Bad Faith Investigations

It is difficult to sue a regulator for their investigations even if the resulting discipline hearing is resolved in the practitioner’s favour. The practitioner needs to prove that the investigation was conducted in bad faith or with malice for there to be liability. Negligent investigation is not sufficient. For that reason many such proceedings are dismissed without the necessity of a hearing because the bad faith is not particularized. However, in Robson v. The Law Society of Upper Canada, 2021 ONSC 5271 (CanLII), the motion to dismiss the claim before trial was unsuccessful.

The practitioner was ultimately successful in defending a discipline allegation that he had fraudulently concealed assets in his bankruptcy proceedings. The practitioner claimed that the investigation was conducted in bad faith by only interviewing witnesses who would help prove the allegation and by not interviewing obvious witnesses who might disprove the allegation. There was conflicting evidence about who interviewed whom and when. The Court said that it was possible that bad faith could be established depending on the credibility findings made. The Court directed that the matter proceed to trial.

Not all bad faith claims can be dismissed before trial.

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