David MacKay Appellant v. Law Society of Saskatchewan, 2021 SKCA 99

Restriction on Publication An order has been made in accordance with s. 49(6) and 84.1(3) of The Legal Profession Act, 1990 , directing that solicitor–client information shall not be published. Court of Appeal for Saskatchewan Docket: CACV3369 Citation: MacKay v Law Society of Saskatchewan 2021 SKCA 99 Date: 2021- 07-14 Between: David MacKay Appellant And Law Society of Saskatchewan Respondent Before: Ottenbreit, Caldwell and Schwann JJ.A. Disposition: Appeal allowed in part Written reasons by: The Honourable Madam Justice Schwann In concurrence: The Honourable Mr. Justice Ottenbreit The Honourable Mr.

Justice Caldwell On appeal from: 2019 SKLSS 1 , Regina Appeal heard: November 17, 2020 Counsel: Robert MacKay for the Appellant Timothy Huber for the Respondent Schwann J.A. I. INTRODUCTION [ 1 ] David MacKay was disciplined by the Law Society of Saskatchewan [LSS] for conduct unbecoming a lawyer in that he did, after agreeing to trust conditions imposed by a lawyer, fail to comply with those conditions by releasing settlement funds to his client without first ensuring that the conditions had been met.

He was sentenced to a reprimand, a fine of $1,000 and costs of $11,000. [ 2 ] In his appeal from the conduct unbecoming ruling, Mr. MacKay challenges the reasonableness of the findings made by the LSS Hearing Committee [Committee] and takes issue with the admissibility of an email he had sent to his client, which he argues was subject to and protected by solicitor–client privilege. Mr.

MacKay also takes issue with the reasonableness of the costs award, principally in relation to the legal fees component that was notionally charged by the LSS’s in-house legal counsel. [ 3 ] For the reasons that follow, I would dismiss Mr. MacKay’s appeal from conviction and remit the costs award to the local registrar of the Court of Queen’s Bench for assessment. II. FACTUAL BACKDROP [ 4 ] Mr. MacKay has been a practicing member of the LSS since 1969 and was a registered member at the relevant time. [ 5 ] Mr. MacKay had been retained by C.W. to act for him in a divorce and family property matter.

Those matters were resolved in May of 2014, except for C.W.’s 1/6th interest in an Arizona property that he held together with his former spouse, T.W., and other members of her family. It was initially understood between C.W. and T.W. that they would resolve the Arizona property issue on their own without the assistance of legal counsel. That changed when T.W. and her family arranged for an Arizona lawyer [Lawyer S.] to assist them in removing C.W.’s name from the title to the Arizona property.

C.W. and T.W. agreed that, in exchange for payment of $11,439 to C.W., he would quit claim his interest in that property to T.W. and her family. [ 6 ] In December of 2014, C.W. retained Mr. MacKay to act on his behalf with respect to the transfer of his interest in the Arizona property. Mr. MacKay contacted Lawyer S. by email to inform him of this development. Lawyer S. responded with the following email to Mr. MacKay on February 13, 2015: How do we plan on doing escrow for this transaction?

For simplicity, I propose the parties meeting at your office. [B.H.] brings a certified check that you deposit to ensure it is “good funds”, [C.W.] brings the signed quit claim deed. The quit claim deed is mailed to me. I record it with the Pinal County Recorder. Once I have the recorded quit claim deed, I will email you a copy. Upon receipt of the quit claim deed, the funds are released to [C.W.].

As far as costs, I propose each party pays their own attorney fees to handle each end of the transaction. Let me know if this works, or if you have another suggestion. [ 7 ] Mr.

MacKay replied to Lawyer S. that same day by an email, stating as follows: Sounds good but I think we will need some short settlement agreement – specifically [B.H.] has been insisting that [C.W.] pay some share of the expenses to date for the property but since [C.W.] did not and felt that he was unable to use the property he requires some assurance that this settlement will end matters between the parties – a mutual release of all matters between them to date. [ 8 ] On March 1, 2015, Lawyer S. sent another email to Mr. MacKay.

Attached to this email was a real estate purchase agreement, quit claim deed and an affidavit. Lawyer S. concluded his email by stating as follows: “Please let me know if you have any questions” – to which, Mr. MacKay responded, on March 3, 2015, “ I agree with the procedure to close as set out in your February 13 email ” (emphasis added). [ 9 ] On April 9, 2015, T.W. delivered to Mr. MacKay’s office a certified cheque for $11,439 USD (converted to Canadian funds) payable to his law firm, a partially signed copy of the real estate purchase agreement and a blank quit claim deed.

On April 16, 2015, before the quit claim deed was registered in Arizona, Mr. MacKay released the settlement funds to his client. [ 10 ] However, the matter did not unfold quite as planned. The following is a chronology of the key events that followed: Date Event 9 April 2015 Mr. MacKay received a partially signed copy of the real estate purchase agreement, a blank quit claim deed and a certified cheque for $11,439 USD (payable to his firm) from T.W., but no affidavit of value. 16 April 2015 Mr. MacKay met with C.W., who executed the real estate purchase agreement and the quit claim deed.

C.W. requested the immediate release of the settlement funds, which Mr. MacKay provided later that same day. Mr. MacKay mailed the documents that had been signed by C.W. to Lawyer S. 26 May 2015 Lawyer S. received the documents from Mr. MacKay, but they were not registrable in the Arizona land titles system without the affidavit of value. Lawyer S. emailed Mr. MacKay advising him of the problem and sent an affidavit of value to him for C.W.’s execution. 9 June 2015 C.W. requested a price quote from Mr.

MacKay to have the affidavit of value notarized. 20 August 2015 An undisclosed person delivered an affidavit of value to Mr. MacKay’s office. It was partially signed by T.W., but not by C.W. 20 August 2015 Mr. MacKay mailed the partially signed affidavit of value to Lawyer S. 31 August 2015 Lawyer S. mailed the partially signed affidavit of value back to Mr. MacKay. 2 September 2015 Lawyer S. sent a fresh copy of the partially signed affidavit to Mr. MacKay for C.W. to sign. Mr. MacKay forwarded that document to C.W. that same day requesting that he sign it.

September 2015 to January 2016 Several attempts were made by Mr. MacKay to have C.W. execute the affidavit of value. [ 11 ] After a considerable period of time had elapsed, Lawyer S. emailed Mr. MacKay on January 25, 2016, to say that the transaction was cancelled and that he was to return the settlement funds. On January 29, 2016, C.W. executed the affidavit of value and delivered it to T.W. on February 2, 2016. The quit claim deed was registered in Arizona and the transaction closed. [ 12 ] On February 2, 2016, T.W. filed a complaint about Mr. MacKay with the LSS.

A formal complaint was initiated by the LSS on February 17, 2017. III. HEARING COMMITTEE DECISIONS [ 13 ] The Conduct Investigation Committee of the LSS found T.W.’s complaint had merit and recommended that the chair of the Discipline Committee appoint a hearing committee to hear the matter and determine if Mr.

MacKay was guilty of conduct unbecoming in that he “did, after agreeing to trust conditions imposed by Lawyer S. in relation to the release of certain settlement funds coming into his possession, fail to comply with those trust conditions by releasing said funds without first ensuring the trust conditions had been met”. This recommendation led to the appointment of a hearing committee pursuant to s. 47(1) of The Legal Profession Act, 1990 , SS 1990-91, c L-10.1 [ Act ]. [ 14 ] Mr. MacKay was compelled to testify before the Committee.

During the course of his testimony, legal counsel for the LSS sought to question him on a document he had produced to the Conduct Investigation Committee during the course of the investigative phase. That document was an email exchange between C.W. and Mr. MacKay that had occurred on March 4, 2015. Mr. MacKay objected to the document being entered into evidence and to any related questioning on it on grounds of solicitor–client privilege. [ 15 ] The Committee overruled Mr. MacKay’s objection. It held that (

a) s. 84.1(2) and s. 84.1(3) of the Act provide clear and unambiguous authority for the LSS to demand the production of a record that may be subject to solicitor–client privilege, (

b) Mr. MacKay could not refuse to answer questions about that record on grounds of privilege, and (

c) the LSS had exercised its discretion only to the extent absolutely necessary to further its objectives under the Act : Law Society of Saskatchewan v MacKay , 2019 SKLSS 1 at paras 26–27 [ Committee Decision ]. The email exchange between Mr. MacKay and C.W. was admitted into evidence, marked as exhibit P-3, and was made subject to a publication ban. [ 16 ] The Committee next concluded that Lawyer S. had imposed trust conditions on Mr. MacKay pursuant to the terms of the February 13, 2015, email and that Mr. MacKay had accepted those conditions by a reply email of March 3, 2015.

The Committee noted that while Lawyer S. had used the word escrow , instead of the more conventional terminology used in Saskatchewan, the intent was the same. The Committee found as a fact that the conditions imposed on Mr. MacKay by Lawyer S. required him to receive and hold the

settlement funds until the title registered. The Committee felt confident in its conclusion insofar as it accorded with “the usual practice inSaskatchewan”, and because “the Uniform Law Society Trust Conditions for real estate conveyancing provides that money not be releaseduntil title registers” (at para 54). Finally, the Committee found that P-3 was demonstrative of Mr.

MacKay’s subjective understanding that“money and documents are exchanged under trust conditions where the funds are not released until the transaction registers” (at para 62). [17] The Committee went on to hold that, even if a trust condition had not been expressly imposed, the money held by Mr. MacKaywas subject to “an implied trust condition that [it] not be released until the documents were registered” (at para 63).

In reaching thisconclusion, the Committee relied on Rule 7.2-11 of the Code of Professional Conduct, (Regina: Law Society of Saskatchewan, 2019)[Code], and its earlier decision in Law Society of Saskatchewan v Mah, 2017 SKLSS 9 [Mah]. [18] The Committee found Mr. MacKay guilty of conduct unbecoming and sentenced him to a reprimand and a $1,000 fine. He wasalso assessed costs of $11,000. IV. ISSUES [19] Mr. MacKay advances four grounds of appeal, which I would re-frame as follows: (

a) Did the Committee err in fact or law in finding that Lawyer S. had imposed a trust condition on him? (

b) Did the Committee err in admitting P-3 into evidence? (

c) Did the Committee err in concluding that the impugned conduct amounted to conduct unbecoming? (

d) Was the costs award unreasonable? V. STANDARD OF REVIEW [20] This is a statutory appeal brought pursuant to s. 56(1) of the Act.

Prior to the Supreme Court’s decision in Canada (Minister ofCitizenship and Immigration) v Vavilov, 2019 SCC 65, 441 DLR (4th) 1 [Vavilov], the standard of review applied to decisions of aCommittee respecting misconduct and penalty was reasonableness, except for questions of law and procedural fairness: see, for example,Kapoor v The Law Society of Saskatchewan, 2019 SKCA 85 at para 18, 438 DLR (4th) 672, and Groia v Law Society of Upper Canada,2018 SCC 27 at para 43, [2018] 1 SCR 772. [21] Vavilov substantially recalibrated the standards of review that apply to decisions of statutory bodies: “where the legislature hasprovided for an appeal from an administrative decision to a court, a court hearing such an appeal is to apply appellate standards of reviewto the decision” (at para 37).

See also Abrametz v Law Society of Saskatchewan, 2020 SKCA 81, leave to appeal to SCC granted, [Abrametz 2020]. [22] The applicable standard of review will vary depending on the issue and on the nature of the question posed on appeal. Thismeans that the appellate standards of review for statutory appeals, including appeals under s. 56(1) of the Act, are those set out in Housenv Nikolaisen, 2002 SCC 33, [2002] 2 SCR 235 [Housen]. VI. ANALYSIS A. Breach of trust condition [23] The Committee had to resolve these issues: (

a) did Lawyer S. impose trust conditions on Mr. MacKay, (

b) did Mr. MacKayaccept those conditions, (

c) if so, did he breach the conditions, and, finally, (

d) did that breach amount to conduct unbecoming?Mr. MacKay takes issue with how the Committee handled all of those issues. [24] Mr. MacKay maintains that, in keeping with Rule 7.2-11 of the Code, a trust condition must be clear, unambiguous and explicit.The bare-bones email exchange between himself and Lawyer S., he argues, failed to achieve that basic threshold because it did notstipulate that, before he could release the funds to C.W., an affidavit of value (sworn by C.W.) had to be returned to Lawyer S. and that thequit claim deed had to be registered in Arizona. Mr.

MacKay characterizes the transaction as atypical. For instance, he says trustconditions and undertakings are normally imposed when documents are delivered, but that did not occur here. As Mr. MacKay sees it,when one steps back and examines the email exchange in its entirety, including how the events actually unfolded, nothing prevented himfrom releasing the funds to C.W. when he did. [25] The overarching theme to Mr.

MacKay’s appeal is that the Committee misinterpreted and misconstrued the import of thecorrespondence passing between him and Lawyer S and that the Committee impermissibly filled in gaps or glossed over vague or absentconditions. He identifies three distinct alleged errors to make his point. I will address each in turn. 1. Reading-in terms and conditions [26] Mr. MacKay argues that Lawyer S.’s email failed to meet the basic requirements set out in s. 7.2-11 of the Code and thecommentary that accompanies it: Undertakings and Trust Conditions

7.2-11 A lawyer must not give an undertaking that cannot be fulfilled and must fulfill every undertaking given and honour every trust condition once accepted. Commentary … [2] Trust conditions should be clear, unambiguous and explicit and should state the time within which the conditions must be met . [ 27 ] As mentioned above, based on the emails that were exchanged between Lawyer S. and Mr. MacKay, the Committee had “no hesitation in finding that the Lawyer S.’s email of February 13, 2015, imposed trust conditions on [Mr. MacKay] and that [Mr. MacKay], by email on March 3, 2015, accepted” (at para 52).

The Committee found the word escrow noteworthy, which it said was defined to mean “holding something in trust until a contingency happens or a condition is performed”. The Committee next broke down the February 13 email into sequential segments and, from there, concluded the only reasonable

interpretation was that “the conditions provide that [Mr. MacKay] would receive and hold the money until title registered” (at para 54). a. Standard of review on the trust issue [ 28 ] Whether a trust arose in the matter at hand involved, primarily, the Committee’s

interpretation of the email from Lawyer S. and, secondarily, a determination of the nature of the condition. These issues required the Committee to weigh and interpret the evidence.

A similar situation arose in Law Society of British Columbia v Brito , 2018 BCCA 407 , 18 BCLR (6th) 50 [ Brito ], where, adopting Grewal v Khakh , 2018 BCCA 357 , 14 BCLR (6th) 18, the British Columbia Court of Appeal concluded that the issue of whether a trust was created (intention, certainty of subject matter and the objects) raised questions of mixed fact and law that required the application of legal standards to the evidence presented.

That Court summarized its approach to the standard of review in these terms: [26] The standard of review as to whether a trust was created is whether the judge made a palpable and overriding error. This Court said recently in Grewal v. Khakh , 2018 BCCA 357 : [24] The appropriate standard of review for the judge’s conclusion that the required certainties were satisfied is whether the judge committed a palpable and overriding error. In Norman Estate v. Watch Tower Bible and Tract Society of Canada , 2014 BCCA 277 at para. 14 , this Court held that “[t]he

interpretation of instruments, such as agreements and wills, may raise questions of both fact and law”. The Court went on to write that the issue of “[i]ntention to create a trust is a question of fact” (at para. 17), and similarly here I would conclude that questions of the requisite certainty of subject matter of the trust and objects of the trust raise questions of at least mixed fact and law requiring the application of legal standards to the evidence presented. The exercise is akin to the

interpretation of a contract, which generally involves questions of mixed fact and law, and which is reviewable only where the first instance judge has committed a palpable and overriding error: Sattva Capital Corp. v. Creston Moly Corp ., 2014 SCC 53 . (Subject to rare cases where the finding throws up an extricable question of law, which is not the case here.) [ 29 ] The court in Brito went on to observe that the task of distilling the parties’ intentions from the documents in evidence is a fact- specific undertaking analogous to contractual

interpretation, with an assessment of the parties’ intentions from the documentary evidence being a question of mixed fact and law: [27] Ascertaining objectively the parties’ intentions from their letters and the promissory notes that form their agreements, is, like the interpretive task undertaken in Sattva [2014 SCC 53], “inherently fact specific” and a mixed question of fact and law.

In light of the standard of review of palpable and overriding error and the largely factual nature of the judge’s findings, it is not open to this Court to set aside the judgment simply because we might interpret the parties’ agreements differently: Rosas v. Toca , 2018 BCCA 191 at para. 34 . [ 30 ] Admittedly, the Brito decision is pre- Vavilov and the court seems to collapse the two questions – whether a trust was created and what the trust conditions were – into one inquiry as opposed to using a two-stage process.

Nonetheless, what I take from Brito is that the question of whether the email exchange between Lawyer S. and Mr. MacKay amounted to a trust, and the

interpretation of the trust condition, is closely aligned with the inherently fact-specific exercise of ascertaining objectively the parties’ intentions. This is a question of mixed fact and law that is subject to the palpable and overriding error standard of review. b. Solicitor’s trust conditions [ 31 ] Mr. MacKay does not take issue with the Committee’s selection of the law concerning trusts, nor does he suggest the Committee applied an incorrect standard, failed to consider a required element of a legal test, or committed an error in principle. Rather, I take Mr.

MacKay to argue that Lawyer S. did not intend to impose trust conditions and that, when their email exchange is examined critically against the need for clear, unambiguous and explicit trust conditions, the Committee erred in finding that a trust was imposed. Even though Mr. MacKay does not assert an error in principle, I find it useful to begin with a brief overview of the law pertaining to solicitor’s trust conditions. [ 32 ] Carling Development Inc. v Aurora River Tower Inc. , 2005 ABCA 267 , 257 DLR (4th) 627 [ Carling ], from the Alberta Court of Appeal, is one of the few cases where this issue is explored.

After conducting an extensive review of the legal character and practical functionality of solicitor’s trust conditions, that court found them to be true trusts, with the accepting lawyer serving as the trustee for the benefit of the sending lawyer. The essential elements of a solicitor’s trust, identified in Carling , were summed up in these terms: [51] In courts of equity, there is an accepted three-part test for creation of an express trust. It is normally satisfied when one solicitor imposes trust conditions upon another .

The first part of the test is words which show that the recipient must take the property for described persons or objects, not beneficially. The words “in trust” suffice, but are not necessary. Between two solicitors, handing over money or property to create a mere moral obligation is highly unlikely. The second part of the test for a new trust is clear identification of the property which is the subject matter. Ordinarily that property is the documents or money enclosed in the letter containing the trust conditions, and said to be subject to the conditions.

Occasionally the conditions refer to documents sent previously in a named letter. Usually that part of the test is clearly satisfied. The final part of the test is certain or ascertainable persons or objects who are to benefit.

That is even more easily satisfied, as usually the required performance is to be given to the solicitor sending the documents and letter. Occasionally, performance is to be to someone else, such as a mortgagee, but that person is usually clearly identified. These tests are described in Waters, Law of Trusts in Canada , Chap. 5 (3d ed. 2005); Underhill and Hayton, Law Relating to Trusts and Trustees , Chap. 2 (15th ed. 1995). (Emphasis added) [ 33 ] What emerges from Carling are several important points.

First, although the phrase in trust is ubiquitous, it is not necessary for the sending lawyer to use this specific language to create a trust. As Carling observes, “Between two solicitors, handing over money or property to create a mere moral obligation is highly unlikely” (at para 51). Second, the subject matter of the trust is typically documents or money sent by the sending solicitor, subject to conditions. Third, the person who benefits from the trust must be certain or ascertainable; it is usually the solicitors who send the documents for the benefit of their client.

Finally, the Code (at least in Alberta) is said to provide “an important backdrop against which to interpret the words which the solicitors choose” ( Carling at para 50 ). [ 34 ] The importance of and need for confidence in solicitor’s trust conditions is a sine qua non of the practice of law.

As such, it needs to be assiduously protected (CED 4th (online), Barristers and Solicitors (Western) “Duty and Liability to Others: Duty to Other Counsel: Undertakings and Trust Conditions” (VIII.2(a)): §505 Unless a solicitor who sends documents to another solicitor on trust conditions can rely with absolute confidence upon those trust conditions being observed, the edifice of trust between solicitors, upon which so much of the efficient service to the public depends, will crumble. It is in the public interest that this confidence be maintained.

This concern merits paramountcy over any effect that judicial measures taken to ensure maintenance of that confidence may have upon the legal or equitable rights and obligations of the solicitors’ clients or those of other persons. (Footnotes omitted) c. Application [ 35 ] Mr. MacKay’s argument must be rejected. As discussed above, the question is whether a trust existed. This is a finding of mixed fact and law for the Committee to have made and, as such, is subject to the palpable and overriding error standard of review.

This Court cannot simply set aside that decision because we might have interpreted the email exchange differently. [ 36 ] In any event, like the Committee, I find that Lawyer S.’s February 13, 2015, email sufficiently evidenced the three certainties necessary to create a trust. Lawyer S. began his email by posing this question to Mr. MacKay: “How do we plan on doing escrow for this transaction?” (emphasis added). His choice of words should not have been discounted as pure happenstance. Rather, the language should have put Mr.

MacKay on alert to the fact that Lawyer S. contemplated something much more than just a loose or casual arrangement between them. [ 37 ] The balance of the email can be broken down into these logical, sequential steps: (

a) the parties meet at Mr. MacKay’s office; (

b) B.H. (presumably on behalf of T.W.) brings a certified cheque for Mr. MacKay that is deposited into Mr. MacKay’s trust account “to ensure it is ‘good funds’”; (

c) C.W. brings Mr. MacKay the signed quit claim deed; (

d) Mr. MacKay mails the quit claim deed to Lawyer S.; (

e) Lawyer S. records the quit claim deed in the Pinal County Recorder; (

f) the quit claim deed is recorded and Lawyer S. emails a copy of it to Mr. MacKay; and (

g) upon receipt of the recorded quit claim deed, the funds would be released to C.W. [ 38 ] The subject matter of the trust was obvious: it was the settlement funds and the quit claim deed. Although the funds were provided indirectly by B.H. (a family friend) and the quit claim deed by C.W., the fact Mr. MacKay was instructed to deposit the funds into his firm’s trust account “to ensure it is ‘good funds’” was a clear signal that Lawyer S. intended for the money to be held in trust.

Accepting the settlement funds on promise of having C.W. execute the quit claim deed was a measure of security for their respective clients: T.W. and C.W. Finally, there was certainty of ascertainable persons or objects: it was Lawyer S. who undertook to record the quit claim deed in the Pinal County Recorder and advise Mr.

MacKay once that occurred. [ 39 ] Although the Committee did not analyze the email exchange between counsel in quite this fashion, having regard to the record, particularly the sequence of steps outlined by Lawyer S. and the deferential standard of review, I see no basis for appellate intervention. [ 40 ] With that, I turn to Mr. MacKay’s argument that Lawyer S.’s email was anything but clear, unambiguous and explicit. He places particular focus on the last condition: “upon receipt of the quit claim deed, the funds are released to [C.W.]”, suggesting it was particularly vague and ambiguous.

He says it could have been reasonably interpreted to mean that upon his (i.e., Mr. MacKay’

s) receipt of the quit claim deed from Lawyer S., he was free to release the funds to C.W. when he received the quit claim deed from T.W. on April 9, 2015. With respect, this argument overlooks two considerations. [ 41 ] First, the Committee had the benefit of Mr. MacKay’s own words that substantially undermined his argument about harbouring confusion as to what those conditions meant and when he could release the funds. In response to C.W.’s inquiry about how the process would unfold, Mr. MacKay emailed him on March 4, 2015, setting out the sequence of events required to take place before the funds could be released to him.

[42] Mr. MacKay testified that his email to C.W. was not intended to reflect his subjective understanding of the arrangement he hadwith Lawyer S. but was simply a heads-up to C.W. that Lawyer S. might change the trust conditions at the last minute. The Committeerejected Mr. MacKay’s explanation. While Mr. MacKay offered a different

interpretation of what he had said to C.W., it was open to theLSS to reject his testimony and interpret his email in the manner that it did. [43] Second, and not insignificantly as it turned out, the Committee found that Mr. MacKay had accepted Lawyer S.’s conditions byreply email on February 13, 2015, and again on March 3, 2015, when he wrote as follows: “I agree with the procedure to close as set out inyour February 13 email”. I do not understand Mr.

MacKay to argue otherwise; and, in any event, that finding is amply supported by theevidence. [44] Further, having accepted the conditions – a finding not challenged on appeal – Mr. MacKay was duty-bound to honour them. Ifhe was confused about whether a trust condition had been imposed in the first place, or about what his obligations were pursuant to thatcondition, it stands to reason that he was obliged to seek clarification from Lawyer S. He was also obliged not to accept the funds and, ifalready received, to return or not allow any dealings with the funds subject to the condition until he had done so.

The followingcommentary to Rule 7.2-11 reinforces my conclusion: Commentary … [2] Trust conditions should be clear, unambiguous and explicit and should state the time within which the conditions must be met. Trustconditions should be imposed in writing and communicated to the other party at the time the property is delivered. Trust conditions shouldbe accepted in writing and, once accepted, constitute an obligation on the accepting lawyer that the lawyer must honour personally.

Thelawyer who delivers property without any trust condition cannot retroactively impose trust conditions on the use of that property by theother party. [3] The lawyer should not impose or accept trust conditions that are unreasonable, nor accept trust conditions that cannot be fulfilledpersonally. When a lawyer accepts property subject to trust conditions, the lawyer must fully comply with such conditions, even if theconditions subsequently appear unreasonable.

It is improper for a lawyer to ignore or breach a trust condition he or she has accepted onthe basis that the condition is not in accordance with the contractual obligations of the clients.

It is also improper to unilaterally imposecross conditions respecting one’s compliance with the original trust conditions. [4] If a lawyer is unable or unwilling to honour a trust condition imposed by someone else, the subject of the trust condition should beimmediately returned to the person imposing the trust condition, unless its terms can be forthwith amended in writing on a mutuallyagreeable basis. [5] Trust conditions can be varied with the consent of the person imposing them. Any variation should be confirmed in writing.

Clients orothers are not entitled to require a variation of trust conditions without the consent of the lawyer who has imposed the conditions and thelawyer who has accepted them. [6] Any trust condition that is accepted is binding upon a lawyer, whether imposed by another lawyer or by a lay person.

A lawyer mayseek to impose trust conditions upon a non-lawyer, whether an individual or a corporation or other organization, but great caution shouldbe exercised in so doing since such conditions would be enforceable only through the courts as a matter of contract law and not by reasonof the ethical obligations that exist between lawyers. (Emphasis added) [45] Obviously, nothing in the commentary expressly compels the receiving lawyer to follow up with the sending lawyer incircumstances where the former finds the trust conditions unclear.

However, when these clauses are read together, they strongly suggestthat, in situations where lawyers are uncertain if a trust condition has been imposed, they must either return the entrusted property or act toclarify the trust conditions. The threads of this

interpretation can be found in the following: (

a) Commentary [2] – trust conditions should be accepted in writing and once accepted, constitute an obligation on the acceptinglawyer to personally honour the conditions; (

b) Commentary [3]– the lawyer should accept trust conditions that are reasonable, and not accept trust conditions that cannot befulfilled personally; (

c) Commentary [4] – if a lawyer is unable or unwilling to honour a trust condition, the subject of the trust condition should beimmediately returned to the person imposing the condition, unless its terms can be forthwith amended in writing on a mutually agreeablebasis; and (

d) Commentary [6] – any trust condition that is accepted is binding on the lawyer who accepts it. [46] Further, given the binding nature of trust conditions, it makes abundant sense that lawyers should proceed with care andprecision where they believe the conditions are unclear – or even if they are unsure about an intention to impose trust conditions.Clarification should be sought. This approach is consistent with LSS’s Ethics Rulings. Regardless of whether a lawyer believes that a trustcondition was necessary to give effect to the transaction, once accepted, that lawyer is bound by the condition.

Similarly, lawyers must bediligent in both drafting and accepting conditions: see the Law Society of Saskatchewan Rules and also consult the LSS Ethics RulingDatabase (code heading, “Responsibility to Lawyers and Others”), e.g., 2009 SKLSPC 6 and 2016 SKLSPC 9. [47] A number of disciplinary decisions from other jurisdictions confirm this approach: see, for example, Law Society of Alberta vLutz, 2015 ABLS 12 ; Law Society of Alberta v Steed, 2011 ABLS 3 ; and Law Society of Alberta v Mark Hoffinger,2009 LSA 28 , aff’d 2010 ABCA 302, 490 AR 214.

In pointing out this line of jurisprudence, I am mindful that these decisionsinvolve the Law Society of Alberta’s Code of Conduct (2011), which contains clearer guidance for lawyers when confronted with

potentially ambiguous trust conditions. [48] Outside of Alberta, the obligation to clarify a trust condition was discussed in Law Society of Upper Canada v Violette, 2006ONLSHP 69 . There, the member was charged with failing to communicate with a client, improper withdrawal of fees from trustmonies earmarked for another purpose and failure to respond with reasonable promptness to communications from another solicitor. Thepanel found all three allegations had been established. In relation to the second charge, the member had testified that the money wasreceived without a trust condition.

The hearing panel found that the member’s position did not accord with her own records and, inaddition, found it significant that the member had not clarified whether a trust condition existed before she withdrew the money for fees: [236] The member did not communicate to the accounting firm that she was not responsible for payment, which was her position in thiscase, nor did she communicate that position to her client at any time.

She did not communicate to her client that she took trust monies thatwere impressed with a trust condition that they were “Costs for Business Appraisal” and transferred them to her general account to payoutstanding fees. Prior to taking those trust monies, the member did not communicate with her client to clarify the trust condition or toseek the client’s permission to take them for fees notwithstanding the trust condition.

When those monies were taken in February 2001,the member failed to communicate that fact to the client or to render an updated statement of account and trust statement. (Emphasis added) [49] While I find no such ambiguity in their correspondence, if Mr. MacKay harboured any uncertainty about whether Lawyer S.had intended to impose trust conditions on him, the precise requirements of those conditions, or whether they permitted him to release thefunds to his client before the quit claim deed was registered in Arizona, he was obliged to clarify such matters with Lawyer S. before heaccepted the funds in question.

However, he not only failed to do that, but he also failed to clarify matters at any point along the way inspite of the fact that, as a lawyer, if such conditions were found to be trust conditions, they would be personally binding on him onceaccepted. [50] To conclude, Mr. MacKay’s argument is an unvarnished attempt to re-argue his case before this Court based on a selectivereading of the evidence in the hope we would see things differently than the Committee. An appeal to this Court is not an opportunity toargue the matter afresh.

The Committee’s finding is a question of mixed fact and law, subject to the palpable and overriding error standardof review. With Mr. MacKay unable to point to any such error, there is no room for appellate intervention. 2. Failure to consider Mr. MacKay’s uncontroverted evidence [51] Next, Mr.

MacKay argues that the Committee ignored his uncontroverted evidence to the effect that – as far as he wasconcerned – Lawyer S. had not imposed a trust condition on him and, at best, the two of them simply had some form of a loose agreement.He expanded on his understanding of their arrangement in the following exchange with LSS counsel at the time of the hearing: Q So you believed you had actually complied with the agreement that you had arranged to with [Lawyer S.]?A Yeah, that was the only agreement that we had.

In my email to [C.W.], I was talking about a quit claim andtransfer, and, obviously, there was no transfer ever involved here. The quit claim was the transfer, so I wassimply responding to him with what I expected the -- might be, as I say, so they didn’t get any unpleasantsurprise at the end of the day, but there never was any agreement, never got any trust agreement or trust letterfrom [Mr. S.]. The only agreement we had was that one that he had proposed and I had accepted in February. [52] The LSS did not call Lawyer S. as a witness to explain what he had intended by his February 13, 2015, email to Mr.

MacKay.In the absence of that evidence, Mr. MacKay questions why the Committee refused to accept his testimony on this point and says that iterred in doing so. [53] The LSS had to establish the existence of a trust condition on a balance of probabilities. As I read its decision, the Committeeconcluded the LSS had met that burden based on the documentary evidence alone, which included (as will be discussed below)Mr. MacKay’s disputed email to C.W. The word escrow, situated as it was at the commencement of Lawyer S.’s email – coupled with thefact that Mr.

MacKay had accepted Lawyer S’s proposed arrangement – was powerful evidence to support the LSS’s theory of its case. [54] The issue Mr. MacKay raises on appeal, rather, is the Committee’s failure to accept his testimony concerning his subjectiveunderstanding of the nature and content of the arrangement with Lawyer S. Of course, the Committee was not obliged to acceptMr. MacKay’s evidence. It was open to the Committee to accept or reject all or part of his testimony and, if accepted, to assign itappropriate weight.

Although the Committee did not say so in express terms, a fair reading of its decision leads me to conclude that it hadrejected Mr. MacKay’s explanation. The March 4, 2015, email undoubtably undermined his credibility in that regard. [55] If the Committee did not reject his testimony, Mr. MacKay asserts that it erred by not assigning it appropriate weight.However, as made clear in Housen, “it is not the role of appellate courts to second-guess” the weighing of evidence by a trier of fact (atpara 22).

Thus, placed in an appellate context, the question on this appeal is not whether the Committee erred by rejecting his evidence orby assigning it less weight, but whether its

interpretation of the email exchange was tainted by palpable and overriding error. And, as Ihave already stated, I see no such error. [56] Neither was the Committee obliged to hear from Lawyer S. about his understanding of the arrangement with Mr. MacKay. Theevidence before the Committee included an agreed statement of fact and documentary evidence, which, together, constituted the case forthe LSS. If Mr. MacKay thought the testimony of Lawyer S. was essential to his defence, it was open to him to have called Lawyer S. as awitness.

The fact that he chose not to do so does not undermine the Committee’s decision. [57] To conclude, the standard of appellate review provides a complete answer to Mr. MacKay’s argument. The Committee wasrequired to determine if trust conditions had been imposed. To that end, it was required to examine the wording of the email exchangebetween the two lawyers. Based on that evidence, it concluded as follows: “The conditions provide that [Mr. MacKay] would receive andhold the money until title registered” (at para 54).

In the circumstances, that amounts to a finding of fact that attracts appellate deference.What that means for Mr. MacKay is that, unless he can point to a palpable and overriding error by the Committee, this Court cannot

intervene. Palpable and overriding error is a high threshold to overcome: “an appellate court can intervene only if there is an obvious error in the trial decision that is determinative of the outcome of the case …” (emphasis added, Salomon v Matte-Thompson , 2019 SCC 14 at para 33 , [2019] 1 SCR 729). The possibility that an alternative factual finding might have been open to the Committee had it weighed the evidence differently does not amount to a palpable and overriding error: see Nelson (City) v Mowatt , 2017 SCC 8 at para 38 , [2017] 1 SCR 138. [ 58 ] I am not persuaded by Mr. MacKay’s argument. 3.

Standard real estate practice in Saskatchewan [ 59 ] Finally, Mr. MacKay takes issue with the Committee’s finding embedded in the following passage of its decision: “This would accord with the usual practice in Saskatchewan. The Uniform Law Society Trust Conditions for real estate conveyancing provides that money not be released until title registers” (at para 54). [ 60 ] Mr.

MacKay argues that the Committee misconstrued what constitutes standard real estate practice in Saskatchewan and that it incorrectly assumed all standard real estate transactions require that money be held pending registration with no possibility of disbursement in advance. He points to various exceptions to the application of that general practice, the absence of a specific condition to that effect in the standard Law Society Trust Condition Format form and how C.W.’s matter was a family law property settlement and not a typical real estate transaction.

Had the Committee examined this issue with more probity, he argues, it would have led to a different result. [ 61 ] While much of Mr. MacKay’s written argument on this issue veers into his submissions on the implied trust issue, at root, I take him to argue that the Committee operated from a flawed understanding of what standard real estate transactions entail, coupled with an erroneous assumption that a clause of that nature exists in the Law Society Standard Trust Condition Format form.

Approaching the issue from this flawed premise, he argues, led the Committee to err. [ 62 ] The Committee approached the matter at hand as a combination of a real estate transaction and a monetary settlement. While the genesis of C.W.’s deal was the final piece to a protracted family property matter, its implementation had all the earmarks of a transaction involving land, most notably the registration of documents affecting title and the exchange of money in return.

The fact that it may not be characterized as a real estate transaction in the purest sense – or, for that matter, in the way that might be understood in this province – does not detract from the Committee’s finding that trust conditions had been imposed on Mr. MacKay. [ 63 ] That said, Mr. MacKay’s argument is not without some merit. The evidence before the Committee was limited to the notice of hearing of the formal complaint, an agreed statement of fact, P-3 and Mr. MacKay’s viva voce testimony.

The LSS did not adduce opinion evidence about the usual real estate practice in this province nor did it proffer the Law Society Trust Condition Format form as an exhibit at the hearing. On the latter point, the Committee only had Mr. MacKay’s testimony on the topic, which, of course, tended to suggest that this transaction was anything but typical. [ 64 ] In my view, the Committee made an error of law by making findings on these points in the absence of an evidentiary foundation for them. [ 65 ] However, the Committee’s error was inconsequential and did not affect the result.

The issue before the Committee was whether Lawyer S. had imposed trust conditions on Mr. MacKay. The Committee concluded that he did, based on its

interpretation of the email exchange between the two lawyers: that is, Mr. MacKay was to hold the money in trust until the quit claim deed registered in Arizona, and that he accepted that condition. Its subsequent musings about the usual real estate practice, and the Law Society Trust Conditions Format form, merely served to reinforce its bottom-line conclusion, i.e., Mr. MacKay should have known better than to release the funds before the title had registered. In other words, the error was not determinative of the outcome, and the Committee’s conclusion can stand despite it. 4.

Implied trust conditions [ 66 ] The Committee went on to hold that, even if the February 13, 2015, and March 3, 2015, emails did not create a trust condition, it would have found that the circumstances at hand gave rise to an implied trust condition. It came to this conclusion based on its earlier decision in Mah , s. 7.2-11 of the Code and the commentary associated with that provision, which provides as follows: “A lawyer should treat money or property that, on a reasonable construction, is subject to trust conditions or an undertaking in accordance with these Rules” (s. 7.2-11, Commentary [7]). [ 67 ] Mr.

MacKay opposes the LSS’s ability to infer or imply a trust condition when one is not otherwise expressed in writing; and, in any event, he argues that the circumstances at hand did not warrant the application of this principle. Since I have determined the Committee did not err in finding an express trust condition, I need not address this ground of appeal and will leave that issue for another day. B. The admissibility of the email to C.W. [ 68 ] On March 3, 2015, C.W. emailed Mr. MacKay to inquire about how the transaction would unfold. As noted above, Mr.

MacKay responded the following day by outlining the sequence of the transaction. [ 69 ] Mr. MacKay disclosed this email to the Conduct Investigation Committee without objection. However, during the course of his examination-in-chief at the hearing, legal counsel for the LSS sought to pursue a line of questioning concerning the circumstances and content of the email. Mr. MacKay objected to both the admissibility of the email and the LSS’s right to question him further on it by asserting solicitor–client privilege. The Committee overruled Mr.

MacKay’s objection, admitted the email into evidence (marked as exhibit P-3) and directed Mr. MacKay to answer the questions posed by the LSS’s counsel in relation to it.

[70] Mr. MacKay renews his position on appeal, maintaining that the Committee’s decision is flawed and must be set aside.Solicitor–client privilege, he argues, is a substantive right, not a mere rule of evidence, and, as such, it is fundamental to the properfunctioning of the legal system. It follows, he says, that this privilege ought not yield or be abrogated except in the clearest of cases. Sincethe Committee could determine whether a trust condition had been imposed from the other documentary evidence, Mr. MacKay contendsit was not absolutely necessary for the LSS to adduce P-3 in order to make its case. Mr.

MacKay goes on to argue that, even if the emailwas properly admitted, it was irrelevant to the

interpretation of the trust conditions. He characterizes the email as nothing more than ageneralized description to C.W. of how the transaction might proceed. 1. The law [71] It is trite to say that the protection of communications between client and lawyer, founded on the unique relationship betweenthem, has long been recognized as fundamental to our legal system. The principle reflects the importance of maintaining the confidentialityof those communications.

Solicitor–client privilege is considered a robust form of privilege: “solicitor–client privilege must be as close toabsolute as possible to ensure public confidence and retain relevance.

As such, it will only yield in certain clearly defined circumstances,and does not involve a balancing of interests on a case-by-case basis” (R v McClure, 2001 SCC 14 at para 35, [2001] 1 SCR 445).Although solicitor–client privilege has its roots in the rules of evidence, it is now understood to have a substantive dimension: seeUniversity of Saskatchewan v Saskatchewan (Information and Privacy Commissioner), 2018 SKCA 34 at para 30, [2018] 7 WWR 373 [Uof S]; Descôteaux v Mierzwinski, (SCC), [1982] 1 SCR 860 at 875 [Descôteaux]; and R v Solosky, (SCC),[1980] 1 SCR 821 at 839. [72] However, the privilege is not absolute.

It can be limited or abrogated by statute: “A statute purporting to limit or abrogate theprivilege must be interpreted ‘restrictively’ and must demonstrate ‘a clear and unambiguous legislative intent to do so’ before it will begiven such effect …” (U of S at para 32). Also see Alberta (Information and Privacy Commissioner) v University of Calgary, 2016 SCC53 at para 28, [2016] 2 SCR 555.

Legislation that intrudes into this privilege must be interpreted restrictively and courts ought not inferpowers in order to abrogate privilege: Law Society (Saskatchewan) v Merchant, 2008 SKCA 128 at para 46, 300 DLR (4th) 462, leave toappeal to SCC refused, [Merchant 2008], and Canada (Privacy Commissioner) v Blood Tribe Department of Health,2008 SCC 44 at para 11, [2008] 2 SCR 574. [73] Solicitor–client privilege in the context of Law Society disciplinary proceedings was the central issue in Merchant 2008.

In thatcase, the member had resisted the LSS’s demand for the production of records involving the member’s dealings with his client. Anapplication to the Court of Queen’s Bench for an order compelling production was denied but that decision was subsequently overturnedon appeal. To properly assess this issue, the Court framed the line of analysis in these terms (at para 45): (

a) Does the LSS have the “authority to demand the production of records subject to solicitor–client privilege”? (

b) If it does, has that authority “been exercised so as not to interfere with privilege except to the extent absolutely necessary”? In answer to the first question, Merchant 2008 concluded that s. 63(1) of the Act conferred broad authority on the LSS to demand theproduction of documents, including those that may be privileged.

The scope of s. 63, the Court said, had to be understood contextually aspart of the LSS’s authority and, indeed, obligation to regulate the profession. [74] On the absolutely necessary question, Merchant 2008 began with reference to what the Supreme Court had to say on the matterin Descôteaux. Justice Lamer (as he then was) said as follows with regard to the absolutely necessary component (at 875): It would, I think, be useful for us to formulate this substantive rule, as the judges formerly did with the rule of evidence; it could, in myview, be stated as follows: … 3.

When the law gives someone the authority to do something which, in the circumstances of the case, might interfere with thatconfidentiality, the decision to do so and the choice of means of exercising that authority should be determined with a view to notinterfering with it except to the extent absolutely necessary in order to achieve the ends sought by the enabling legislation. [75] Merchant 2008 cast the question to ask in the context of the Act as this: “whether, in deciding to request the records and inframing its request for them, the Law Society has respected solicitor–client privilege except to the extent absolutely necessary to achievethe objectives of the Act” (at para 44).

The answer to that question, the Court went on to say, was informed by an examination of theLSS’s duties and responsibilities in connection with its obligation to ensure professional integrity, investigate complaints, and the scope ofthe demand. In relation to the specifics in that case, this Court concluded as follows: [58] … The Law Society has a duty to investigate complaints and the authority to demand privileged records in the course of dischargingthat duty. It has framed a request which is as narrow as reasonably possible and is thus seeking only those documents necessary toinvestigate Ms.

Wolfe’s complaint. It is self-evident that there is no other way to obtain those records or to pursue the investigation. Thus,in my view, this is a clear example of what Descôteaux v. Mierzwinski described as “… not interfering with [privilege] except to the extentabsolutely necessary in order to achieve the ends sought by the enabling legislation”. [76] Following Merchant 2008, the Legislature saw fit to amend the Act to specifically address solicitor–client privilege.

Section84.1 reads as follows: Solicitor and client privilege during proceeding 84.1(1) In this section: (a) “member” includes a former member, a non-member who is authorized to engage in the practice of law in Saskatchewan, a student-at-law, a person required to serve under articles and a person authorized to practise law in accordance with the rules made pursuant to clause

10(i); (b) “member’s records” means anything kept or acquired by a member or the partnership in which a member practises or given to a member or the partnership in which a member practises by or for a client or any other person, and, without restricting the generality of the foregoing, includes ledgers, books of account, records, files, documents, papers, securities, shares, trust money in cash or on deposit and negotiable instruments: (

i) if they relate in any way to the member’s practice or former practice as a lawyer or to the business or affairs of the member’s clients or former clients; and (ii) whether they were acquired before or after the member ceased to practise as a lawyer; (c) “records” includes electronic records.

(2) A member shall not in any proceedings pursuant to this Act refuse to answer inquiries or provide any information, member’s records or other property within the member’s possession or power on the grounds of solicitor and client privilege.

(3) If a member is required to answer inquiries or provide any information, member’s records or other property pursuant to subsection (2) and the member may claim solicitor and client privilege with respect to the answers, information, member’s records or other property, the member or any other person who may claim the solicitor and client privilege may require that: (

a) all or part of any proceedings pursuant to this Act that deal with the answers, information, member’s records or other property be held in private; and (

b) the public be refused access to the information, member’s records or other property and to any other document containing the answers.

(4) If the Court of Queen’s Bench or the Court of Appeal on an application or appeal pursuant to this Act considers it necessary to prevent the disclosure of answers, information, a member’s records or other property with respect to which solicitor and client privilege may be claimed, the court shall order that: (

a) all or any part of the proceedings before the court that deal with the answers, information, member’s records or other property be held in private; and (

b) the public be refused access to the information, member’s records or other property and to any other document containing the answers. (5) Subsections (3) and (4) apply, with any necessary modification, to: (

a) every person who keeps any of a member’s records or other property; and (

b) records or other property of a member seized pursuant to an order described in subsection 61(9) or 63(3).

(6) Compliance with subsection (2) or (5) does not breach or constitute a waiver of solicitor and client privilege and the privilege continues for all other purposes. 2. Analysis [ 77 ] Mr. MacKay’s ground of appeal breaks down into two issues: (

a) Does the Act clearly abrogate or limit solicitor–client privilege? (

b) If so, was it absolutely necessary for the LSS to adduce P-3 into evidence? [ 78 ] As discussed in Merchant 2008 , s. 63(1) of the Act empowers the LSS to demand the production of a member’s files and records for purposes of an investigation, even where those records are subject to solicitor–client privilege.

The member on whom such a demand is made is obliged to comply. [ 79 ] As noted above, subsequent to Merchant 2008 , the Legislature amended the Act to include what is now s. 84.1(2) , which provides that “in any proceeding pursuant to this Act ”, a member cannot object to providing “ any information, member’s records or other property within the member’s possession or power on the grounds of solicitor and client privilege” (emphasis added). The effect of this provision is to compel a member to disclose information that is otherwise protected by solicitor–client privilege. Randal N.M.

Graham, Legal Ethics: Theories, Cases and Professional Regulation , 2d ed (Toronto: Emond Montgomery Publications, 2011), discusses the theory behind this rule in these terms (at 279): The rationale for this exception to the lawyer’s duty of confidentiality is clear. It seems unfair to require lawyers to face the difficult choice of either (1) violating the rules of professional conduct by disclosing confidential information, or (2) violating a legislative provision or court order by refusing to disclose the information.

In order to spare lawyers the burden of making such difficult choices, the rules of professional conduct instruct the lawyer to disclose client information wherever such disclosure is required by law. [ 80 ] Similar wording found in s. 112(1) of the Legal Profession Act , RSA 2000, c L-8 , was described in 0678786 B.C. Ltd. v Bennett Jones LLP , 2020 ABQB 115 , aff’d 2021 ABCA 62 , 21 Alta LR (7th) 228, as an override of solicitor–client privilege for purposes of disciplinary proceedings.

In reference to s. 84.1 of the Act , the CED 4th (online), Barristers and Solicitors (Western) “Discipline: Proceedings Before Inquiry Panel: Evidentiary Considerations: Compellability of Member Cited” (XVII.5(d)(i)), states as follows: “A lawyer or law firm which is being investigated by its governing body may not claim privilege as a ground for refusing to co-operate in the proceedings. The public interest in the ethical practice of law outweighs any solicitor–client privilege claimed by lawyers” (footnotes omitted, at §1034).

[81] As noted, Mr. MacKay did not take issue with the LSS’s right to demand the production of his email exchange with C.W.during the investigative stage; indeed, he complied with that request without objection. Rather, Mr. MacKay challenged the admissibilityof a privileged record at the disciplinary hearing stage. He says the Committee erred in its application of the absolutely necessary principlebecause it was able to determine and rule on the nature of the trust condition issue based on the other documentary evidence, standingalone.

Thus, he argues, a privileged record could not be adduced into evidence unless the admission of that document was absolutelynecessary for the LSS to prove its case. [82] The Committee rejected that submission, stating as follows: [25] … With respect, this submission misconstrues the “absolutely necessary” requirement. Such an objection could be raised each timesolicitor–client privileged documents are tendered to a hearing committee. What then would be the point of the investigation or section84.1? Such an

interpretation would render the investigation hollow and make an absurdity of sections 84.1 and 49(6). [83] In my view, s. 84.1(2) is a complete answer to Mr. MacKay’s argument and is repeated here for ease of reference: Solicitor and client privilege during proceeding 84.1(2) A member shall not in any proceedings pursuant to this Act refuse to answer inquiries or provide any information, member’srecords or other property within the member’s possession or power on the grounds of solicitor and client privilege. (Emphasis added) [84] The language employed in this provision could not be clearer.

A member cannot refuse to answer questions in any proceedingunder the Act on grounds of solicitor–client privilege. The phrase any proceedings is not subject to limiting words of any sort and, in myview, is broad enough to include a disciplinary hearing conducted pursuant to

Part IV (Competency and Discipline) of the Act. Indeed,Part IV uses the word proceedings liberally in connection with the LSS’s various regulatory responsibilities: see s. 34.2, s. 38 and s. 39. [85] The question before the Committee, therefore, was whether the LSS’s authority to demand disclosure of privileged records, andfor Mr.

MacKay to answer questions in relation to those records at the disciplinary hearing, was exercised “so as not to interfere withprivilege except to the extent absolutely necessary” (Merchant 2008 at para 45), which this Court clarified to mean as follows: [44] … To repeat, the question raised by the “absolutely necessary” requirement is not whether the Legislature and the Law Society havedone everything absolutely necessary to protect the confidentiality of privileged records.

It is whether, in deciding to request the recordsand in framing its request for them, the Law Society has respected solicitor–client privilege except to the extent absolutely necessary toachieve the objectives of the Act. [86] With that broad framework in mind, I return to the circumstances at hand. I begin by pointing out the obvious: the LSS wasobliged by s. 40(1)(

a) of the Act to investigate T.W.’s complaint. The complaint in issue related to a breach of a trust condition, longconsidered a serious matter for the profession at large. Undertakings and trust conditions “are essential tools of commerce and when theseare breached by lawyers, the public’s confidence in the integrity of the profession is undermined” (Law Society of Saskatchewan v Mahon,2014 SKLSS 12 at para 21). Also see Law Society of Saskatchewan v Galey, 2014 SKLSS 7 at para 12. [87] The LSS had the right to demand the production of the privileged records.

Since this matter involved only one document, thescope of the LSS’s request was unquestionably narrow. Furthermore, the Committee was not blind to the need for it to protect records thatwere subject to solicitor–client privilege and, to that end, made an order under s. 84.1(3).

That subsection provides as follows (repeatedhere for reference): Solicitor and client privilege during proceeding 84.1(3) If a member is required to answer inquiries or provide any information, member’s records or other property pursuant to subsection(2) and the member may claim solicitor and client privilege with respect to the answers, information, member’s records or other property,the member or any other person who may claim the solicitor and client privilege may require that: (

a) all or part of any proceedings pursuant to this Act that deal with the answers, information, member’s records or other property be heldin private; and (

b) the public be refused access to the information, member’s records or other property and to any other document containing the answers. [88] Mr. MacKay says P-3 was not relevant or material to the proceedings. Relevance asks this question: “Does the evidenceoffered, as a matter of logic and human experience, tend to prove or disprove a fact in issue?” (emphasis in original, Canadian NationalRailway Company v Clarke Transport, 2013 SKQB 394 at para 20, 432 Sask R 63 [CNR]). Materiality, on the other hand, relates towhether the fact or matter is in issue (CNR): [22] What determines whether a fact or matter is material are the elements of the cause(

s) of action and what the parties have pled asbeing the facts or their positions. Only if the matter is in issue in the action is the matter material, in a jurisprudential sense. If the matterqualifies as being material to the action, the next question is whether the evidence being proffered tends to prove or disprove the matter inissue. If the question does not relate to a matter in issue as particularized by the pleadings, then the matter is not relevant to any matter inissue. [89] In my view, P-3 was clearly material to the charge and critical to the issue of credibility because it tended to disproveMr.

MacKay’s testimony about what he thought he had conveyed to C.W. by his March 4, 2015, email. To repeat, the issues before theCommittee were whether Mr. MacKay had agreed to trust conditions imposed by Lawyer S. and, if he did, whether he failed to abide bythose conditions. Mr. MacKay argued that he understood the arrangement with Lawyer S. to be just that: an arrangement, and that hisemail to C.W. supported his understanding of things. Mr. MacKay had also argued that he was confused by the last sentence ofLawyer S.’s February 13, 2015, email as to when the funds could be released.

[ 90 ] Since Mr. MacKay put his subjective understanding of those two matters in issue before the Committee, I struggle to understand how P-3 was not relevant to how he viewed the arrangement with Lawyer S. and whether he was confused about when the funds could be released. Logically speaking, P-3, and the questioning that ensued from it, seriously undermined Mr. MacKay’s testimony and provided cogent and probative evidence that he was aware of the proper sequence of events and what was required of him. [ 91 ] Mr.

MacKay goes on to argue that since P-3 was not essential to the LSS’s case, it follows that it was not absolutely necessary to put it into evidence. Respectfully, Mr. MacKay’s submission is misdirected and takes the principle expressed in Merchant 2008 too far. The absolutely necessary concept is not concerned with whether the document is essential to the LSS’s case; rather, the absolutely necessary concept is instrumental in prescribing “how the authority to limit privilege must be exercised” ( Merchant 2008 at para 43). Also see Descôteaux at 875, point 3. [ 92 ] Further, it was not up to Mr.

MacKay to determine how the LSS was to mount its case. He has provided no tangible basis to establish that the LSS could have pursued its investigation another way. He vigorously opposed the LSS’s theory of its case. If Mr. MacKay’s argument were to prevail, it would effectively preclude disciplinary actions from proceeding in circumstances where a member discloses a relevant, probative document at the investigation stage but refuses to cooperate with questioning by merely asserting solicitor–client privilege.

Sanctioning this approach would undermine the LSS’s ability to self-regulate the profession and the public’s confidence in it as the regulator. [ 93 ] To conclude, I am unable to accept Mr. MacKay’s arguments. Solicitor–client privilege belongs to the client, not the lawyer, which the lawyer is duty-bound to respect. However, s. 84.1 of the Act is a clear limitation of that privilege: a member cannot refuse to produce records or answer questions in relation to such records. Any concern Mr. MacKay may have had about breaching solicitor–client privilege should have been assuaged by the legislation.

It was within the purview of the Committee to rule on Mr. MacKay’s objection. I find the Committee did not err in its

interpretation of s. 84.1 or in its application to Mr. MacKay. [ 94 ] This argument cannot succeed. C. Conduct Unbecoming [ 95 ] The Committee did not dwell on the conduct unbecoming issue. It simply found Mr. MacKay guilty, stating that “after agreeing to trust conditions imposed by Lawyer S. in relation to the release of certain settlement funds coming into his possession, fail[ed] to comply with those trust conditions by releasing said funds without first ensuring the trust conditions had been met” (at para 64). [ 96 ] Mr.

MacKay argues that it is neither fair nor reasonable to hold him to a standard of perfection in light of Rule 3.1-2 of the Code (which requires lawyers to provide legal services to the standard of a competent lawyer) and Rule 2.1-1 (which imposes a duty on lawyers to discharge their responsibilities honourably and with integrity). Even if he technically breached a trust condition, Mr. MacKay maintains that, on its own, it does not automatically lead to a finding of conduct unbecoming and that moral turpitude had to be established to convict him.

Mere carelessness or even negligence, he argues, is insufficient. [ 97 ] To the extent Mr. MacKay is understood to argue that the Committee interpreted the concept of conduct unbecoming incorrectly, he raises a question of mixed fact and law that involves an extricable question of law. As such, this ground of appeal is subject to review on the correctness standard. [ 98 ] The appropriate starting point is the definition of conduct unbecoming found in in s. 2(1) (

d) of the Act :

Interpretation 2(1) In this Act : … (d) “conduct unbecoming” means any act or conduct, whether or not disgraceful or dishonourable, that: (

i) is inimical to the best interests of the public or the members; or (ii) tends to harm the standing of the legal profession generally … . [ 99 ] Several decisions from this Court have grappled with the concept of conduct unbecoming and what needs to be established for that finding to be made: Merchant v Law Society of Saskatchewan , 2009 SKCA 33 , [2009] 5 WWR 478, leave to appeal to SCC refused, [2009] 1 SCR xi [ Merchant 2009 ], is the guiding authority on the matter. The facts in that case are these.

The member had been found guilty of conduct unbecoming in circumstances where, unbeknownst to him, his legal assistant had sent an obsolete retainer form to a prospective client. (In earlier proceedings, the retainer had been found to be misleading). The conviction was overturned on appeal for unrelated reasons; however, it is significant to the matter at hand for how this Court dealt with the meaning of conduct unbecoming on a conceptual level. Conduct unbecoming, the Court said, is an expansive term that is fact-dependant and may arise in a variety of contexts.

Most importantly for purposes of the present appeal, Merchant 2009 established that moral turpitude is no longer a required element. Those conclusions were summarized in that decision as follows: [62] The definition in the Act is expansive, and conduct unbecoming may be established through intentional conduct, negligent conduct or total insensibility to the requirements of acceptable practice (as in professional incompetence). In the last two instances, where practitioners have been careless or merely incapable in some aspect, moral turpitude is not, typically speaking, a feature of the unacceptable behaviour.

The

section provides that the conduct in question need not be disgraceful or dishonourable to constitute conduct unbecoming. It is abundantly clear that moral turpitude is no longer an active requirement. [ 100 ] In short, what constitutes conduct unbecoming in any given case will vary depending on the specifics of the allegations and the context. Generally speaking, proof of moral turpitude is no longer required.

[101] Arguments similar to those advanced by Mr. MacKay were made in Hesje v Law Society of Saskatchewan, 2015 SKCA 2, [2015]3 WWR 104. The member had argued that his conduct, which had been made honestly and in good faith, was the product of one isolatedincident. In the alternative, he maintained that gross or habitual negligence was necessary to convict and that more than mere wilful orreckless failure to maintain minimal standards of competency and quality of service had to be established. This Court soundly rejected themember’s arguments in stating as follows: [64] It is clear that regardless of whether Mr.

Hesje’s conduct was an isolated decision made in good faith, a negligent act can meet thedefinition of “conduct unbecoming” and moral turpitude is not a necessary element. Therefore, the standards put forth by Mr. Hesje (thatan isolated decision made in good faith is not conduct unbecoming, or that a wilful and reckless failure to maintain even the most minimalstandards of competence and quality of service is required for conduct unbecoming) are higher than what this Court has held can constitute“conduct unbecoming”. In that sense, the standards of “conduct unbecoming” suggested by Mr.

Hesje – with their focus on the bona fidesof Mr. Hesje’s conduct and his lack of malicious intent in failing to contact G.L. – appear to be an attempt to smuggle moral turpitude backinto the definition of conduct unbecoming. Such a standard is directly contrary to this Court’s holding in Merchant 2009. Perhaps just asimportantly, no compelling argument was made to reconsider this Court’s decision in Merchant 2009. [102] The Committee did not dwell on what constitutes conduct unbecoming in the general sense of the term nor in relation toMr. MacKay’s actions in particular.

Its lack of analysis is not altogether surprising since Mr. MacKay did not make this argument at thetime of the hearing. The thrust of his defence was that the email exchange did not give rise to trust conditions and, in consequence, afinding of guilt was not open to the Committee. After making that argument, Mr. MacKay moved swiftly to address the Committee as tosentence. As I see it, Mr.

MacKay’s argument before this Court amounts to an entirely new argument raised for the first time on appeal,which is generally not permitted: R v Perka, (SCC), [1984] 2 SCR 232 at 240. [103] Reading the Committee’s decision in its totality, I am satisfied that it was aware of the applicable authorities, the importance oftrust conditions to the practice of law and the seriousness of the breach in issue. I see no error of law with its implicit

interpretation ofconduct unbecoming or in its application to the facts at hand. D. Penalty [104] The Committee agreed with Mr. MacKay that his conduct merited a penalty at the lower end of the range and, accordingly,sentenced him to a reprimand and a $1,000 fine. Mr.

MacKay does not appeal from that result. [105] With regard to the matter of costs, the Committee began its decision by referring to its statutory authority, the applicablejurisprudence, notably Abrametz v The Law Society of Saskatchewan, 2018 SKCA 37 [Abrametz 2018], the need to take an individualizedapproach, and that it ought not impose an award that was punitive to Mr. MacKay. On the latter point, the Committee commented on theabsence of any evidence from Mr. MacKay about how a costs award would have an impact on him personally.

Taking those matters intoaccount, the Committee made the following order: [83] There was no evidence presented by the Member that the cost award would, in his particular circumstance, be punitive. As noted inAbrametz [2018], the onus is on the Member. While not insignificant, this is not a case where the costs requested are hundreds ofthousands of dollars. Nor are the other sanctions imposed by this committee likely to substantially interfere with the Member’s ability toearn his livelihood.

As such, the hearing committee finds a costs award of $11,000.00 is not punitive and is reasonable in the particularcircumstances of this case. [106] Mr. MacKay argues that the costs order is excessive and should be set aside because of the following: (

a) he has no prior record for conduct unbecoming; (

b) T.W. experienced no financial loss; (

c) it exceeds the value of the property settlement between C.W. and T.W. and is therefore not proportionate; (

d) the notional costs for the LSS’s in-house counsel are excessive; (

e) he had no opportunity to respond to the LSS’s submission; and (

f) the threat of a substantial costs award will have a chilling effect on members and improperly encourage a guilty plea simplyfor financial reasons. 1. The law [107]

Section s. 53(3) of the Act, as it existed at the time of the hearing (now incorporated into Rule 1131(3) of the Law Society ofSaskatchewan Rules), gave the Committee wide discretion to craft an appropriate penalty following a finding of conduct unbecoming andto impose a costs award. The relevant portions of the Act were as follows: Decision of hearing committee; powers re penalties 53(3) If a hearing committee finds that a formal complaint is well founded, the hearing committee may, by order, do one or more of thefollowing: (

a) assess any penalties or impose any requirements that it considers appropriate, including but not limited to: … (iv) imposing a fine in any amount that the committee may specify;

(

v) requiring the member to pay: (

A) the costs of the inquiry, including the costs of the conduct investigation committee and hearing committee; (

B) the costs of the society for counsel during the inquiry; and (

C) all other costs related to the inquiry; (vi) reprimanding the member; (vii) permitting the member to resign from the society … . [ 108 ] In calculating a costs award, Rule 490 (now Rule 1135) provides the following direction: Costs 490.

(1) In calculating the costs payable under section 53(3) (a)(

v) of the Act , a Hearing Committee may include part or all of one or more of the following costs actually incurred by the Society: (

a) the cost of any enquiries or investigations ordered under this Part; (

b) the daily witness fee fixed by the tariff enacted pursuant to The Queen’s Bench Rules , multiplied by the number of days the witness was required to remain in attendance at a hearing or meeting under this Part; (

c) reasonable travel and living costs of a witness; (

d) the court reporter’s fee for attendance at a hearing or meeting under this Part; (

e) the cost of a transcript of a hearing or meeting held under this Part, if the Society would otherwise be liable for its cost; (

f) the cost incurred by the Society in publishing the decision of a Committee under this Part; (

g) a Hearing Committee attendance fee of: (i) $150 per half day of hearing for the first three days of hearings; plus (ii) $500 per half day of hearing for each subsequent day of hearing multiplied by the number of Hearing Committee members in attendance; (

h) reasonable fees or costs of Counsel to the Conduct Investigation Committee; (

i) reasonable disbursements of Counsel to the Conduct Investigation Committee; and

j) any other amount, arising out of the proceedings, for which the Society would otherwise be liable. [ 109 ] Prior to Vavilov , costs awards were reviewed on a reasonableness standard of review: Abrametz 2018 . Applying the revised Vavilov approach, an appeal from a costs award in a disciplinary matter is now reviewable through the lens of the standard of appellate review applicable to discretionary decisions.

See also Law Society of Ontario v Ejidike , 2020 ONSC 6228 (Div Ct). [ 110 ] The purpose of a costs award in a disciplinary proceeding is “not to indemnify the opposing party but for the sanctioned member to bear the costs of disciplinary proceedings as an aspect of the burden of being a member … and not to visit those expenses on the collective membership …” ( Abrametz 2018 at para 44, citing Robert A. Centa and Denise Cooney, “Trends in Costs Awards before Administrative Tribunals” (2014) 27 Can J Admin L & Prac 259).

Professional disciplinary bodies must, however, maintain a balance and ensure that “[c]osts should not be so prohibitive as to prevent a member from defending his or her right to practice in the chosen profession, or from being able to dispute misconduct charges” ( Abrametz 2018 at para 45). [ 111 ] Referring to Hills v Nova Scotia (Provincial Dental Board) , 2009 NSCA 13 , 307 DLR (4th) 341 [ Hills ], this Court in Abrametz 2018 endorsed the following approach in relation to costs: [46] Apart from these broad principles, courts have taken a variety of factors into account in under

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