A Prosecutor’s Continuing Duty to Evaluate Evidence

I preface this comment by saying that I know nothing about the evidence in the Law Society of Upper Canada’s prosecution of Torys LLP lawyers Darren Sukonick and Elizabeth DeMerchant, other than what is disclosed in the reasons for judgment of the Hearing Panel dated October 17, 2013 [Ed. note: http://canlii.ca/t/g10k2 & http://canlii.ca/t/g10k5]. I have not seen the documents relied on by the Law Society, nor did I attend any part of the hearing.

As has been widely reported, the Hearing Panel dismissed all six of the charges against Mr. Sukonick and Ms. DeMerchant for conflict of interest stemming out of their representation of Hollinger International Inc. and related parties in, inter alia, the sale of Hollinger newspaper assets to CanWest. The hearing extended over two-and-a-half years, and necessitated 130 days of hearing. The judgment was under reserve for over nine months.

The reasons for judgment raise this basic question: Why did the Law Society continue with the prosecution for as long as it did?

No doubt, the Law Society had ample grounds for looking into the matters and perhaps commencing the proceedings. The transactions at issue, particularly the non-competition payments to principals of the company, were under intense scrutiny. However, that is not the end of the matter. Prosecutors have a continuing duty to review the evidence to ensure that the grounds which justified the laying of a charge continue to exist.

In the context of claims for malicious prosecution, the Court of Appeal for Ontario stated in Oniel v. Marks (2001), 195 D.L.R. (4th) 59, 2001 CanLII 24091, at para. 49:

Although the prosecutor may have reasonable and probable cause to commence a prosecution, if the prosecutor obtains information which suggests that the person probably did not commit the offence, or recklessly disregards advice that such information could be obtained through routine investigative steps, the prosecutor lacks reasonable and probable cause to continue the prosecution, and malice may be inferred.

In Ferri v. Root (2007), 279 D.L.R. (4th) 643, 2007 ONCA 79, at paras. 64, 83, the Court stated:

…the NRPD [Niagara Regional Police Department] had a continuing duty to investigate and to examine the evidence, including exculpatory evidence, after the charges had been laid…If the Crown Attorneys doubted the honesty of prosecuting Ferri, and failed to take reasonable steps to eliminate this doubt, they may then be considered to have failed to continue to hold a belief in reasonable and probable cause. This result would be possible even though the original accusation against Ferri had some foundation.

The reasons of the Hearing Panel indicate that, over the course of the lengthy hearing, the Law Society called one witness, a forensic accountant and corporate governance expert from Germany, Dr. Hans Marschdorf. The reasons indicate the following in respect of his evidence:

Para. 52: “Dr. Marschdorf’s task was difficult as he was asked to suggest conclusions when not all of the facts were known by him. After his testimony, further evidence showed that many of his suggestions could not be supported.”

Para. 54: “There were a number of other examples of Dr. Marschdorf making suggestions based on incomplete documentation or lack of oral evidence. While he was doing the best he could with the limited resources he had, further evidence often showed a different situation.”

Para. 59: “It is unfortunate that no one who was involved with any of the six particulars testified for the applicant, the Law Society.”

Other parts of the reasons of the Hearing Panel raise similar themes. In referring to communications by the Law Society with potential witnesses, the Panel stated:

Para. 95: “When asked if he had ever been contacted by the Law Society with respect to the matters involved in this hearing, Mr. Leipsic [counsel for CanWest] indicated he had no contact from the Law Society, and if he had, he would have talked to them.”

Para. 99: “In this hearing, no one was called who was involved with Hollinger with respect to the transaction; nor was anyone called from Oslers [CanWest outside counsel] as to what transpired.”

Mr. Sukonick and Ms. DeMerchant were on the witness stand for lengthy periods. The Hearing Panel’s conclusions on their evidence would seemingly have been apparent long before then. The Panel stated:

Paras. 184-185: “Neither Ms. DeMerchant nor Mr. Sukonick was involved with the business decisions as to who was to receive compensation, how much was to be received or which vendor would bear the burden of the payments. Nor were they asked for advice on any of these issues and gave none.”

Paras. 193-195: “The general practice is that outside counsel does not instruct the independent committee at all [on related party transactions] and is not involved, unless they are requested to provide information. In this case, the respondents were not requested to do anything until after the fact, when it became apparent that the independent committee had not properly set out the facts. The two respondents testified to the general practice as did Messrs. Leipsic, McKenzie, Jewitt and Beck. There was no evidence to the contrary.”

Para. 203: “In all of the evidence we have heard, it was general counsel’s [i.e. not outside counsel’s] role to properly put the completed proposal to the independent committee.”

Para. 368: “The general practice, as described by a number of witnesses, has been in existence for a considerable period of time. This practice does not contravene the Law Society’s rules and should not easily be dismissed in this hearing.”

Para. 390: The clients are all considered to be sophisticated and before there is a finding of conflict of interest, there should be some evidence that counsel preferred the legal interests of one or more clients to the detriment of another. There was none.”

Public policy dictates that prosecutors in criminal and disciplinary matters be given considerable leeway in decisions on whether to initiate or continue proceedings. As the Supreme Court of Canada cautioned in Miazga v. Kvello Estate, [2009] 3 S.C.R. 339, 2009 SCC 51, at para. 76:

In carrying out the objective assessment, care must be taken in retroactively reviewing the facts actually known to the prosecutor at the relevant time — that is, when the decision to initiate or continue the proceeding was made. The reviewing court must be mindful that many aspects of a case only come to light during the course of a trial: witnesses may not testify in accordance with their earlier statements; weaknesses in the evidence may be revealed during cross-examination; scientific evidence may be proved faulty; or defence evidence may shed an entirely different light on the circumstances as they were known at the time process was initiated.

The Court noted at para. 64: “In Crown Policy manuals, the initiation or continuation of a prosecution is generally not recommended unless there exists a reasonable prospect of conviction and it is in the public interest to pursue the criminal proceeding.”

It is entirely possible there is information not referred to in the reasons of the Hearing Panel that would shed further light on the decision to continue the prosecution. However, what is in the reasons of the Hearing Panel calls out for an explanation beyond the expression of disappointment issued by the Law Society following release of the decision.

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Comments

  1. Excellent article Allan.

    It will be interesting to see the costs award.

  2. Conrad Black in A Matter of Principle on the LSUC’s prosecution of Ms. DeMerchant and Mr. Sukonick:

    “I was never overly impressed with their imagination, and some of their advice was incorrect, but I don’t think they were unethical or negligent. The singling out of them, as well as the Law Society’s rather banal allegations, seems to me to be shabby and tokenistic placation of opinion by the Toronto legal establishment, at the expense of two relatively defenceless scapegoats.”

    quoted from “Conflcit Case A Circus”, Canadian Lawyer, Jan. 3, 2012

    We have to assume that that either the LSUC’s outside prosecutor advised the LSUC that there was a valid basis to prosecute or somebody else did but, in any event, the prosecutor didn’t disagree sufficiently to withdraw from the case at any point.