Lawful Threats: Regulatory Law and Professional Conduct
Lawyer Ian Richler (Gowlings) has posted a fascinating comment on a revision to Ontario’s Rules of Professional Conduct. Now, rule 3.2-5 prohibits threatening “to make a complaint to a regulatory authority” in order to “gain a benefit” for a client. An exception is set out for “an application made in good faith to a regulatory authority for a benefit to which a client may be legally entitled”. The commentary to the Rules explains:
Where a regulatory authority exercises a jurisdiction that is essentially civil, it is not improper to threaten to make a complaint pursuant to that authority to achieve a benefit for the client. For example, where the regulatory authority of the office dealing with employment standards covers non-payment of wages, it is not improper to threaten to make a complaint pursuant to the relevant provincial statute for an order that wages be paid failing payment of unpaid wages.
But of course this leaves open countless other areas where regulators have discretionary powers that lawyers might want to invoke in favour of their clients. Richler gives the example of a property owner whose property is damaged by an oil spill by the gas station next door: is it a breach of rule 3.2-5 for a lawyer to ask the gas station to pay to clean up the oil, failing which she will make a complaint to the regulator? After all, this is certainly a threat to make a complaint in order to “gain a benefit” for the property owner (though note that the commentary also refers to “the satisfaction of a private grievance” which may be intended to qualify the meaning of “benefit”).
Unfortunately the new rule does not distinguish clearly between threats to ask a regulatory authority to exercise its powers in accordance with its statutory mandate for a legitimate purpose, and threats to use a regulatory process for collateral or ulterior motives. It therefore seems overbroad. Even threats that are not frivolous and would not result in an abuse of process risk being captured by the rule.
I am no expert on professional responsibility and ethics, but Richler’s concern seems legitimate to me.
It brings to mind one of my favourite cases straddling the public-private divide: Central Canada Potash Co. Ltd. et al. v. Government of Saskatchewan,  1 SCR 42. Amongst other things, the company sought damages from Saskatchewan for the tort of intimidation. An inter-governmental deal was struck on potash supply, in order to reduce supplies. The plaintiff objected because it had contractual obligations which it would be unable to fulfill once the deal took effect. Its application for an additional quota was refused and Saskatchewan threatened to revoke the existing quota on basis that the company was exceeding it. The company’s action for intimidation failed, in part because, as Martland J. explained:
[I]f the course of conduct which the person making the threat seeks to induce is that which the person threatened is obligated to follow, the tort of intimidation does not arise…In the present case the Potash Conservation Regulations made under The Mineral Resources Act prohibited the appellant from exceeding a specified production of potash. By conforming to the requirements of the Regulations, the appellant would not suffer damage and, therefore, the claim for intimidation is not well founded.
It did not matter that the Regulations were subsequently found to be unconstitutional: “The Deputy Minister was then seeking to induce conformity with the prorationing plan which had been created by legislation which it was his duty to enforce. At the time the threat was made, the legislation stood unchallenged…the Minister was properly entitled to seek to enforce the Regulations unless and until they were found to be ultra vires. This being his duty, it cannot constitute intimidation to seek to enforce them”.
It seems to me that a similar analysis should prevail in the area of professional responsibility. What could possibly be wrong about asking a regulator to do something that is lawful?
This content has been updated on December 17, 2014 at 09:07.