An Ottawa-based real estate lawyer found to have committed real estate fraud by the Law Society of Upper Canada’s discipline tribunal in 2014 has won his appeal. His substantial penalties have been set aside due to inordinate delays in his case and for what his counsel describes as the LSUC not following its own disclosure policies.
Sole practitioner Luigi Savone successfully had his 2014 findings overturned by the tribunal’s appeal division and a new hearing ordered to investigate his role in a series of 12 alleged fraudulent real estate purchases centred in the Ottawa Valley from 2000 to 2003.
His counsel says on one hand it’s a victory for Savone, while on the other, he battled the allegations starting in 2007 and will have to go through the process again.
Savone’s lawyer Brian Radnoff, a partner at Lerners LLP, says his client was treated unfairly by the law society as it would not allow production of vendor and lender documents the defence considered vital to its case and yet still moved for disbarment.
“Lawyers in this province would be similarly disturbed to learn that where the law society is trying to disbar a lawyer in this situation, who only acted for the vendors, the law society is refusing to produce the files for the lawyers of the purchasers and the lenders, despite the fact that they’re clearly relevant and may well contain exculpatory information,” says Radnoff.
“Under their disclosure obligations, which are the Stinchcombe standard, there is no question that they’re required to produce those files.”
The appeal tribunal, chaired by Christopher Bredt with Robert Armstrong, Janet Leiper, Barbara Murchie, and John Spekkens wrote: “the hearing panel erred in dismissing the motion for disclosure of the files of the lawyers who acted for the other parties. In our view, the transaction files are potentially relevant. Subject to claims of solicitor/client privilege, they ought to have been disclosed, if relevant.”
The March 2015 penalty against him of $100,000 was to cover costs of the LSUC’s investigation. Savone also faced losing his licence after the LSUC tribunal found the 30-year veteran was wilfully blind to the accommodation of fraud.
The disciplinary panel ruling by chair Mary Louise Dickson and rounded out by Ross Earnshaw and Sarah Walker found on a balance of probabilities that Savone had engaged in professional misconduct when he assisted in dishonest conduct of clients in obtaining mortgage proceeds under false pretences in that he abdicated his responsibility to review and check that statements of adjustment properly reflected the 12 transactions in question.
“Where a staff member prepares the Statement of Adjustments, the vendor’s and purchaser’s lawyers have an obligation to review it with their respective clients. In his evidence, Mr. Savone testified he never reviewed the Statements of Adjustment with his clients but left this to his clerk, Gerry,” the panel wrote in its ruling. “This is an admission that he, an experienced practitioner, chronically fell below the accepted standard of care and abdicated his responsibility to his client.”
In its ruling, the LSUC determined the statements contained clear indications of reverse engineering and fraudulent entries designed to permit the closing of the transactions on a “no-money-down” basis for the ultimate purchasers.
But Radnoff says the law society erred in not following its standards for disclosure.
“There was no direct evidence he was involved in any fraud, if there even was any fraud, but the law society’s position is the only proper punishment is disbarment,” says Radnoff.
“I think that lawyers in this province would be even more disturbed to hear that the law society has expended significant resources and costs prosecuting this lawyer and now there’s going to have to be a re-hearing be cause the society failed to meet its disclosure obligations when there’s no question they knew exactly what their obligations were.”
The LSUC could not be reached for comment before this article was posted.