Complaints, Lawyer Discipline and Public Hearings

Summary of Disciplinary Action Decision

ROBERT COLLINGWOOD STROTHER

Vancouver, BC

Called to the bar: May 12, 1981

Ceased membership: January 1, 2008

Discipline hearing: May 26-30 and August 21, 2014 and August 19, 2015

Panel: Gavin Hume, QC, Chair, Gregory Petrisor and Alan Ross

Decisions issued: February 26 (2015 LSBC 07) and December 11, 2015 (2015 LSBC 56)

Counsel: Henry Wood, QC and Lars Kushner for the Law Society; Peter Gall, QC, Robert Grant, QC and Joanne Thackeray (facts and determination) and Peter Gall, QC (disciplinary action), for Robert Collingwood Strother

The citation was issued on September 8, 2009; however a number of preliminary applications had to be resolved prior to the panel hearing the facts of the case.

Strother took issue with a portion of the Law Society’ s proposed evidence and applied for an order limiting the evidence to be relied upon by the Law Society in the proceeding. On January 4, 2012, the panel issued its decision (2012 LSBC 01), saying it did not find reason to limit the scope of the evidence to be tendered by the Law Society on the basis of the doctrine of abuse of process.

Strother then requested a ruling from the panel relating to allegation 1 of the two allegations in the citation. The panel was asked to rule on the applicability of Chapter 7 Rule 1(a) of the Professional Conduct Handbook to Strother’ s conduct during the period in question. If the panel found that the scope of Chapter 7 Rule 1(a) did not contemplate the conduct alleged in the citation, then allegation 1 of the citation would be dismissed.

In its decision issued May 3, 2012 (2012 LSBC 14), the panel found that:

(a)              Chapter 7, Rule 1(a) did not create an absolute prohibition against both acting for and taking a financial interest in a client; and

(b)              Chapter 7, Rule 1(a) did not act to protect other clients of the lawyer, only the one in which the lawyer took a financial interest.

As a result, the panel dismissed allegation 1 of the citation.

The Law Society then applied to amend the remaining citation, arguing that since allegation 1 had been struck, it was necessary to import certain details that had been included in allegation 1 into the remaining allegation to provide transactional context and to allow allegation 2 to be a meaningful stand-alone allegation. In its decision issued September 11, 2012 (2012 LSBC 28), the panel granted the Law Society’ s application to amend the citation.

FACTS

Although Robert Collingwood Strother ceased to be a member of the Law Society as of January 1, 2008, section 38(4)(b)(v) of the Legal Profession Act gives a hearing panel the jurisdiction to make a finding of professional misconduct against a former member if the conduct of the former member, if he or she had been a member, constituted professional misconduct.

Strother was counsel in the 1990s for a corporation that devised and marketed film-industry tax shelter investments. In 1997 the federal government closed the tax shelter through an amendment to the Income Tax Act. Relying on Strother’ s advice, the client wound down its business except to administer its ongoing obligations.

In early 1998 Strother was approached by the company’ s former chief financial officer, who had an idea for a similar venture and who asked Strother to seek an advance tax ruling from Revenue Canada. On January 30, 1998, Strother entered into an agreement with the former CFO under which he would seek an advance tax ruling and take steps to incorporate a new company. That agreement gave Strother a financial interest in the venture.

On October 6, 1998, Strother obtained an advance tax ruling favourable to the new corporation, and by December 31, 1998, the new company had closed transactions worth $260 million.

Strother continued to consult with the original company on tax matters as late as December 8, 1998. The principals of the original company did not hear about the new company’ s transactions until early 1999, at which time they severed their relationship with the firm at which Strother was a partner.

In February and March 1999, while he was still a partner with that firm, Strother received two advances from companies related to the new company, totalling $785,000.

Strother resigned from the law firm effective March 31, 1999 and joined the new corporation as a 50 per cent shareholder.

DETERMINATION

The hearing panel found that Strother had a duty of loyalty to his original client and that his failure to provide material disclosure to that client of his financial interest in a potential competitor deprived the client of any opportunity to consider whether it wanted to continue to retain and rely on Strother despite that financial interest. The panel found that Strother breached his duty to that client in favour of his own financial interest.

The panel concluded that:

  • Strother’ s failure to provide material disclosure to the original client of his interest in a potential competitor constituted professional misconduct;
  • Strother’ s failure to advise the original client that his previous negative legal opinion concerning an amendment to the Income Tax Act should be reconsidered constituted professional misconduct; and
  • Strother’ s failure to advise the original client of the favourable tax ruling constituted professional misconduct.The panel found that Strother’ s submissions clearly identified that the disciplinary action sought by the Law Society of a suspension of five to six months is on the high side of penalties imposed in Canada where a lawyer is suspended for acting in a conflict situation. However, the panel concluded that, given the actions outlined in its finding of facts and determination, the appropriate discipline is a lengthy suspension.

DISCIPLINARY ACTION

The panel ordered that Strother:

  • be suspended for five months; and
  • pay costs of $54,792.38.

Strother has applied for a review of the hearing panel’ s decision.

2015 LSBC 56 Decision on Disciplinary Action

2015 LSBC 07 Decision on Facts and Determination