Smith v. Law Society of Manitoba, 2011 MBCA 81

Citation: Smith v. Law Society of Manitoba, 2011 MBCA 81 Date: 20111019 Docket: AI 11-30-07540 IN THE COURT OF APPEAL OF MANITOBA Coram: Mr. Justice Martin H. Freedman Mr. Justice Richard J. Chartier Mr. Justice Marc M. Monnin BETWEEN : ) S. Green, Q.C. JAMES RICHARD SMITH ) for the Appellant ) Appellant ) R. H. Kravetsky ) for the Respondent - and - ) ) Appeal heard: THE LAW SOCIETY OF MANITOBA ) September 9, 2011 ) Respondent ) Judgment delivered: ) October 19, 2011 FREEDMAN J.A. 1 The appellant was charged with nine counts of professional misconduct.

He was found guilty on seven of those counts by a panel of the Discipline Committee (the Panel) of the Law Society of Manitoba (the Law Society). He was ordered disbarred and to pay costs with respect to the matter. He appeals the misconduct findings and the penalty. In my opinion his appeal must be dismissed. 2 The main issue on this appeal is whether the conclusions of the Panel on professional misconduct and on the penalty of disbarment are reasonable.

A subsidiary issue is whether the Law Society was entitled to investigate information coming to its attention through a spot audit when that information did not relate specifically to the trust accounting rules. A decision on a preliminary motion by a panel of the Discipline Committee of the Law Society (the motion panel) is challenged; that decision held that the evidence obtained through examining files related to the spot audit was admissible. BACKGROUND 3 The appellant was called to the bar in 1974. In 2007 the Law Society conducted a routine audit of his books, which led the auditor to request certain files.

The files were voluntarily provided by the appellant. Certain estate files raised concerns. Further investigation resulted in charges relating to some estate files and also arising from the appellant’s conduct during the Law Society investigation. A hearing followed, at which the appellant testified. 4 The most serious concern arose from the appellant’s handling of the C.B. estate. C.B. had been his client, and her will designated him as sole executor. He was also the lawyer for the estate, which consisted of cash of about $20,000 and a house appraised at $90,000.

The beneficiaries were the deceased’s two adult sons (as to 41.66 per cent each) and a charity (as to 16.67 per cent). 5 The sons (one in particular) were pressing the appellant for a cash distribution. About two months after C.B.’s death, the appellant wrote to them (but not to the charity). The Panel summarized the letter this way (at paras. 9-10): In December 2006, Mr. Smith advised Michael and Clinton that he had located an “investor” that was interested in purchasing the house for $50,000. In a letter dated December 18, 2006, he set out the proposed terms of the offer.

The investor would pay $20,000 on acceptance of the offer and the remaining $30,000 on transfer of title. The investor would cover utilities and taxes as of March 1, 2007. The letter went on to explain that the $90,000 appraised figure was a gross amount and would be reduced by approximately $8,000 for commissions and closing costs if sold on the open market. It further stated that $7,000 would be needed to paint and clean the home even though the appraisal report had already discounted the price for these factors.

Mr. Smith then summarized his view and concluded, “if you are prepared to wait until the property can be sold on the open market, while the Estate pays the carrying costs, your share may approximate the same figure.” The letter advised Michael and Clinton to review the proposal with their own legal and financial advisors and indicated that, “I strongly recommend that you obtain independent legal advice regarding all your affairs with the Estate.” 6 The two sons signed authorizations for sale.

Only when the file was reviewed by the Law Society was it discovered that the “investor” who purchased the house was the appellant’s wife. The appellant testified at the disciplinary hearing that the purchaser’s identity was irrelevant and the only information important to the beneficiaries was the price. The appellant was convicted of four counts relating to the C.B. estate. 7 Another estate was that of J.T., who was apparently the common-law husband of C.B. His estate was very small, and a government department wrote the personal representative (not the appellant) requesting repayment of a $4,600 loan.

The appellant responded, as lawyer for the estate, that the assets “were applied to final expenses.” In fact, estate funds were then in his trust account, and were later paid to C.B. on the basis that she was entitled to it, as reimbursement for having prepaid J.T.’s funeral expenses herself. The appellant was convicted of one count relating to the J.T. estate. 8 When the Law Society commenced its investigation into the C.B. estate matters, the appellant engaged counsel. He paid certain of his counsel’s legal bills with estate funds.

The Panel found this to be improper, resulting in a conviction on one count. 9 The last conviction arose because the appellant declined to answer certain questions raised by the Law Society during its investigation. His position was that the Law Society was “conducting a general enquiry of the manner” in which his practice had been conducted, and that this was unauthorized. He was convicted on one count for failing to respond to the substance of the request within the required time. ANALYSIS AND DECISION 1.

Standard of Review 10 Many authorities make clear that the standard by which we are to review the Panel’s misconduct findings, as well as its choice of penalty, is reasonableness. See Law Society of New Brunswick v. Ryan , 2003 SCC 20 , [2003] 1 S.C.R. 247 ; Histed v. Law Society of Manitoba , 2006 MBCA 89 , 208 Man.R. (2d) 44 ; Histed v. Law Society of Manitoba , 2007 MBCA 150 , 225 Man.R. (2d) 74 ; Walsh v. Law Society of Manitoba , 2006 MBCA 154 , 212 Man.R. (2d) 5 ; Ritchot v. Law Society of Manitoba , 2010 MBCA 13 , 251 Man.R. (2d) 121 ; and Luk v. Law Society of Manitoba , 2011 MBCA 78 .

This standard was recently described by Binnie J. in Canada (Citizenship and Immigration) v. Khosa , 2009 SCC 12 , [2009] 1 S.C.R. 339 (at para. 59 ) : …. Where the reasonableness standard applies, it requires deference. Reviewing courts cannot substitute their own appreciation of the appropriate solution, but must rather determine if the outcome falls within “a range of possible, acceptable outcomes which are defensible in respect of the facts and law” ( Dunsmuir , [2008 SCC 9 , [2008] 1 S.C.R. 190 ] at para. 47). There might be more than one reasonable outcome.

However, as long as the process and the outcome fit comfortably with the principles of justification, transparency and intelligibility, it is not open to a reviewing court to substitute its own view of a preferable outcome. 11 The motion panel’s decision dealt with the admissibility of evidence, and that question of law is reviewable on a standard of correctness. See Dunsmuir v. New Brunswick , 2008 SCC 9 at paras. 58 , 60 , [2008] 1 S.C.R. 190. 2. Admissibility of Evidence 12 It is convenient to deal first with the subsidiary issue.

The appellant argues that, while the Law Society has the authority to conduct spot audits to determine whether the trust accounts of lawyers are in compliance with its rules, it cannot use any evidence that it obtained as a part of the spot audit, such as evidence from the lawyer’s files, to found any charges of professional misconduct. He submits that this is contrary to s. 8 of the Canadian Charter of Rights and Freedoms (the Charter ) .

He raised similar arguments on a preliminary motion before the motion panel, which rejected them. 13 The motion panel said (at paras. 26, 37-39): At common law, if evidence is relevant, it is admissible unless found inadmissible pursuant to an exclusionary rule. The focus at

common law is on the probative value of evidence, not on the matter of how the evidence came to be before the court. (Paciocco andStuesser, The Law of Evidence, 3rd ed., p. 273). The member argues that the evidence ought to be excluded because admission of the evidence would contravene two provisions in theCanadian Charter of Rights and Freedoms:

Section 11(

c) dealing with the right against self incrimination; and

Section 8 dealing with theright to be secure against unreasonable search and seizure. The threshold question regarding

Section 11(

c) is whether the Charter right applies at all to these proceedings. The panel holds that itdoes not. It is settled law that

Section 11 of the Charter does not apply to proceedings before professional disciplinary tribunals such asthis panel (R. v. Wigglesworth, (SCC), [1987] 2 S.C.R. 541); and that the protections under

Section 11 of the Charter donot apply to disciplinary proceedings unless there are “true penal consequences” (Belhumeur v. Discipline Committee of the Quebec BarAssociation (1983), (QC CS), 34 C.R. (3d) 279 (Que. S.C.); aff’d sub nom Belhumeur v. Savard (1988), (QC CA), 54 D.L.R. (4th) 105 (Que. C.A.). The instant proceedings do not carry “penal consequences.” The substantial right contained in

Section 8 (security against unreasonable search and seizure), is to protect an individual’s reasonableexpectation of privacy. Inspections for the purpose of determining regulatory compliance have been held to be not unreasonable withinthe meaning of

Section 8 of the Charter (Comité paritaire de l’industrie de la chemise v. Potash; Comité paritaire de l’industrie de lachemise v. Sélection Milton, (SCC), [1994] 2 S.C.R. 406. The Law Society argues, and we accept, that the membercould not have had a reasonable expectation of privacy in relation to the inspection of his records. Accordingly we find that

Section 8has no application to this proceeding. Further as indicated previously, pursuant to

Section 67 of The Legal Profession Act [C.C.S.M., c.L107], for the purpose of conducting an investigation concerning the conduct or competence of a member, the Law Society has a right ofaccess not only to the accounting records of a member but to the member’s files. 14 The motion panel conducted a s. 24(2) analysis out of an abundance of caution and concluded (at para. 43): In this case, the impugned body of evidence was not obtained through subterfuge, through any type of invasive activity, or through anyother means that might bring the administration of justice in disrepute.

In fact, the evidence came to the attention of the Law Societyupon proper discharge of its legislated mandate for protection of the public interest in the delivery of legal services. 15 The motion panel concluded that the evidence obtained from the files, which had been produced by the appellant during thecourse of the spot audit, was admissible. In my opinion, the motion panel was correct in its decision, for the thorough reasons it gave,which I would adopt. 16 The motion panel’s decision finds support in the decision of the Supreme Court of Canada in British Columbia SecuritiesCommission v.

Branch, (SCC), [1995] 2 S.C.R. 3 at paras. 52-64. The court recognized broad powers of search andinspection of records when the purpose of the authorizing legislation is regulatory oversight, as here, as opposed to criminalinvestigation. It held that individuals engaged in professions that are highly regulated will have little, if any, expectation of privacy withrespect to a search by the professional regulatory authority of their place of business and material seized. The Legal Profession Act,C.C.S.M., c.

L107 (the Act), is clear that the fundamental purpose of the regulatory scheme is to protect the public interest, and the dictaof the court in Branch applies to this situation. 17 It is also worth noting that the record clearly shows that the appellant consented to the “search.” Assuming the search wasunreasonable, the appellant’s consent acts as a waiver of his s. 8 rights. See R. v. Simon (S.), 2008 ONCA 578, 269 O.A.C. 259 (at para.48): “The reasonableness standard mandated by s. 8 has no application where the individual has consented to the state intrusion upon hisor her privacy….” See also R. v.

Deprez (G.J.) (1994), (MB CA), 97 Man.R. (2d) 272 at para. 39 (C.A.). I wouldreject the ground of appeal relating to admissibility of evidence. 3. The Panel’s Reasons for Convicting on Counts Alleging Professional Misconduct 18 The most serious of the seven charges on which convictions were entered, in my view, relate to the C.B. estate and to theappellant’s arranging for the sale of the property (at a discount to market) to an undisclosed purchaser, who was his spouse. Thedecision of the Panel to convict the appellant includes the following (at paras. 13, 15-17): Count one of the citation charges Mr.

Smith with breach of

Chapter 1 of the Code of Professional Conduct for failing to advise thebeneficiaries that the purchaser of the property was his spouse.

Chapter 1 states that “the lawyer must discharge with integrity all dutiesowed to clients, the court, other members of the profession and the public.”

It is critical to recognize that

Chapter 1 of the Code demands of all lawyers a duty of absolute honesty, not only with justice system participants, but with the public at large. It is no answer to this count for Mr. Smith to indicate that his client, the estate, knew the identity of the purchaser. His duty extended to the beneficiaries as well. Further, the Code does not permit the lawyer to decide what information others might consider relevant. It demands absolute frankness in all dealings with the public. Knowing who the purchaser is has the potential to put a very different gloss on the December 18, 2006 letter.

Is it a totally objective calculation of what the net proceeds will be after a sale on the open market or is it coloured to encourage a quick sale that will benefit the lawyer’s family? The decision of each of the beneficiaries to obtain or forego independent legal and financial advice could very well have been influenced by knowledge of the purchaser’s identity. It is precisely to ensure that members of the public have all the information that they [original emphasis] might consider relevant, that the Code imposes a duty of integrity.

The panel is therefore of the view that the member’s failure to disclose the identity of the purchaser to the beneficiaries amounts to a breach of the duty to act with integrity. 19 Another charge relating to the C.B. estate was that he advised the sons that the sale price should be discounted, and thus he preferred his wife’s interests over the beneficiaries’. The Panel found (at paras. 21-22): … [T]hat the December 18th letter was not objective but was intentionally written in a manner to encourage acceptance of the offer to purchase.

This inference is strengthened dramatically by the failure to identify the purchaser. As the executor of the estate, Mr. Smith owed a fiduciary duty to the beneficiaries to act in their best interests. Instead, in his capacity as legal counsel to the estate, he wrote a letter that was misleading in order to obtain a financial benefit for his family. The Code of Professional Conduct demands that lawyers discharge all of their duties with the highest of integrity.

The December 18th letter is dishonest both in what it said and what it omitted to say. …. 20 The appellant did not communicate at all with the charitable beneficiary until after the Law Society became involved, and the Panel had this to say (at para. 25): The December 18, 2006 letter makes specific reference in the final paragraph to the percent share due to each son. It does not ring true that Mr. Smith had simply forgotten about the Winnipeg Humane Society’s interest. Forty-one plus forty-one does not equal one hundred. Mr. Smith was well aware that there was a third beneficiary due the remaining percentage.

If he realized it was prudent to obtain consent from two of the beneficiaries then he must have realized the advisability of obtaining consent from the third. His failure to do so appears a conscious decision to leave the Winnipeg Humane Society in the dark, presumably because he was concerned that it would not approve the discounted sale price. 21 He was convicted also of not adequately protecting the estate, since he transferred the property to the purchaser before receipt of the full purchase price. The Panel found (at paras. 36-38): In the present situation, Mr. Smith’s client was the estate.

The estate gave up legal title to its main asset prior to the purchase price being paid or appropriate trust conditions being put in place to secure payment. Mr. Smith’s only explanation was that the purchaser was his wife and he knew the funds were coming. This explanation, however, is unacceptable given the high level of ethical conduct expected of lawyers. When Mr. Smith chose to act for both sides in the real estate deal, he took on the responsibility of being loyal to and giving the best possible advice to both clients. He did not give good advice to the estate and therefore put the beneficiaries at risk.

Had he only been acting on one side of the deal, he would never have exposed his client to this risk. It is no answer to the charge of breach of ethics that at the end of the day the estate received its money. Until the money was received, there was the potential for problems. The ethical obligation to be conscientious and diligent is designed to prevent problems from occurring in the first place.

22 On the J.T. estate he was convicted of failing to discharge his duties with integrity. The Panel found the letter he wrote would be misleading to the government agency recipient, and that the appellant had usurped or pre-empted the agency’s right to challenge the distribution to the actual payee, who was another creditor of the estate. 23 When the Law Society commenced its investigation the appellant hired counsel to assist him. He paid legal bills his counsel had rendered for representing him from C.B. ’s estate.

This is what the Panel had to say in finding that he breached his duty of integrity (at paras. 56-57): In answer to this charge, Mr. Smith asserted that his understanding of the law is that legal fees that arise during the administration of an estate are born by the estate. It was his position that he had a right to use estate funds to cover his legal expenses. In the alternative, he argued that an error in law does not amount to an ethical violation. As stated several times in these reasons, an honest mistake of law does not by itself constitute professional misconduct.

However, the panel does not accept that Mr. Smith honestly believed that the estate would be responsible for costs incurred by him to deal with matters between himself and his governing body. This was not a question of the

interpretation of a will or how claims of competing beneficiaries ought to be resolved. Nor was the issue whether Mr. Smith was correct in law in positions he took while handling the estate. The issue before the Law Society was whether Mr. Smith had acted unethically. It is totally unreasonable to suggest that the beneficiaries should pay for Mr. Smith’s defence. 24 The last conviction related to his failure to respond substantively to a letter from the Law Society.

The appellant had responded to the Law Society’s first request for information, but, through his lawyer, he declined to answer a request for further information.

His lawyer wrote that: … [A] spot audit is not intended, nor is it to be used by the Law Society as a vehicle for entering a lawyers’ [ sic ] practice and conducting a general enquiry of the manner in which that practice has been conducted. …. 25 The Panel said, referring to a recent amendment to the Rules of the Law Society of Manitoba (at paras. 67-68): In the present case, the auditor had the authority to attend the member’s office and review files for the purpose of ensuring compliance with financial rules.

It is illogical to suggest that the auditor should then ignore matters identified in the file that might amount to ethical breaches. The authority of the auditor both pre- and post-amendment is the same. Potential violations by a lawyer of other rules and obligations cannot be ignored and should be brought to the attention of the chief executive officer. The effect of the amendment, therefore, has been to clarify the authority of the auditor, not to expand it. Once the auditor identified a potential problem, the jurisdiction of the Law Society to investigate is found in Rule 5-61.

This provision gives the chief executive officer the authority to “treat as a complaint information that comes to the attention of the society about the conduct or competence of a member.” It was under this authority that the Law Society sent the letter dated October 1, 2007. The obligation on the member as set out in Rules 5-64(3) and 5-64(4) is to respond to the substance of the complaint and to any further inquires within 14 days.

The member declined to do this given his opinion on jurisdiction. 26 The Panel concluded on this last charge (at para. 72): As set out above, the panel has concluded that the Law Society had the jurisdiction to ask for an explanation of potential ethical violations that were first identified during the financial audit and that the member’s

interpretation of the Law Society’s jurisdiction was wrong in law. As such, the member’s refusal to deal with the substance of the complaint within 14 days is a breach of the applicable rules and constitutes professional misconduct. 4. Were the Convictions Reasonable? 27 On the most serious charge, the argument of the appellant amounted to this: the sons were pressing the appellant for cash, the appellant told them he was not their lawyer, he strongly recommended they obtain legal and financial advice, and he told them that

the potential sale would be at a discount to market. It was immaterial to them who the purchaser was, and he had no obligation to disclose who it was. All they cared about was receiving money as soon as possible. This was an ordinary commercial transaction. 28 In his testimony before the Panel, the appellant said that he did not think he had done anything wrong in connection with the sale (or anything else in connection with the C.B. estate or the J.T. estate).

He testified also that since he was agreeing to sell the property before probate had issued, he “had to sell to somebody who probably wouldn’t sue me if they couldn’t get title. So I was balancing a number of competing interests.” He said that the fact that the purchaser was his wife did not create a conflict. He said he was simply “brokering a deal between two people who wanted immediate cash, who wanted the house sold, with somebody who was prepared to buy it.” 29 He acknowledged that he was the lawyer for the estate on the sale, but at first hedged on whether he was also the lawyer for the purchaser.

He said, “It’s hard to answer that question. I was putting a deal together.” He agreed that his wife did not have any other lawyer, and finally agreed that he also represented his wife as purchaser. He agreed that he did not tell the sons, whose consent he required to close the “commercial transaction,” that he also represented the purchaser. 30 He was asked: ….

And so you are dealing with people who, from your point of view, are desperate for money, who haven’t been given all the information, they don’t know that you are related to the purchaser, they don’t know that you’re acting for the purchaser, they don’t know what the appraisal actually says, and you don’t tell them those facts at all, and you are telling me that that’s immaterial? 31 To this question he answered “Yes.” 32 The point made by the appellant, in his testimony and in his argument before us, that the important and governing consideration was that the sons wanted cash and did not care where it came from demonstrates, in my view, a flawed understanding of the role and duties of a lawyer, as the Panel found.

While the appellant was not the lawyer for the sons, he was dealing with them in his capacity as lawyer for the estate and as lawyer for the purchaser. He deliberately failed to disclose what in the Panel’s view was an obvious conflict of interest on his part. 33 I agree that there was a conflict of interest, and the appellant had a duty to disclose to the beneficiaries all relevant circumstances.

To think that the fact that his wife was the purchaser of the discounted property was not a relevant factor, regardless of whether at the time these two beneficiaries expressed any interest in it, displays a serious lack of awareness of fundamental principles which must guide all lawyers. 34 Whether or not the sons cared who purchased the property was immaterial to the appellant’s obligation as a lawyer to act with complete integrity in his dealings with the beneficiaries of the estate. He arranged for his wife to purchase the asset, at less than market value, without disclosing that conflict on his part.

On this count, the conviction decision of the Panel, and its reasoning process, were eminently reasonable. 35 It is not necessary in this decision to review each of the other counts, the evidence and the Panel’s rationale for conviction, in more detail than has already been set out. It is sufficient to say that on each of the counts on which he was convicted, the Panel demonstrably considered the facts, the evidence and the submissions.

Where they found it appropriate to do so, they drew inferences, which were reasonable, from the evidence. 36 The appellant argued that his conduct did not constitute professional misconduct, since that required an element of moral turpitude, and none of the charges fell into the category of disgraceful or dishonourable conduct. The Panel found that the conduct in question did fall into the “disgraceful” or “dishonourable” category, and that finding was not unreasonable.

He also argued that the Law Society was “retaliating” against him since he “did not yield willingly to the positions taken by the Law Society in its investigation.” There is no evidence to support the argument of retaliation. 37 The appellant also argued that the Panel erred when it assessed his conduct from the standard of a lawyer as opposed to that of an executor, which he said was the role he was engaged in when dealing with the estate of C.B. However, both the documentary evidence and his own testimony show clearly that while he was, indeed, the executor, he was at all material times acting as a lawyer.

When he was dealing and communicating with the beneficiaries he was doing so in his capacity as a lawyer. For example, not only was the letter of December 18, 2006 (see para. 5 above) written on his law firm’s stationery, in it he described himself as the estate’s legal agent, as well as its legal representative. I need not consider the duties and responsibilities of an executor, as they are not at issue here.

It is enough to say that his role as executor cannot relieve him of his obligations as a lawyer, which he was bound to discharge while representing the estate. 38 I am satisfied that the Panel’s decision to convict the appellant of professional misconduct on each count was justified on the facts and the evidence. The conviction decision of the Panel is supported by a “line of analysis within the given reasons that could reasonably lead the tribunal from the evidence before it to the conclusion at which it arrived” ( Ryan at para. 55 ).

The convictions fall within “a range of possible, acceptable outcomes which are defensible in respect of the facts and law” ( Dunsmuir at para. 47 ). 39 The convictions were reasonable, and must be sustained. 5. Was the Penalty of Disbarment Reasonable?

40 I reiterate that the standard by which the decision to disbar the appellant is reviewed by this court is reasonableness. If the decision (and the process leading to it) meets the reasonableness standard, we may not interfere, and must defer to the Panel’s view of what is the appropriate sanction ( see Khosa , above at para. 10 ). 41 Three months after its conviction decision, the Panel issued its penalty decision. In it the Panel observed that two of the seven convictions were on charges not involving a breach of the duty relating to integrity.

One of those convictions involved quality of service and the other involved a breach of the Rules for failure to respond to the Law Society’s letter. The Panel’s reasons for those convictions are set out above in paras. 21, 25-26 respectively. While these two convictions were regarded by the Panel as of significance, the Panel said that “[o]n their own, [these] two counts do not call for a serious penalty” (at para. 1).

The Panel said that the other convictions were “by far the more serious” ( ibid. ). 42 The Panel noted the submissions of both parties and especially the appellant’s 37 years of practice without incident, except for a formal caution 15 years previously. 43 The Panel stressed the importance of the cardinal principle that lawyers must act with integrity. Integrity, it said, was “the fundamental quality” of any lawyer (at para. 3). Any breach of the duty to act with integrity, in its view, deserved significant sanction. 44 Three of the convictions related to the C.B. estate.

Of these the Panel said (at para. 6): Our view of all of the facts is that they disclose a pattern of lack of integrity. The entire transaction involving the sale of the estate asset for $50,000 carries with it a taint of dishonesty. The only reason the lawyer could have had for failing to identify his wife as the purchaser was a concern that this critical fact may have caused the two primary beneficiaries to take a second look at the advisability of the transaction.

Further, our findings as set out in our December 9, 2010 reasons are that leaving the third beneficiary entirely in the dark was done out of concern that this more sophisticated and less financially desperate beneficiary may have raised objections to the transaction. The decisions that Mr. Smith took in respect of the sale of the estate asset were designed to benefit his family at the expense of others.

This level of dishonesty is a serious breach of the duty of integrity. 45 On the other two convictions involving a breach of the duty to act with integrity, the Panel said (at para. 7): The other two matters that resulted in convictions for breach of integrity show a similar pattern of Mr. Smith preferring his own financial interest over those of others to whom he owed a duty of candour. He was dishonest with the Government of Canada in a letter he wrote and through his lack of integrity deprived the government department of the information it needed to make an informed decision on how to proceed. Mr.

Smith benefitted from this lack of candour in that his outstanding legal bill was covered out of the funds. Finally, Mr. Smith covered his own legal fees related to the Law Society investigation out of the estate assets when he ought to have known that this was totally unreasonable. 46 The Panel then explained why it had decided that the appropriate penalty was disbarment (at para. 8): The issue, therefore, is what the appropriate penalty is given the panel’s conclusion that there is a pattern of dishonest actions.

Our obligation is to impose a penalty that protects the public and maintains the reputation of the profession. This includes ensuring that only people who understand and adhere to the duty to act with the upmost of integrity practice law. Unfortunately Mr. Smith is not such a person. When the opportunity presented itself to be dishonest, he took it. Further, he continues to maintain that he has done nothing wrong which causes us concern that if another opportunity was to present itself he would once again favour his personal circumstances over that of the public.

As such we have concluded that the appropriate penalty in this case is disbarment. This is the only penalty that will protect the public and maintain the reputation of the profession as one where only honest people practice law. 47 The appellant argued before us that the finding of a “pattern” of conduct was unwarranted. He said that separate penalties should have been imposed for each count and, in any case, the penalty was “excessive, oppressive and unreasonable.” 48 In my view, there was evidence from which the Panel was justified in concluding that a pattern of conduct existed.

While that conclusion need not necessarily have been drawn, it was certainly open to the Panel to conclude as it did, and so concluding was not unreasonable. 49 The Panel was also entitled to impose a global disposition rather than a separate penalty for each count. It was entitled to consider the cumulative effect of the misconduct to reach a fit disposition. See Mackinnon v. Law Society of Manitoba , 2011 MBCA 36 (at para. 4 ): ....

They [the panel] were also entitled to consider the cumulative impact of these incidents together as leading to a conclusion of intentional misleading of the client and professional misconduct.

50 As to the harshness of the penalty, critical to the Panel’s decision to disbar was the appellant’s testimony, and his belief, that he had done nothing wrong in connection with the matters before it. The Panel was concerned that given another opportunity, “he would once again favour his personal circumstances over that of the public” (at para. 8). The Panel decided that on five counts, the appellant’s conduct demonstrated a lack of integrity.

The Panel concluded that disbarment was required to protect the public and maintain the reputation of the profession. 51 The appellant said that there was no precedent in this province of a lawyer being disbarred without having misappropriated funds in a manner which would be deemed criminal, and he argued that his conduct did not fit that description. The Law Society argued that the penalty of disbarment is not reserved for cases of misappropriation.

It referred to Gavin MacKenzie, Lawyers & Ethics: Professional Responsibility and Discipline , looseleaf (Toronto: Thomson Reuters Canada Limited, 1993), ch. 26 (at p. 26-46): It would be a mistake, however, to assume that disbarment is a penalty reserved for cases that combine the worst imaginable offence with the worst imaginable offender. In cases involving fraud or theft, in spite of evidence of prior good character and financial or other pressures, lawyers are almost certain to be disbarred.

In one such case, a discipline hearing panel held that “disbarment is as much required for the lawyer who throws away a hard-earned reputation for integrity as it is for the scoundrel who caps a disreputable career with more of the same.” Thus the profession sends an unequivocal message in the interest of maintaining public trust and the reputation of the profession. 52 The Law Society also relied on James T.

Casey, The Regulation of Professions in Canada , looseleaf (Toronto: Carswell, 1994) vol. 2, ch. 14 (at p. 14-5): Given that the primary purpose of the legislation governing professionals is the protection of the public, it follows that the fundamental purpose of sentencing for professional misconduct is also to ensure that the public is protected from acts of professional misconduct. 53 The Panel had a range of penalties open to it, from a reprimand to disbarment (see s. 72(1) of the Act ). It had found, and with justification, that the appellant’s conduct reflected a “pattern of dishonest actions” (at para. 8).

It was seriously troubled by the appellant’s lack of insight into his actions. Indeed, the Law Society argued that such lack of insight could well have tipped the scales in the Panel’s reasoning away from a lengthy suspension and towards disbarment. Certainly the reasons of the Panel support such a hypothesis. 54 Had the appellant recognized that his conduct, especially regarding the sale of the property to his wife, was seriously improper and unprofessional, the sanction might well have been a suspension because the Panel would not likely have had the concerns it expressed about future protection of the public.

But his insistence that his conduct was not improper, a position he maintained in argument before us, coupled with the finding of a pattern of dishonesty, led the Panel to conclude that the public interest could only be protected in future by permanently removing the appellant from the practice of law. It was these two factors together that led the Panel to reject any lesser sanction than disbarment. 55 Considering the evidence before the Panel, and bearing in mind its grave concerns about the appellant’s continuing lack of insight, its decision to disbar was not unreasonable.

Both the process followed by the Panel and the result met the Dunsmuir standard, and “fit comfortably with the principles of justification, transparency and intelligibility” ( Khosa at para. 59 ). The penalty imposed fell within a range of outcomes that was defensible on the facts and the law. Thus, this court must defer to the Panel’s decision. 56 In the result I would dismiss the appeal with costs. J.A. I agree: J.A. I agree: J.A.