanings ascribable to the term “sanction”, only one has application in the

present context, and it is “a penalty […] enacted to enforce obedience to a law or rule” Oxford Canadian Dictionary, 2nd ed (OxfordUniversity Press: Toronto, 2006)). An order of costs under s. 60(1)(e), like the one under appeal, is not captured by that meaning: theobject of such an order is restitutive, not punitive. In my view, the order of costs rendered in first instance is no more a sanction orpenalty than an order of restitution under s. 60(1)(d.1). Section 60(1)(

f) is also telling: it confers on a panel the power to make any “otherorder as in its opinion is necessary and appropriate in the circumstances”. There is no reason to interpret this omnibus provision in amanner that would limit its scope to measures in the nature of penalties or sanctions. [37] Here, the panel found the appellant guilty of both charges in the Notice of Complaint. Itdescribed each charge as “serious”.

After giving due consideration to the pertinent Ogilvie factors and as required under s. 59, the panelimposed sanctions in accordance with s. 60, specifically subparagraphs (a) (reprimand) and (b) (fine). Applying the general rulereferenced hereinabove, the panel then combined those sanctions with a non-punitive measure, the order of costs under sub-paragraph(e). In my judgment, the panel’s treatment of an order of costs as a non-punitive measure to which the “general” rule could be applied isnot legally impermissible and cannot be labeled unreasonable on that basis (see Lysons v.

Alberta Land Surveyors’ Association, 2017ABCA 7, [2017] A.J. No. 10 (QL), at paras. 12-13 and Bryan Salte, The Law of Professional Regulation, (Markham, Ont.: LexisNexis,2015) at paras. 8.12 and 8.14). I would go further: the panel’s approach reflects a rationally defensible policy choice and its use would beappropriate in other cases, like the present one, where the essence of each charge is proven and as a result, the respondent member isfound guilty of all charges. Where the case features a mix of proven and unproven charges, a corresponding allocation of the costs mightbe warranted (see Hasan v.

College of Physicians and Surgeons (N.B.) (1994), (NB CA), 152 N.B.R. (2d) 230, [1994]N.B.J. No. 389 (C.A.) (QL), per Ryan, J.A.). In relatively rare cases, a suitably calibrated apportionment of costs might also beappropriate where, despite all charges being proven, the more serious particulars, as pleaded, have been rejected.

On the panel’s findings,that is clearly not the case here. [38] In coming to the conclusion that s. 60(1) did not require the panel determine the appropriatenessof an order of costs by resorting to the framework it applied for the reprimand and the fine, I have not overlooked that multi-facetedprovision’s one-word heading: “Sanctions”. While s. 16 of the

Interpretation Act, R.S.N.B. 1973, c, I- 13, states headings are “insertedfor convenience of reference only”, there is authority for the proposition that headings may be relied upon for interpretative purposes,even where the wording of the provision itself is not ambiguous (see Ruth Sullivan, Statutory

Interpretation, 3rd ed (Toronto: Irwin Law,2016) at 160, 161 and 167). [39] The drafters’ choice of “Sanctions” as the heading for s. 60 is neither surprising nor entirely ill-suited; after all, the bulk of the measures listed in s. 60(1) is comprised of sanctions (reprimand, fine, suspension and disbarment). A one-word heading will rarely purport to capture the full reach of a multi-faceted provision. The key question is whether s. 60(1)’s headingreflects an intention that all of the measures it identifies, including the non-punitive ones, be viewed as penalties or sanctions. In myview, it does not.

A “non-punitive sanction” surely qualifies as an oxymoron and the drafters could not have intended that illogical result,a consequence of morphing non-punitive measures into punitive ones. [40] One final observation. Even if the appellant’s

interpretation of s. 60(1) had carried the day, sothat orders of costs under s. 60(1)(

e) would stand to be included, like reprimands, fines, suspensions and disbarments, in the basket ofimposable sanctions, I would still conclude the panel’s approach has not been shown to be unreasonable. There is nothing in s. 60(1) thatrequires the application of the Ogilvie factors to every measure enunciated in its sub-paragraphs. Indeed, no feature of the Act’s pertinentprovisions precludes a panel from resorting to the general rule applied in first instance to determine the appropriateness of an order ofcosts under s. 60(1)(e). IV. Conclusion [41] As more fully appears from the preceding text, the panel’s order under s. 60(1)(

e) of the LawSociety Act, 1996 requiring the appellant pay the sum of $16,195.27 towards the costs incurred by the Law Society has not been shownto be unreasonable. It is for this reason that I joined my colleagues in dismissing the appeal from the bench. I would wrap up theproceedings by ordering the appellant pay costs on appeal of $2,500. Version française de la décision de la Cour rendue par LE JUGE DRAPEAU, J.C.N.-B.

I. Introduction [1] Dans une décision rendue le 20 juillet 2016 sur le « fond », un sous-comité de discipline a conclu que l’appelant, conseiller de la reine et membre respecté du Barreau depuis longtemps, avait fait preuve de « conduite répréhensible » au sens du par. 60(1) de la Loi de 1996 sur le Barreau , L.N.-B. 1996, ch. 89. La conduite en question a été détaillée dans deux accusations exposées dans l’avis de plainte signifié à l’appelant, et modifié plus tard à l’audience. Dans la première accusation, on affirmait que l’appelant a fourni des services juridiques inférieurs aux normes du

chapitre 2 (« La compétence ») et du

chapitre 3 (« La qualité des services ») du Code de déontologie professionnelle du Barreau. La deuxième accusation était fondée sur l’assertion que l’appelant a continué à représenter sa cliente, la plaignante, après qu’un conflit d’intérêts a pris naissance, adoptant ainsi une conduite interdite par le

chapitre 6 du Code (« Conflit d’intérêts entre clients »). La décision sur le « fond », y compris la conclusion de conduite répréhensible, n’est pas portée en appel. [2] Dans une décision ultérieure, le sous-comité a réprimandé l’appelant, lui a infligé une amende de 3 000 $ et lui a ordonné de payer la somme de 16 195,27 $ au

titre des frais engagés par le Barreau. Seule cette dernière ordonnance est contestée en appel. L’appelant soutient qu’elle est déraisonnable. En toute déférence, je ne suis pas d’accord. [3] Après avoir entendu les avocats, la Cour a rejeté l’appel séance tenante en indiquant que les motifs suivraient. Dans les pages qui suivent, je formule les motifs qui m’ont incité à me joindre à mes collègues pour statuer ainsi sur cet appel. II. Contexte et règlement

sommaire de certaines questions [4] Comme on le verra, et contrairement à ma pratique générale, je reproduis de longs extraits des décisions du sous-comité de discipline. Je procède ainsi pour une série de raisons. Tout d’abord, l’arrêt Barreau du Nouveau-Brunswick c. Ryan , 2003 CSC 20 , [2003] 1 R.C.S. 247 , prescrit à la Cour d’« examiner » les motifs du sous-comité lorsqu’elle exerce ses fonctions en appel en application de la Loi .

Pour bien comprendre ces motifs, il faut les examiner dans le contexte décrit par le sous-comité dans son examen des éléments de preuve documentaire et des témoignages, ainsi que dans ses conclusions sur les faits, la crédibilité et la fiabilité. Deuxièmement, une reproduction textuelle de ces motifs servira à faire comprendre l’interprétation non filtrée du sous-comité de ce qui est indiscutablement un ensemble inhabituel de circonstances. Troisièmement, le dossier dont nous disposons n’inclut pas de transcription de la preuve et des plaidoiries en première instance.

Quatrièmement, ni l’une ni l’autre des deux parties ne conteste les conclusions du sous-comité quant aux faits, à la crédibilité et à la fiabilité. Enfin, bien que la transaction immobilière qui a donné lieu à la plainte sous-jacente et aux accusations contre l’appelant puisse susciter des préoccupations qui semblent légitimes au sujet du caractère approprié du financement de l’achat, des honoraires immobiliers et des frais de courtier perçus, il n’y a absolument aucune insinuation, et encore moins de preuves, de malhonnêteté, de détournement de fonds ou de manque de crédibilité de la part de l’appelant.

Les motifs formulés par le sous-comité le démontrent de façon très compétente. [5] Comme je l’ai indiqué, l’appel conteste une ordonnance de dépens rendue par un sous-comité de discipline constitué pour faire enquête sur deux accusations qui ont été formulées dans un avis de plainte daté du 28 juillet 2015. Les extraits importants de l’avis exposent le nœud de la controverse tel qu’il a été conçu au départ, sans l’avantage des observations officielles faites par l’appelant dans le cadre de sa réponse prescrite par la loi : [TRADUCTION] [1] En mai 2012, ou vers cette date, les services de G.

Keith Allen ont été retenus pour qu’il représente [Serena Wallace] dans la vente de sa maison (« la propriété »). [Serena Wallace] avait négocié avec [Brad MacPherson], de la compagnie [Madawaska Mortgages], une entente selon laquelle elle vendrait sa propriété à un prix de 102 000 $ à [Brad MacPherson], qui ensuite la revendrait rapidement à profit.

Selon cette entente, le prêt hypothécaire de 77 000 $ de [Serena Wallace] serait remboursé à partir du produit de la vente de la propriété, et elle toucherait alors un solde de 24 000 $. [Brad MacPherson] a informé [Serena Wallace] que [Marcel Arsenault] serait l’acheteur de la propriété. En mai 2012, [Serena Wallace] s’est présentée au bureau de G. Keith Allen afin de signer des documents ayant trait à la vente à [Marcel Arsenault]. À ce moment-là, la cliente de G. Keith Allen, [Serena Wallace], a constaté qu’il y avait des frais de courtier de 59 807,50 $. Lorsque [Serena Wallace] a posé une question à G.

Keith Allen à propos de ces frais, il ne lui a donné aucune explication à leur sujet. [Serena Wallace] n’a jamais touché le produit de la vente de la propriété, elle n’a jamais reçu de compte rendu de G. Keith Allen et ce dernier a omis de lui fournir des détails quant à sa transaction, malgré les questions qu’elle lui adressait. Par conséquent, G. Keith Allen

n’a pas fourni à sa cliente des services juridiques satisfaisants, il a omis de la tenir raisonnablement informée pendant le déroulement de l’affaire et après son dénouement, et il a omis de lui donner un rapport rapide et complet une fois le travail terminé, contrevenant ainsi au

chapitre 2 (La compétence) et au

chapitre 3 (La qualité des services) du Code de déontologie professionnelle du Barreau du Nouveau-Brunswick; [2] En mai 2012, les services de G. Keith Allen ont été retenus pour qu’il représente [Serena Wallace] dans la vente de sa propriété. G. Keith Allen a également agi pour le compte de l’acheteur, [Marcel Arsenault], dans la même transaction. G. Keith Allen a omis d’obtenir de la part des deux parties leur consentement écrit à ce qu’il les représente toutes les deux.

Lorsque [Serena Wallace] a essayé d’obtenir des renseignements sur le progrès de son dossier et sur le fait qu’elle n’avait pas touché le produit de la vente, G. Keith Allen a omis de les lui fournir à bref délai et a continué d’agir pour le compte de l’acheteur, même lorsqu’il est devenu évident que [Serena Wallace] remettait en question le bien-fondé de la transaction et de la documentation s’y rapportant. Par conséquent, G. Keith Allen a agi dans une situation de conflit d’intérêts, contrevenant ainsi au

chapitre 6 (Conflit d’intérêts entre clients) du Code de déontologie professionnelle du Barreau du Nouveau-Brunswick. [6] L’essentiel des détails de la première accusation (et non de la preuve attendue) est que l’appelant a omis 1) de fournir à M me Wallace des services juridiques satisfaisants, 2) de la tenir raisonnablement informée, et 3) de lui donner un rapport rapide et complet.

Quant à la deuxième accusation, l’essentiel des précisions données dans les plaidoiries est que l’appelant a continué d’agir pour le compte des deux parties à la transaction après qu’il est devenu évident que M me Wallace [TRADUCTION] « remettait en question le bien-fondé de la transaction et de la documentation s’y rapportant ». [7] Aux termes du par. 56(4) de la Loi , l’appelant était tenu de déposer une réponse « [admettant] quelles accusations sont fondées [et expliquant] celles qui ne le sont pas ».

Dans sa réponse du 14 août 2015, l’appelant a contesté [TRADUCTION] « les plaintes de [Serena Wallace] exposées dans l’avis de plainte, dans leur totalité ». La réponse n’a pas ensuite « expliqu[é] » les choses conformément au par. 56(4). [8] L’audience sur les accusations a eu lieu le 17 mai 2016. Le sous-comité a radié de la deuxième accusation l’allégation voulant que l’appelant ait omis d’obtenir le consentement écrit des parties à ce qu’il représente les deux parties à la transaction.

Le sous-comité a agi ainsi pour le motif que la preuve présentée par l’appelant établissait [TRADUCTION] « clairement que ce consentement avait été obtenu ». Le sous-comité a également entendu quatre témoins : Serena Wallace, la plaignante, M e William Craig Kean,

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