|
Representation - Compensation Fund. Aubin v. Law Society of Ontario
In Aubin v. Law Society of Ontario (Div Ct, 2026) the Divisional Court granted a JR, this brought against a decision by the Compensation Fund Subcommittee of the LSO that it was 'without jurisdiction' to grant the applicant's claim.
Here the court considers whether the LSO subcommittee had 'fettered' it's discretion by treating it's policy guidelines as law:[2] Leeanne Aubin retained a lawyer in 2022 who sexually harassed her and attempted to extort sexual favours from her in exchange for legal services. When she reported the lawyer to the Law Society, he publicly defamed her, threatened to kill her and attempted to procure a firearm with which to do so. Ms. Aubin successfully sued the lawyer and was awarded damages of $195,000.00 plus costs. By the time she did so, the lawyer’s licence had been revoked and he was a serving a four-year penitentiary sentence.
[3] As she was unable to enforce the judgment, Ms. Aubin applied for a grant from the Fund. The Subcommittee was satisfied that Ms. Aubin had suffered significant harm as a result of the lawyer’s dishonesty. However, the Guidelines define “loss” as “the difference between what the lawyer … received from the claimant or on the claimant’s behalf, and the amount that was earned and accounted for, and/or returned to the claimant.” Since the loss Ms. Aubin was seeking compensation for did not meet that definition, the Subcommittee concluded that it was “without jurisdiction” to grant the claim.
[4] Ms. Aubin applies to this court for judicial review of the Subcommittee’s decision. She submits that the Subcommittee fettered its discretion by treating the Guidelines as binding, resulting in an unreasonable decision. The Law Society disagrees and submits that the Subcommittee’s decision was the result of a reasonable exercise of its discretion to decide what types of losses should be compensated.
[5] The following reasons explain why I agree with Ms. Aubin and would grant the application and set aside the Subcommittee’s decision.
....
B. Fettering Discretion: Relevant Legal Principles
[21] Any discretionary decision-making power of a public administrative body, like all exercises of public authority, must find its source in law: Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, at paras. 27-28. The law that gives the decision-maker the discretion also informs how it is exercised, as any such discretion must be exercised in “accord with the purposes for which it was given”: Vavilov, at para. 108.
[22] In exercising discretion, it is entirely appropriate for a decision-maker to create and rely on decision-making guidelines. Such guidelines can serve a useful purpose by ensuring that relevant factors are considered and by promoting consistency: El-Hennawy v. Law Society of Upper Canada, 2014 ONSC 375, 316 O.A.C. 260 (Div. Ct.), at para. 30; Stemijon Investments Ltd. v. Canada (Attorney General), 2011 FCA 299, 341 D.L.R. (4th) 710, at paras. 59. However, such guidelines do not have the force of law and cannot have the effect of superseding the law that is the source of the decision-making power. As stated in Stemijon Investments, at para. 60:An administrative policy is not law. It cannot cut down the discretion that the law gives to a decision-maker. It cannot amend the legislator's law. A policy can aid or guide the exercise of discretion under a law, but it cannot dictate in a binding way how that discretion is to be exercised. [23] It follows from the foregoing that a decision-maker cannot abdicate a statutorily-imposed responsibility to exercise its discretion to guidelines or policies that do not have the force of law, what is often referred to in the caselaw as “fettering discretion.” It is well-established that any decision that is the result of a fettered discretion is per se unreasonable: Kanthasamy v. Canada (Citizenship and Immigration), 2015 SCC 61, [2015] 3 S.C.R. 909, at para. 60; Maple Lodge Farms v. Government of Canada, 1982 CanLII 24 (SCC), [1982] 2 S.C.R. 2, at pp. 6-7; Canadian Assn. of Refugee Lawyers v. Canada (Minister of Immigration, Refugees and Citizenship), 2020 FCA 196, 92 Admin. L.R. (6th) 1, at para. 53; Stemijon Investments, at paras. 23-34.
C. Did the Subcommittee Fetter Its Discretion?
(i) The Issue
[24] As this court recognized in El-Hennawy, at para. 31, the Guidelines in this case are not intended to be binding or to fetter the discretion of the Subcommittee, as is clearly stated in the Preface. The issue in this case is whether despite this, the Subcommittee treated them as binding and thereby fettered its own discretion. In my view, it did. There are several reasons for this conclusion.
(ii) The Guidelines “Define” the term “loss”
[25] First, while the Guidelines are overall clearly not intended to be binding, the portion relating to the meaning of the term “loss,” which the Subcommittee relied on in denying the applicant’s claim, is worded in such a way as to suggest otherwise. It purports to “define” the term “For the purposes of the Compensation Fund” and restricts it to losses of money paid by the claimant to the lawyer which are not earned, accounted for or returned to the client.
[26] Section 51(5) of the LSA requires only that a loss be sustained by a person “in consequence of . . . dishonesty on the part of a person, while a licensee, in connection with his or her professional business or in connection with any trust of which he or she was or is a trustee.” It is clear from the wording of the section that while the term “loss” is not defined, it refers to more than misappropriated trust funds and includes any loss “in connection with” the lawyer’s professional business.
[27] In this case, the Subcommittee was satisfied that the applicant suffered harm as a result of the lawyer’s dishonesty and there is no issue that she had been awarded damages for that harm which she was unable to recover. The respondent accepts that it was open to the Subcommittee to grant compensation to the applicant, from which it follows that she suffered a “loss” for the purposes of s. 51(5). The language of the Guidelines, however, suggests that there was no “loss,” which supports the conclusion that the Subcommittee fettered its discretion.
(iii) The Language in the Decision Letter
[28] The language in the Decision Letter from counsel for the Fund supports the conclusion that the Subcommittee fettered its discretion. The letter specifically refers to the term “loss” being “defined” by the Guidelines and states that the claim “does not meet the Fund’s definition of compensable loss,” suggesting that the Subcommittee did not exercise its discretion to decide whether the loss in this case justified a grant from the Fund. This conclusion is supported by the Subcommittee minutes, which reflect that the sole reason for denying the applicant’s claim was “Guideline 8 (“loss” definition).”
[29] The letter also stated, incorrectly, that the Fund was “governed by specific criteria under the Fund’s Guidelines.” This reflects a misunderstanding of the purpose of the Guidelines, which is to guide, not govern.
[30] Finally, the letter ended by stating, “We are truly sympathetic to the Claimant’s experience and regret that we are without jurisdiction to assist.” Counsel for the respondent submitted in her factum that what was meant by this was that the Subcommittee had determined that the claim “fell outside the scope of the statutory scheme.” However, in oral argument counsel conceded that it was open to the Subcommittee to grant all or part of the applicant’s claim, so doing so would clearly not fall outside the statutory scheme.
[31] The word “jurisdiction” has a specific legal meaning when referring to a decision-maker, especially when the term is used by a lawyer, and refers to the scope of a statutory power: Vavilov, at para. 65; Canada (Canadian Human Rights Commission) v. Canada (Attorney General), 2018 SCC 31, [2018] 2 S.C.R. 230, at para. 38. The statement in the Decision Letter that the Subcommittee was “without jurisdiction to assist” can only be understood as expressing a belief on the part of the Subcommittee that it did not have the statutory authority to grant the applicant’s claim. This reflects a clear misunderstanding of the powers granted to the Subcommittee by s. 51(5) and shows that it fettered its own discretion.
(iv) Failure to Consider Other Factors
[32] Finally, the Subcommittee did not consider any factors other than whether the loss in this case met the definition in the Guidelines. Section 51(5) grants the Subcommittee a broad discretion and it is for the Subcommittee to determine what factors are relevant in a given case. Such factors could (but do not have to) include the egregiousness of the lawyer’s dishonest conduct, the causal connection between the misconduct and the loss, the extent to which the loss was connected to the lawyer’s professional business, and the Law Society’s duty, pursuant to s. 4.2 of the LSA, to “advance the cause of justice” and “protect the public interest”: El-Hennawy, at paras. 36-39. The fact that no such factors were considered also supports the conclusion that the Subcommittee did not exercise its discretion but, rather, denied the claim because it believed that the Guidelines required it to do so. . Aubin v. Law Society of Ontario
In Aubin v. Law Society of Ontario (Div Ct, 2026) the Divisional Court granted a JR, this brought against a decision by the Compensation Fund Subcommittee of the LSO that it was 'without jurisdiction' to grant the applicant's claim.
Here the court considers the LSO Compensation Fund:[1] The Law Society of Ontario maintains a Compensation Fund (“the Fund”) to assist individuals who have suffered losses as a result of dishonesty on the part of a lawyer or paralegal. Section 51(1) of the Law Society Act, R.S.O. 1990, c. L.8 (“LSA”) provides that the Law Society’s governing body, Convocation, may in its absolute discretion make grants from the Fund to relieve or mitigate the loss sustained by a person “in consequence of … dishonesty on the part of a person, while a licensee, in connection with his or her professional business or in connection with any trust of which he or she was or is a trustee.” Convocation has delegated the authority to make such grants to a Compensation Fund Subcommittee. It also created “General Guidelines for the Determination of Grants From the Compensation Fund” (“the Guidelines”) for use by the Subcommittee.
....
C. The Law Society Compensation Fund
(i) Relevant Statutory Provisions
[13] The Law Society Compensation Fund is maintained by the Law Society in accordance with s. 51 of the LSA, which provides that compensation may be granted to individuals in the circumstances described in s. 51(5), the relevant portion of which provides as follows:51.(5) Convocation in its absolute discretion may make grants from the Fund in order to relieve or mitigate loss sustained by a person in consequence of,(a) dishonesty on the part of a person, while a licensee, in connection with his or her professional business or in connection with any trust of which he or she was or is a trustee; As permitted by s. 51(10), Convocation has delegated its power to make decisions with respect to grants to the LSO Compensation Fund Subcommittee. (ii) The Guidelines
[14] The Law Society also established “General Guidelines for the Determination of Grants from the Compensation Fund Relating to Lawyers and Paralegals” for use by the Subcommittee. The purpose of the Guidelines is set out in the Preface to them:These Guidelines outline the general principles that will guide the Compensation Fund in the exercise of its discretion pursuant to the Law Society Act, R.S.O. 1990, c. L.8, s. 51, as am. These Guidelines are not rules, are not exhaustive and will not necessarily apply to every conceivable situation. The facts and circumstances of each case will be carefully considered as part of decision-making. [15] Section 8 of the Guidelines states:8. Loss: For the purposes of the Compensation Fund, loss is defined as the difference between what the lawyer or licensed paralegal received from the claimant or on the claimant’s behalf, and the amount that was earned and accounted for, and/or returned to the claimant. . Barnwell v. Law Society of Ontario
In Barnwell v. Law Society of Ontario (Div Ct, 2025) the Divisional Court dismissed an LSO JR, here against Appeal and Hearing Panel decisions of the Law Society Tribunal that "found that the appellant engaged in professional misconduct and concluded that nothing less than revocation or permission to resign would prevent the appellant from committing similar misconduct, deciding on the latter".
Here the court considers payments from the 'Compensation Fund' to complainants [under LSA s.51], thus illustrating aspects of the Fund's operation:Compensation Fund
[124] The appellant challenges the Appeal Panel’s decision to uphold the Hearing Panel’s order that the appellant pay up to $100,000 for payments out of the Compensation Fund. Two of the complainants in this matter had requested compensation from the Fund, up to that amount. It is Convocation, not the Law Society, which grants compensation in its absolute discretion, as set out in s. 51(5) of the Law Society Act.
[125] The appellant submits that there was no jurisdiction to make the order because the requests for compensation from the Fund were still active – Convocation had not yet made a decision to make a grant from the Fund. The appellant further submits that the Appeal Division’s interpretation is unconstitutional under unwritten constitutional principles acknowledged in the Reference re Remuneration of Judges of the Provincial Court (P.E.I.), 1997 CanLII 317 (SCC), [1997] 3 S.C.R. 3. The appellant raised the constitutional issue for the first time in this Court, on the basis that it arises from the Appeal Panel’s reasons for decision. The Hearing Panel did not give reasons regarding jurisdiction to make this order.
[126] The Appeal Panel considered the issue of the Hearing Panel’s jurisdiction to make the order and interpreted s. 35(1) of the Law Society Act, specifically paragraphs 14 and 21, which provide as follows:35 (1) Subject to the rules of practice and procedure, if an application is made under section 34 and the Hearing Division determines that the licensee has contravened section 33, the Division shall make one or more of the following orders: …
14. An order requiring the licensee to pay to the Society, for the Compensation Fund, such amount as the Hearing Division may fix that does not exceed the total amount of grants made from the Fund as a result of dishonesty on the part of the licensee.
21. Any other order that the Hearing Division considers appropriate. [127] The appellant submits that the Appeal Panel erred in not interpreting paragraph 21 as constrained by paragraph 14.
[128] The Appeal Panel fairly acknowledged that they would have greater difficulty finding jurisdiction under s. 35(1) paragraph 14 because it is worded in the past tense. That paragraph contemplates an order requiring a licensee to pay to the Law Society not more than the total amount of grants made from the Fund. The Appeal Panel referenced another hearing panel decision that held that there was no authority in s. 35(1) paragraph 14 to order payment prior to the amount having been fixed and paid”: Law Society of Upper Canada v. Sarko Mohammed Mortala Muslim, 2006 ONLSHP 54.
[129] The Appeal Panel did not make a definitive interpretation of paragraph 14, instead proceeding to find jurisdiction under paragraph 21, discussed below. The Law Society submits that paragraph 14, properly interpreted, does authorize the Hearing Panel’s order. It submits that the words “grants made from the Fund” should be interpreted to include grants that may or will be made, particularly where there is evidence of a pending application for compensation from the Fund. We return to this submission below, after considering what the Appeal Panel did do.
[130] The Appeal Panel went on to consider paragraph 21, which provides jurisdiction to make any other order that the Hearing Division considers appropriate. The Appeal Panel addressed the interpretive issue of whether paragraph 21 is limited by the more specific paragraphs in s. 35(1) or is a broad discretion that is not limited by the other paragraphs. The Appeal Panel followed Tribunal decisions, concluding that paragraph 21 is a broad discretion to fashion a remedy that is appropriate in the circumstances, taking into account relevant penalty principles and regulatory goals, and is not constrained by paragraph 14, citing Law Society of Ontario v. Diamond, 2024 ONLSTA 8, citing Law Society of Ontario v. Hans, 2021 ONLSTH 40.
[131] The appellant submits that the above interpretation is an error of law.
[132] The principles of statutory interpretation are well-established. The words of the Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of the Legislature: Rizzo & Rizzo Shoes Ltd. (Re), 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27.
[133] In interpreting s. 35(1) we have regard for the objects of the Law Society Act. The Act provides for the Law Society’s broad public interest mandate and broad regulatory powers to accomplish that mandate. The appellant accepts that the statutory powers of a professional regulator, including the Law Society, must be interpreted sufficiently broadly to allow for effective regulation in order to enforce professional standards and to provide for the good governance of the profession, citing Green v. Law Society of Manitoba, 2017 SCC 20, [2017] 1 S.C.R. 360, at paras. 26, 28-30.
[134] In addition to providing for regulation of the profession through discipline, the Act provides the regime under which grants are made from the Compensation Fund and grants are reimbursed. As set out in s. 51(5), Convocation may, in its discretion, make grants in order to relieve or mitigate loss sustained by a person due to dishonesty, among other grounds. Under s. 51(7), the Law Society is subrogated to all rights and remedies of the recipient to the extent of the amount of the grant. The Act expressly contemplates that the amount of a grant may be recovered from the licensee.
[135] Moving to s. 35(1), the appellant submits that while there is some flexibility, statutory provisions that impose penalties must be interpreted narrowly, and any ambiguity must be resolved in favour of the licensee. The appellant relies on R. v. McIntosh, 1995 CanLII 124 (SCC), [1995] 1 S.C.R. 686, interpreting the Criminal Code self-defence provision in a murder case. The majority cited the general principles for interpreting penal provisions that are ambiguous and equivocal. They found that the Code section was clear. However, they noted, at paras. 27-29, that if it had been ambiguous, it should be interpreted in favour of the accused since the liberty of the subject was at stake.
[136] The compensation order does not implicate the liberty of the appellant. However, s. 35(1) is a penalty provision. We have considered this interpretive principle to the extent that it informs the different legislative context of professional misconduct in a regulated profession.
[137] The appellant then submits that the Appeal Panel erred in interpreting paragraph 21 to have “no limits” and an “unfettered authority” to do what it wants. That is not so.
[138] Following the words of the statute, the Appeal Panel held that the discretion under paragraph 21 permitted an order in appropriate circumstances. Further, the Appeal Panel held that the broad discretion was consistent with the prior cases cited. Those tribunal cases provided that the discretion also had to be exercised having regard for the circumstances of the case and considering relevant penalty principles and regulatory goals. These principles also focus the exercise of the discretion and they do not permit an approach based on no limits or give an unfettered discretion. The appellant’s constitutional argument is predicated on his submission that the interpretation amounts to an unfettered discretion. Therefore, that argument need not be addressed.
[139] Moving to the plain and ordinary meaning of s. 35(1), we are not persuaded that the Appeal Panel erred in its conclusion that, in this case, there is jurisdiction under paragraph 21. Bearing in mind the objects of the Act, the statutory provisions regarding grants and the role of this order to facilitate compensation, and because there were applications to the Fund in progress, the Hearing Panel order meets the statutory wording of being “appropriate” in its plain and ordinary meaning and within the larger context required for statutory interpretation. This is consistent with the intention shown in s. 51 that the Law Society recover grants and does not conflict with s. 35(1) paragraph 14, providing for an order to pay for grants made. In the particular circumstances of this case, the Appeal Panel did not err. We need not decide whether, in other circumstances, paragraph 21 would provide jurisdiction, nor do we need to rule on the Law Society’s alternate interpretation of paragraph 14.
[140] Some of the appellant’s submissions, both to the Appeal Panel and to this Court, challenge whether a grant should be made by Convocation. The appellant submits that he was not dishonest and the applications to the Fund were late. These are matters for Convocation in exercising its discretion regarding whether to make a grant. To the extent that they may be relevant to the exercise of discretion under s. 35(1) paragraph 21, the Appeal Panel did not make an error of principle or palpable and overriding fact in their treatment of these issues in their decision.
[141] We therefore dismiss this ground of appeal.
|
