LAW SOCIETY TRIBUNAL  
HEARING DIVISION  
Citation: Law Society of Ontario v. Marusic and Martini, 2022 ONLSTH 55  
Date: May 11, 2022  
Tribunal File No.: 17H-153; 19H-084; 20H-042  
BETWEEN:  
Law Society of Ontario  
Applicant  
- and -  
Maria Frances Marusic and Claudio Martini  
Respondents  
Before: Margaret Leighton (chair), Eric Whist, Alexander Wilkes  
Heard: March 22-26, April 5 and 9, September 7-8, December 8 and 13-17, 2021, and  
February 17-18, 2022, by videoconference  
Appearances:  
Guy Pratte, Caitlin Sainsbury, and Veronica Soljin, for the applicant  
Brian Greenspan and Naomi Lutes, for the respondent Ms. Marusic  
Gavin Tighe and Scott Gfeller, for the respondent Mr. Martini  
3.  
Summary:  
MARUSIC Failing to Assist in Preventing the Unauthorised Practise of Law Failing  
to Act with Integrity – In 2015, after hearing how the Lawyer’s relationship with Martini  
had ended, the Tribunal imposed restrictions on the Lawyer’s licence – The panel  
found that the Lawyer had misled the Tribunal about the nature of her relationship with  
Martini and thus failed to act with integrity She also failed to assist in preventing  
Martini’s unauthorised practise of law and provision of legal services – The Lawyer  
associated with and used the services of Mr. Martini without the requisite express  
approval of the Hearing Division The panel directed that dates are to be set for a  
hearing on penalty.  
MARTINI Misappropriation of Funds Providing Legal Services While Suspended –  
Motion to Stay Based on Delay The Lawyer was suspended as of April 22, 2015 –  
The Lawyer admitted to repeatedly breaching escrow but denied misappropriation on  
the basis that the action had been assigned to him The panel found that the Lawyer  
had misappropriated funds The Lawyer also continued to provide legal services while  
suspended The panel concluded due to the nature of the proceedings and the  
Lawyer’s own contribution to the delay, the delay here did not rise to the level of  
inordinate The motion to stay was dismissed and the panel directed that dates are to  
be set for a hearing on penalty.  
REASONS FOR DECISION ON FINDINGS  
[1]  
[2]  
[3]  
Margaret Leighton (for the panel):Claudio Martini was called to the bar in  
1989. He had a highly successful and extremely busy litigation practice. Maria  
Marusic was called in 1993. She also was an accomplished and busy litigator.  
Mr. Martini and Ms. Marusic began working together in 1993. In 2000 they  
became law partners. In 2001 they became romantic partners. In 2010 they  
established Shulgan Martini Marusic LLP (SMM) together with Myron Shulgan.  
In late 2021, while this hearing was ongoing, they married.  
On November 26, 2012, both Mr. Martini and Ms. Marusic participated in the  
mediation of a longstanding contractual dispute involving Client A and his  
company, Company B. The mediation was very successful. On November 30,  
2012, settlement funds of $2,746,342.41 were deposited into SMM’s trust  
account. The minutes of settlement required the funds to be held in escrow  
pending delivery of performance bonds, which were the subject of the litigation,  
to opposing counsel.  
On November 30, 2012, $925,128.87 was withdrawn from the SMM trust  
account by cheque payable to SMM. Mr. Martini signed the cheque and Ms.  
Marusic co-signed it. The Law Society alleges this began a series of 19  
misappropriations from trust such that, by November 2014, just over $50,000 of  
the original $2.7 million settlement remained. The bonds were never delivered.  
2
[4]  
[5]  
Mr. Martini responds that Client A assigned the action to him in December 2006.  
He admits repeatedly breaching escrow but denies any misappropriation on the  
basis that all the money belonged to him.  
The parties agree Ms. Marusic co-signed two more cheques transferring funds  
subject to escrow from trust to the SMM general account in February 2013. The  
Law Society alleges that by co-signing the November 2012 and February 2013  
cheques, Ms. Marusic misappropriated or knowingly assisted in the  
misappropriation of approximately $1.2 million from trust. Ms. Marusic denies  
any knowledge of Mr. Martini’s escrow breach and any misappropriation.  
[6]  
[7]  
Mr. Martini left his SMM office on December 12, 2014 after being advised the  
Law Society was investigating the Client A matter. He did not return. On  
January 5, 2015, the Tribunal suspended his licence on an interim interlocutory  
basis. An interlocutory suspension was ordered effective April 22, 2015: Law  
Society of Upper Canada v. Martini, 2015 ONLSTH 68.  
In March 2015 the Law Society asked to suspend Ms. Marusic’s licence based  
on the alleged misappropriation. At the hearing in April 2015 Ms. Marusic told  
the Tribunal her relationship with Mr. Martini had ended in late March. This was  
a factor in the Tribunal’s decision to impose restrictions on Ms. Marusic’s  
licence rather than order her suspended: Law Society of Upper Canada v.  
Marusic, 2015 ONLSTH 81.  
[8]  
The Law Society alleges Mr. Martini engaged in the unauthorized practice of law  
while suspended by assisting in the preparation for and the trial of a malicious  
prosecution action brought by Client B against the RCMP and the federal  
government. The matter settled mid-trial for several million dollars. Client B was  
represented by Ms. Marusic at the trial. Mr. Martini met with Ms. Marusic and  
Client B and prepared an authorization to settle and direction for payment of  
legal fees. Mr. Martini is also alleged to have engaged in unauthorized practice  
in respect of nine other clients or ongoing legal matters.  
[9]  
The Law Society alleges Ms. Marusic failed to prevent Mr. Martini’s  
unauthorized practice, associated with him, and used his services without the  
express approval of the Tribunal. The respondents deny these allegations and  
take the position Mr. Martini’s involvement in client matters was limited to  
transferring his files to Ms. Marusic.  
[10]  
The Law Society also alleges Ms. Marusic failed to act with integrity in the  
manner in which she handled the settlement of the Client B litigation. Ms.  
Marusic denies this allegation.  
3
[11]  
[12]  
Finally, the Law Society alleges Ms. Marusic misled the Tribunal about the  
nature of her relationship with Mr. Martini between March and August 2015. Ms.  
Marusic denies this allegation.  
For the reasons that follow we find:  
Mr. Martini misappropriated funds held in trust as a result of the Client A/  
Company B litigation.  
Mr. Martini continued to provide legal services while suspended, contrary to  
Rule 7.6-1.2 of the Rules of Professional Conduct.  
Ms. Marusic failed to assist in preventing Mr. Martini’s unauthorised  
practise of law and provision of legal services, contrary to Rule 7.6-1 of the  
Rules of Professional Conduct. Further, she associated with and used the  
services of Mr. Martini without the express approval of a panel of the  
Hearing Division of the Law Society Tribunal, contrary to Rule 7.6-1.1.  
Ms. Marusic failed to act with integrity in the settlement of Client B’s matter  
contrary to Rule 2.1-1 of the Rules of Professional Conduct.  
Ms. Marusic misled the Law Society Tribunal about the nature of her  
relationship with Mr. Martini between March and August 2015 and by doing  
so failed to act with integrity contrary to Rule 2.1-1 of the Rules of  
Professional Conduct.  
[13]  
However, we are not satisfied the Law Society met its onus to prove, on a  
balance of probabilities, Ms. Marusic knowingly assisted in the misappropriation  
of funds held in trust as the result of the Client A/Company B litigation. Those  
allegations are dismissed.  
BACKGROUND AND PROCEDURAL HISTORY  
[14]  
[15]  
In October 2014, Mr. Martini admitted to having engaged in a sophisticated and  
elaborate scheme to deceive his clients. The Hearing Division ordered his  
licence suspended for seven months. Law Society of Upper Canada v. Martini,  
2014 ONLSTH 192. His appeal of that penalty was pending when the Law  
Society commenced its investigation of the Client A matter in December 2014.  
Law Society of Upper Canada v. Martini, 2014 ONLSTA 51.  
On December 18, 2014, the Law Society obtained an order from the Superior  
Court freezing SMM’s accounts. Sometime in January 2015, the three partners  
dissolved SMM. Ms. Marusic started her own firm, Marusic Law LLP, and took  
on approximately 70% of Mr. Martini’s files. She also assumed responsibility for  
SMM’s debts.  
4
Martini suspended  
[16] The Law Society’s motion for an interlocutory suspension was scheduled for  
January 5, 2015. That hearing was adjourned to January 23 and the Tribunal  
ordered an interim interlocutory suspension effective that day: Law Society of  
Upper Canada v. Martini, 2015 ONLSTH 31. After another adjournment,  
Mr. Martini consented to an interlocutory suspension effective April 22, 2015:  
Law Society of Upper Canada v. Martini, 2015 ONLSTH 68.  
Marusic practice restrictions and suspension  
[17]  
The Law Society sought an interlocutory suspension of Ms. Marusic’s licence  
based on her alleged involvement in the misappropriation of the Client A funds.  
In her sworn affidavit in March 2015 and oral evidence responding to the Law  
Society’s motion for an interlocutory suspension, Ms. Marusic stated that her  
relationship with Mr. Martini had ended. After considering the circumstances the  
panel found a restriction on Ms. Marusic’s ability to operate her trust account  
was sufficient to protect the public.  
[18]  
In December 2015, the Law Society moved to vary the Tribunal’s June order on  
the basis of a material change in circumstances arising out of Mr. Martini’s  
involvement in the Client B litigation and fresh evidence Ms. Marusic had  
associated with and/or facilitated Mr. Martini’s practice of law. At that time Ms.  
Marusic admitted her romantic relationship with Mr. Martini had resumed in  
August 2015. While the hearing panel agreed the resumption of the romantic  
relationship was a material change, the majority did not order a suspension:  
Law Society of Upper Canada v. Marusic, 2016 ONLSTH 67. The Law Society  
appealed.  
[19]  
The Appeal Division found the majority of the hearing panel misapprehended  
the significance of Mr. Martini’s involvement in negotiating fees with Client B,  
which raised concerns about Mr. Martini’s influence on Ms. Marusic and about  
her independent judgment. It ordered a suspension: Law Society of Upper  
Canada v. Marusic, 2016 ONLSTA 22. The Divisional Court upheld that  
decision: Marusic v. Law Society of Upper Canada, 2017 ONSC 663. Ms.  
Marusic’s licence was suspended effective February 2017.  
[20]  
In July 2017, Ms. Marusic brought a motion to lift the interlocutory suspension  
on the basis, among other reasons, that the conduct application had not yet  
been commenced. The panel refused her request but ordered the suspension  
would be lifted if a conduct application had not been commenced by November  
30, 2017: Law Society of Upper Canada v. Marusic, 2017 ONLSTH 197.  
5
Marusic applications  
[21]  
The application in file 17H-153 was issued on November 29, 2017 (the first  
Marusic application). The first application alleged Ms. Marusic misappropriated  
or assisted in the misappropriation of approximately $1.265 million held in trust  
for Client A, failed to assist in preventing Mr. Martini’s practice of law in relation  
to the Client B litigation, and failed to act with integrity in the settlement of the  
Client B litigation.  
[22]  
[23]  
The Tribunal refused Ms. Marusic’s request to either dismiss the first application  
as an abuse of process or to stay the Tribunal’s hearing pending resolution of  
civil proceedings between the respondents and Client A: Law Society of Ontario  
v. Marusic, 2018 ONLSTH 118.  
The application in file 19H-084 was issued on July 12, 2019 (the second  
Marusic application). It alleged Ms. Marusic failed to assist in preventing  
Mr. Martini’s practice of law in relation to several other clients and that between  
March and August 2015 Ms. Marusic misled the Law Society and/or the Law  
Society Tribunal about the nature of her relationship with Mr. Martini and in  
doing so failed to conduct herself with integrity.  
[24]  
The Law Society’s motion to join both applications was granted: Law Society of  
Ontario v. Marusic, 2019 ONLSTH 127.  
Privileged documents issue  
[25]  
Between April and June 2018, Law Society discipline counsel became aware  
that search results of data collected from the digital search of Ms. Marusic’s  
computers and servers may have included solicitor-client privileged information.  
In December 2018, Borden Ladner Gervais (BLG) was retained and took  
carriage of the file for the Law Society. Between January and March 2019  
counsel for both parties worked on, and ultimately achieved, a protocol to  
address the possible privilege issues.  
Preliminary motions  
[26]  
In December 2019, the Tribunal heard three motions. Ms. Marusic asked the  
Tribunal to exclude evidence allegedly taken from her computers in violation of  
the Charter of Rights and Freedoms and to remove BLG as counsel for the Law  
Society on the basis of a conflict of interest. The Law Society sought an order  
permitting Client A to testify remotely.  
[27]  
Ms. Marusic’s motion to exclude evidence was successful in part. Her personal  
e-mails were excluded but case-related e-mails not limited to her work on the  
Client B matter were admitted. The motion to remove BLG was denied. The Law  
6
Society’s motion to permit Client A to testify remotely was granted: Law Society  
of Ontario v. Marusic, 2020 ONLSTH 18.  
Marusic hearing begins  
[28]  
The hearing of the merits began on February 10, 2020. The Tribunal heard four  
witnesses on behalf of the Law Society: Client B; his advisor Leighton Roslyn;  
Allane Andrusko, the Law Society’s forensic auditor; and Myron Shulgan, the  
respondents’ former partner at SMM. Continuation dates were scheduled in  
April, May and June 2020.  
Covid  
[29]  
The April hearing dates were vacated on March 16 due to the COVID-19  
lockdown. The May and June dates were vacated for the same reason. The  
hearing was scheduled to resume remotely for eight days in September and  
October 2020.  
Martini application  
[30] The application in file 20H-042 was issued April 2, 2020 (the Martini  
application). It contained 13 allegations against Mr. Martini. Particulars 5 and 13  
concerned Client A and Client B (referred to by other initials in the Martini  
NOA):  
5.  
Between November 2012 and November 2014, having received  
a settlement of $2,746,342.41 in trust on behalf of Client [A] Mr. Martini  
made unauthorized withdrawals from trust, misappropriating and/or  
misapplying $2,194,383.49, more or less, of the funds held in trust on  
behalf of Client [A].  
(…)  
13.  
In or about June 2015, in connection with the trial and settlement  
of an action Mr. Martini had commenced on behalf of Client [B],  
Mr. Martini continued to practice law while suspended when he actively  
assisted Client [B] and Client [B]’s counsel during the trial preparation  
and/or settlement of the action.  
Martini and Marusic applications joined  
[31]  
On September 7, 2020, Mr. Martini moved to have the Client A and Client B  
allegations in the Martini application heard together with the two Marusic  
applications.  
[32]  
The Tribunal granted Mr. Martini’s motion on September 15. The Tribunal found  
that the considerations favouring joinder, avoiding a multiplicity of proceedings  
and the risk of inconsistent findings, outweighed the factors against it, most  
7
particularly the need to restart the Marusic hearing. The other 11 allegations in  
the Martini application would proceed separately: Law Society of Ontario  
v. Martini, 2020 ONLSTH 116.  
[33]  
As a consequence of the joinder decision, the September and October Marusic  
hearing dates were vacated. Further, the chair of the Marusic panel advised he  
was leaving the Tribunal and, given the number of hearing dates required to  
complete the three applications, was unable to continue to hear the matters.  
The remaining members did not consider it appropriate to continue as a two-  
person panel. A new hearing panel was required.  
Martini’s stay motion  
[34] By notice of motion filed March 12, 2021, Mr. Martini sought a stay of the  
proceedings against him in respect of Clients A and B on the basis that the Law  
Society’s delay in prosecuting these matters was inordinate, breached natural  
justice and procedural fairness and was an abuse of process. Counsel agreed  
to argue the delay motion at the completion of the hearing on the merits.  
Marusic/Martini hearing  
[35]  
The parties agreed the transcripts of evidence given before the original Marusic  
hearing panel would be relied on in the joined Marusic/Martini hearing. The  
parties relied on the agreed statement of facts (ASF) filed earlier in the Marusic  
applications and filed a second ASF in relation to the Martini allegations.  
[36]  
The Law Society was permitted to recall Ms. Andrusko and Mr. Shulgan to  
testify about the Martini allegations. The parties also agreed Client A could  
provide his evidence in chief by affidavit and that a licensed paralegal,  
acceptable to the parties, would be present while Client A testified, given Client  
A’s unfamiliarity with Zoom proceedings and technology in general. The same  
paralegal commissioned Client A’s affidavit.  
[37]  
The hearing resumed for two weeks on March 22, 2021. We heard from Ms.  
Andrusko and Mr. Shulgan and Client A began his testimony on March 25.  
Unfortunately, and despite being expressly instructed not to discuss his  
evidence or the hearing with anyone, Client A spoke to the paralegal about his  
cross-examination and requested Law Society counsel’s assistance. The  
paralegal then telephoned and e-mailed Law Society counsel in an attempt to  
communicate Client A’s concerns. Law Society counsel properly refused to  
respond or engage. Respondents’ counsel were informed and provided with the  
e-mail and voicemail recording. The paralegal’s services were terminated.  
[38]  
The remaining March hearing days were adjourned to permit the Law Society to  
find another individual to assist Client A. Due to the pandemic lockdown and  
social distancing requirements, it was impossible to retain anyone for this  
8
purpose or to have them safely attend in Client A’s home until lockdown  
restrictions were relaxed in early summer 2021.  
[39]  
[40]  
On September 7 and 8, 2021, Client A resumed his testimony. Court reporters  
retained by the Law Society and acceptable to the respondents assisted Client  
A to manage the hearing technology.  
The hearing reconvened on December 8 for two weeks to hear the respondents’  
evidence. Gino Morga provided evidence on behalf of Ms. Marusic. Ms. Marusic  
elected not to testify. Mr. Martini testified and was cross-examined. The hearing  
of evidence was completed on December 21, 2021.  
[41]  
[42]  
The parties filed a joint brief of Ms. Marusic’s “read-ins” taken from affidavits  
and testimony she provided in her interlocutory suspension proceedings as well  
as the transcript of her interview by the Law Society investigators. The parties  
identified portions of those materials the panel could accept for the truth of their  
contents as well as portions the panel could consider as context for the  
read-ins.  
Two days, February 17 and 18, 2022, were set to hear final submissions and  
the argument of the stay. The day before reconvening, Mr. Martini’s counsel  
delivered his written submissions which raised, for the first time and without  
formal notice, serious allegations of prosecutorial misconduct against the Law  
Society and its counsel, principally in connection with Client A’s testimony and  
affidavit as well the conduct of the Law Society’s original investigator, Michael  
Spagnuolo. The LSO asked us to disregard these submissions but, if we felt  
unable to do so, required an adjournment in order to respond properly.  
[43]  
After some clarifying discussion in which the Law Society acknowledged the  
frailties of Client A’s evidence but declined to withdraw his affidavit, counsel for  
Mr. Martini confirmed his primary concern was with the Law Society’s  
characterization of and reliance on Client A’s evidence and he was not alleging  
prosecutorial misconduct.  
THE ALLEGED MISAPPROPRIATIONS  
[44]  
Mr. Martini provided extensive, detailed evidence about his business  
relationship with Client A. We were provided with six volumes containing  
documents relating to Mr. Martini’s involvement with Company B/Client A over  
almost two decades. We have no difficulty accepting Mr. Martini spent a great  
deal of time and effort representing Client A’s interests. We also accept that his  
efforts were remarkably successful – twice saving Client A’s projects from  
failure. It is unnecessary to review this evidence in detail.  
[45]  
Similarly, we heard considerable evidence about SMM’s finances from Ms.  
Andrusko. She carefully and precisely reviewed the SMM trust ledger, billing fee  
9
journals, dockets, and invoices. We also heard from Mr. Martini about his  
docketing habits and from both Mr. Martini and Mr. Shulgan about SMM’s  
business culture and practices. In the end, given Mr. Martini’s admission of his  
repeated escrow breaches, it is also unnecessary to examine this evidence in  
great detail.  
Client A not a reliable witness  
[46]  
Client A proved to be a very difficult witness. He was at times combative and  
sarcastic and at other times charming and complimentary. He claimed memory  
issues which, given his age and that critical incidents occurred well in the past,  
were understandable. However, it appeared to us that frequently his memory  
issues arose when confronted with a fact he did not want to accept.  
[47]  
Client A’s testimony was inconsistent with or repudiated statements he made  
under oath on various examinations for discovery in his civil litigation. He  
repeatedly denied or asserted facts in direct and inexplicable contradiction with  
objective evidence. For example, he denied signatures on cheques or contracts  
were his. When he did acknowledge his signature on documents, he would  
claim he had not known what he was signing. At one point he even suggested  
Mr. Martini had made him sign a document in the dark. He disagreed that  
meetings where his presence was objectively documented had occurred. He  
emphatically denied knowing the lawyer representing him in his ongoing civil  
action against the respondents. He repeatedly denied having testified, sworn  
affidavits, been deposed, or even been involved in Company B’s lengthy  
litigation. Despite being shown his cancelled cheque, which he provided to the  
Law Society’s investigator, he denied ever paying Mr. Martini for legal services.  
He also denied receiving $500,000 from Mr. Martini in 2014 although this is  
clearly documented on the client trust ledger and Client A had admitted this to  
the Law Society’s investigator. No portion or aspect of Client A’s testimony was  
unaffected by these problems.  
[48]  
The most troubling exchange occurred when he was asked about the affidavit  
sworn only two weeks earlier adopted as his evidence in chief.  
Q. I’m asking about this document. That marking that’s on the document  
above the name Client ‘A’, you don’t remember putting that on the  
paper? My understanding, sir, is Mr. Nicholson [paralegal assisting  
Client A] met with you and you signed this document; remember that?  
A. I never seen that. I got a hard time to recognize my signature, but I  
never make this sworn before me, City of Windsor, Province of Ontario.  
Never meet this guy, commissioner, never.  
Q. Never met Mr. Nicholson?  
A. No.  
10  
Q. Isn’t he in the room with you right now?  
A. No, I never met him. I don’t know how he look.  
Q. You never met him.  
A. No.  
Q. How did his and your signature come to be on the same document, if  
you’ve never met him?  
A. Cannot say how.  
[49]  
[50]  
We considered whether there was an issue of competence but were satisfied  
Client A was competent to testify. In our view Client A was fully engaged, alert  
and, frankly, frequently appeared to be enjoying his interactions with counsel.  
We agree with respondents’ counsel that Client A’s testimony before us  
concerning his involvement with Mr. Martini in respect of the retirement home  
construction, the litigation with AXA, the assignment of the claim and the  
settlement of that litigation, discussed below, was unreliable. We are not  
satisfied Client A was able to observe, recall and recount those events  
accurately and thus his evidence failed to meet the test for reliability: R. v. G.F.,  
2021 SCC 20 at para. 82. Therefore, we cannot, and do not, rely on it.  
Client A’s involvement with Martini  
[51]  
Company B built and ran retirement homes. Client A’s first project (Kingsville)  
was beset with financing issues and the subject of multiple construction liens. In  
1991, Client A retained Mr. Martini, who took steps needed to prevent  
foreclosure on the property and the loss of Kingsville.  
2002 Leamington project  
[52]  
In 2002, Client A asked Mr. Martini to review a contract between Company B  
and CGC Enterprises Design Manage Construct Inc. for the construction of  
another retirement home (Leamington). The contract required CGC to obtain a  
100% labour and material payment bond and a 100% performance bond.  
[53]  
On September 3, 2002, CGC obtained the bonds from AXA Pacific Insurance  
(AXA). These were the bonds which became the subject of the subsequent  
litigation between AXA and Company B.  
2004: Leamington in financial trouble  
[54]  
In March 2004 Leamington was in serious financial difficulty. AXA took the  
position Company B had materially misrepresented the amount of work  
completed on the project and refused to accept liability under the bonds.  
Mr. Martini again came to Client A’s assistance and, as counsel for Company B,  
11  
successfully negotiated a mitigation agreement with AXA to secure additional  
funding. This allowed Company B to complete Leamington in mid-2006. The  
dispute about liability on the bonds would be addressed at a later date.  
[55]  
[56]  
In addition to the mitigation agreement, Mr. Martini re-tendered the bidding to  
different contractors to finish the work, obtained an additional $700,000 to  
address deficiencies and convinced AXA to postpone its second-position  
mortgage because of the additional security that needed to take priority ahead  
of AXA.  
Mr. Martini did not have a retainer with Client A for this work. Mr. Martini  
testified he undertook the work for Client A because he “felt badly for him” and  
because Client A “stood to lose everything.”  
Invoices to Company B  
[57]  
On March 22, 2005, Mr. Martini issued an account to Company B for $55,000 in  
fees, plus disbursements and GST, for a total of $60,961.81.  
[58]  
On January 26, 2006, Mr. Martini issued a second account to Company B for  
$45,000 in fees, plus disbursements and GST, for a total of $48,150. This  
account notes the $60,961.81 owing from March 2005 remains outstanding for a  
total of $109,111.81.  
[59]  
Mr. Martini testified he issued the invoices to clear out some of the money in  
the filebut had absolutely no hope Client A would be able to pay. Despite  
completing Leamington, Client A remained short of funds. He had yet to pay the  
January 2006 invoice. Mr. Martini testified that Client A’s financial situation was  
so dire that he lent Client A $6,000 in October 2006 so his spouse could fly  
overseas to visit her sick mother.  
[60]  
[61]  
Mr. Martini testified that in November 2006, Client A told him that he wanted to  
“put an end” to things with AXA for $250,000. Mr. Martini prepared a draft  
direction for AXA to pay Client A $250,000 personally “as damages for mental  
distress” to settle the dispute over the bonds. The damages were characterized  
in this way on Client A's instructions to avoid paying any tax.  
AXA was interested and made a counterproposal in December that, to  
Mr. Martini, seemed better than what he had proposed. However, AXA’s  
response reserved its rights to pursue a claim against Leamington’s architect.  
When they met to discuss the proposal on December 11, 2006, Mr. Martini  
testified that Client A was adamant he did not want the architect to have any  
exposure to AXA and refused the offer.  
12  
Sale of the retirement homes  
[62]  
Unbeknownst to Mr. Martini, Client A had agreed in late 2006 to sell Leamington  
and Kingsville for $37 million. However, the lawyer he had retained for the  
closing was unable to discharge AXA’s collateral mortgages on the properties.  
Client A was afraid that he was going to lose his deal. He sought Mr. Martini’s  
help again.  
[63]  
Mr. Martini testified he was “furious” with Client A. He believed Client A had not  
involved him in the sale because he wanted to avoid paying him for his work  
but, once again, agreed to help. He concluded that issuing a claim against AXA  
might provide the necessary leverage to get some kind of agreement in place to  
discharge the mortgages from title and allow the sale transaction to close at the  
end of the month. It might also, he thought, put money in Client A’s pocket and  
allow Mr. Martini to be paid for the work and effort he had put in since 2004.  
[64]  
[65]  
On December 12, 2006, Mr. Martini issued a claim on behalf of Company B  
against AXA for over $5 million. Mr. Martini testified he was unaware AXA had  
already issued a claim against Company B and the architect in July. AXA  
sought recovery of the $2 million provided pursuant to the 2004 mitigation  
agreement plus $350,000 in related costs. Mr. Martini testified he received  
AXA’s claim on December 18, 2006.  
Mr. Martini subsequently negotiated an escrow agreement with AXA’s counsel.  
$2.5 million from the closing funds on the sale of the homes would be held in  
trust pending resolution of the AXA litigation. This allowed AXA’s collateral  
mortgages to be “bonded” off and ultimately permitted the sale of the retirement  
homes to close at the end of December.  
The assignment agreement  
[66]  
Mr. Martini met with Client A on December 18, 2006, to discuss his outstanding  
fees. Mr. Martini testified that he explained how unfair he felt Client A was being  
and that his accounts, which remained unpaid, did not reflect the time and work  
he had performed. He testified Client A was unmoved and was going to leave  
the country to avoid paying taxes on his windfall. “[Client A] was going to take  
his money and and he was going to go, and he didnt want nothing to do with any  
ongoing issues.”  
[67]  
Mr. Martini proposed the following:  
I said to him, look, Ive issued the claim, I want to proceed with it, then.  
And then I said I said, I want to negotiate an agreement on settling up  
some of the monies owed, but Ill take over the claim, you assign the  
claim to me, what I get, I get to keep. And he was perfectly fine with that  
because his view was Im done with it.  
13  
But my concern was I needed his help. I didn't know how far I'd have to  
push this, so I was I was hedging my bets that Id get some money out  
of AXA. But if I had to push it to a discovery, I needed his help. So I said  
to him, I'll pay you a fair amount of money if you help me, you'll have to  
come to a discovery, I may need information from you, Ill run it, you  
assign it to me, I'll take it over, whatever I get, Ill keep.  
But I also wanted to be paid some money upfront for the efforts. And –  
and I I remember saying to him, I think I billed you a hundred grand.  
He said, I'm not paying a $100,000. And this is a guy, he was about to  
have $35 million in the bank. And to and fro, and to and fro. By the end of  
the day, he said, fine, you can have the lawsuit, whatever you get, you can  
keep, but I'm only going to pay you towards the legal fees so far 50 grand.  
[68]  
[69]  
Mr. Martini told us he believed he could settle the litigation with AXA and  
recover up to $300,000 but never expected AXA to defend so aggressively or, in  
the end, to give up so completely and settle for over $2.5 million. He agreed his  
other option was to sue Client A but explained that would be difficult and  
perhaps pointless if Client A and his money left Canada as intended.  
Despite no longer trusting Client A, Mr. Martini explained:  
I made the best deal I could, thinking that understanding it would be a  
while. I thought I’d at least buy myself some time while he’s around. I  
could push AXA’s hand, get him, if I needed to, to do a quick discovery.  
Never did I imagine I’d – I’d be paying an associate for two years to fight  
over productions. So I just the file took on, like everything seemed to  
with Client A, a life of its own.  
[70]  
Mr. Martini’s dockets do not record a meeting with Client A on December 18. He  
explains the absence as an example of his being a “terrible docketer.”  
The December 19 assignment letter  
[71]  
The only document supporting the existence of the assignment is an unsigned,  
file copy of a letter, not on letterhead, addressed to Client A and dated  
December 19, 2006, that states:  
I confirm our meeting of yesterday in regards to the above noted matter.  
The Leamington Project was completed by monies advanced from AXA  
pursuant to a Funding Agreement. On the closing of the sale of your  
retirement homes two million five hundred ($2,500,000.00) dollars was  
paid to AXA's solicitors in trust pursuant to that agreement and a  
collateral mortgage.  
14  
AXA has commenced a claim against those monies. We have also  
commenced a claim on behalf of [Company B] for those monies.  
We have expended significant efforts in this matter since 2004 which  
resulted in completion of the retirement home and the ultimate sale of  
the same for in excess of thirty-five million ($35,000,000.00) dollars. We  
understand your position that you do not wish to dispute AXA's  
entitlement to this money and you are content at this time to walk away.  
However, we are still owed substantial funds for our work. We also  
disagree that you should walk away from your claim to these monies.  
On that basis I confirm our agreement that you will assign to me and the  
Firm the cause of action as against AXA in satisfaction of the value of  
the work completed for you to date and the work we will undertake in  
regards to that claim. You have agreed to participate by testifying and  
assisting and in fairness we will agree on fair compensation for that. The  
Firm will be responsible for all costs and expenses in proceeding with  
the litigation and any cost order which may result. On that basis there  
will be no exposure to you moving forward or any obligation for you to  
pay any monies.  
[72]  
[73]  
Mr. Martini testified the December 19 letter was not on letterhead because at  
that time the original was printed on stock letterhead with a file copy printed on  
blank paper. The file copy would be unsigned and placed on the  
correspondence brad.  
Asked how we could know the December 19 letter was delivered to Client A or  
accepted by him, Mr. Martini explained he did not mail documents to Client A.  
Client A’s practice was to drop into the office, usually once a week, and pick up  
anything from the front desk. He stated he knew the letter had been received  
because Client A chided him about it the following week.  
[74]  
In 2014 Client A told the Law Society’s investigator he never had a retainer  
agreement with Mr. Martini and believed he was entitled to the entire  
settlement. Client A denied agreeing to an assignment.  
AXA litigation settles  
[75]  
The AXA litigation was protracted and expensive. The six years of litigation  
involved several days of discoveries, motions for undertakings and productions  
and appeals from those decisions.  
[76]  
Mr. Martini, Ms. Marusic and Client A attended a mediation on November 26,  
2012. Pursuant to minutes of settlement signed by Client A on behalf of  
Company B, $2,746,342.41 was deposited into the SMM trust account on  
November 30, 2012.  
15  
Minutes of Settlement  
[77] The minutes of settlement provide (emphasis is ours):  
The parties hereto agree to settle this action on the following basis:  
a. The amount of $2,500,000 plus accrued interest less any unpaid fees  
(the "Trust Funds") currently being held in trust by [AXA counsel]  
pursuant to the Agreement as between [Company B], AXA and Borden  
Ladner Gervais LLP dated December 22, 2006 shall be released to the  
benefit and credit of the Plaintiff, [Company B]. Said Trust Funds are  
hereby directed to be paid to the Plaintiff's solicitors, Shulgan Martini  
Marusic, LLP, in trust. Said Trust Funds shall be delivered to Shulgan  
Martini Marusic, LLP, in trust within five (5) days from the date of these  
Minutes of Settlement or as soon as reasonably possible thereafter.  
These funds shall be held in trust by Shulgan Martini Marusic, LLP  
pending completion of all other matters set out within the Minutes  
of Settlement.  
b. In addition to the monies specified in paragraph 1 herein, [AXA] shall  
pay to the Plaintiff[Company B], the additional sum of $150,000.  
[Company B] hereby directs payment of those funds to its solcitiors (sic),  
Shulgan Martini Marusic, LLP in trust. It is agreed that Shulgan Martini  
Marusic, LLP shall hold those funds in trust pending completion of  
the other matters provided for within these Minutes of Settlement.  
c. All parties to these proceedings shall exchange Full and Final Mutual  
Releases in respect to all claims arising from these actions.  
d. [Company B] shall also provide a Full and Final Release to [AXA  
counsel] releasing [AXA counsel] from any and all obligations arising  
from the Agreement dated December 22, 2006 and the Trust Funds.  
e. [Company B] hereby agrees to deliver up for cancellation to  
[AXA] the original Performance Bond No. 7500557 dated September  
3, 2002 and Labour and Material Payment Bond No. 7500557 also  
dated September 3, 2002.  
f. Upon completion of all matters set out in these Minutes of  
Settlement, all parties shal (sic), consent to an Order dismissing both  
actions without costs.  
[78]  
Client A executed a full and final release on behalf of Company B. Mr. Martini  
witnessed Client A’s signature. The release, states, in part (emphasis ours):  
AND FOR THE SAID CONSIDERATION the Releasor covenants and  
warrants that: it has not assigned to any persons, partnerships,  
corporations or other entities any of the matters released herein or  
16  
for which they have agreed herein not to make or continue any further  
claims; and (ii) that it has the full right and authority to release the  
matters released herein.  
[79]  
On November 30, 2012, AXA counsel wrote to Mr. Martini enclosing the  
settlement cheque. The letter explicitly notes (emphasis ours):  
[p]ursuant to the Minutes of Settlement dated November 26, 2012, these  
funds are to be held in trust pending the finalization of the balance  
of the steps in the settlement including but not limited to the  
delivery up for cancellation of the bonds (...).  
[80]  
The minutes of settlement and the November 30 letter tell us three critical  
things:  
1. At the time of settlement, AXA and its counsel believed Company B was the  
beneficiary of the settlement. This is clear from the identification of the  
parties in the minutes and confirmed by the explicit warranty in the release  
that the claim has not been assigned.  
2. The minutes of settlement expressly required that settlement funds be held  
in trust pending completion of the other matters, including delivery of the  
bonds, provided for in the agreement. That requirement is stated twice.  
3. Company B was required to deliver the bonds to AXA for cancellation. Until  
that happened all settlement funds were to be held in trust.  
[81]  
The bonds were never located or delivered to AXA. On August 10, 2016, nearly  
18 months after the majority of the settlement funds had been disbursed, AXA  
waived the condition that the bonds be delivered.  
Martini breaches escrow  
[82] The parties agree the settlement funds were taken from SMM’s trust account  
between November 30, 2012 and November 2014 as follows:  
November 30, 2012: $925,128.87 was withdrawn from SMM’s trust account  
by cheque made payable to the firm and signed by Mr. Martini and Ms.  
Marusic. An invoice for this amount was issued to Company B on the same  
day. The invoice is identified as a final account.  
January 18, 2013: $226,000 was withdrawn from SMM’s trust account and  
deposited into the general account by cheque made payable to the firm and  
signed by Mr. Martini and his associate, Vincenzo Mastrogiacomo.  
February 4, 2013: $113,000 was withdrawn from SMM's trust account and  
deposited into the firm’s general account by cheque made payable to the  
firm and signed by Mr. Martini and Ms. Marusic.  
17  
February 27, 2013: $226,000 was withdrawn from the SMM trust account  
and deposited into the firm’s general account by cheque made payable to  
the firm. This cheque was signed by Mr. Martini and Ms. Marusic.  
April 8, 2013: $172,956 was withdrawn from the trust account by cheque  
payable to two other SMM clients. The cheque was signed by Mr. Martini  
and Mr. Mastrogiacomo. The same day another $100,000 was withdrawn  
from the trust account and paid to the same clients. The cheque was signed  
by Mr. Martini and Mr. Mastrogiacomo.  
April 30, 2013: a cheque was signed by Mr. Martini and Ms. Marusic in the  
amount of $4,030 payable to another law firm.  
June 6, 2013: Mr. Martini transferred funds from the account to the Lee  
County Tax Collector.  
June 17, 2013: $84,750 was withdrawn from SMM’s trust account by  
cheque payable to the firm. The cheque was signed by Mr. Martini and Mr.  
Mastrogiacomo.  
July 18, 2013: $250,000 was withdrawn from the SMM trust account by  
cheque payable to the firm and signed by Mr. Martini and Mr.  
Mastrogiacomo. This was paid to Client A.  
August 23, 2013: $22,500 was transferred from SMM’s trust account to the  
firm. The cheque was signed by Mr. Martini and Mr. Mastrogiacomo.  
July 28, 2014: $500,000 was issued from the Company B trust account by  
cheque payable to Company B. The cheque was signed by Mr.  
Mastrogiacomo and Mr. Martini.  
November 19, 2014: Mr. Martini transferred $50,000 from the Company B  
trust account to the firm. There is no co-signer.  
[83]  
Mr. Martini admitted:  
All of the transfers were inappropriate because they were in breach of  
the escrow. All the transfers like, not a dollar should have left the  
account, and thats exactly what Im saying. Any inappropriate transfers  
were directed and they were. Im the one that authorized the accounts  
be done. Im the one that authorized payment for the property. I did that.  
But they were all wrongful because the money wasnt supposed to leave  
until the escrow condition was satisfied, and and neither [Shulgan] nor  
[Marusic] had any knowledge of that.  
18  
Three invoices, a final account and other transfers  
[84]  
Tracking the disbursement of the settlement funds was confusing and the Law  
Society’s investigators quite properly flagged the transfers from trust as  
requiring close scrutiny.  
[85]  
On receiving the settlement funds, Mr. Martini directed an account be prepared.  
He explained that, while the funds were his, he needed to transfer the money  
into the firm. This required the preparation of an account. Yet we note  
subsequent transfers were unaccompanied by invoices or accounts.  
Mr. Martini’s explanation for this was that he had the ability to dictate what part  
of the money came to him personally and what part of the money would be  
billed for the firm. That explanation fails to address the inconsistency in his use  
of an invoice to support the transfer in November and not in others.  
[86]  
[87]  
[88]  
SMM staff prepared three invoices for differing amounts on November 29, 2012.  
Only one, for $925,128.87, appears in the trust ledger. The three invoices  
appear to have been drafts. Ms. Andrusko agreed the three documents were  
not three bills but one bill which was modified three times.  
Mr. Martini agreed he did not know whether the invoice for $925,128.87 was  
sent to Client A. There is nothing in the file disclosure to confirm this and Client  
A denied receiving any invoices when interviewed by the Law Society’s  
investigator.  
Asked why or on what basis he had arrived at the $925,128.87 amount billed,  
Mr. Martini explained he did not want to bill the entire amount and “create a  
huge tax issue.” He deflected a question as to why the account is described as  
final, in contrast with the accounts sent to Client A in 2005 and 2006 which were  
identified as interim, saying that staff draft the accounts and none of the staff  
knew “what my deal was.”  
[89]  
Mr. Martini explained:  
Look, at the end of the day, I transferred money to the firm by way of  
accounts. We we were listen, it was all about the firm was large.  
We were carrying over $3 million in unbilled disbursements. Cash flow is  
a concern for every firm. And, yes, I transferred the money into the firm,  
quite frankly, to assist the firm with cash flow that that would be  
generated from billings. We had worked on this file a long time. I had  
been paid $50,000. It was completely wrong.  
I didn’t transfer the money so I could transfer money to the firm and take  
it personally. The money stayed in the firm. They were operating funds  
the firm needed.  
19  
ANALYSIS  
[90]  
Mr. Martini argues the settlement funds were his pursuant to his assignment  
with Client A and he cannot misappropriate his own money. He described his  
conduct as both a “horrible mistake” and a “technical breach” because he  
considered the bonds to be valueless.  
[91]  
Whether Mr. Martini’s taking of settlement funds in breach of the escrow  
obligation amounts to professional misconduct turns on whether we accept  
Mr. Martini honestly believed he was entitled to take or pay out the settlement  
funds without satisfying the escrow condition: Law Society of Ontario v.  
Thompson, 2020 ONLSTH 42 at para. 11.  
[92]  
We must answer the following questions:  
Were the funds assigned to Mr. Martini? If not, Mr. Martini knew he had had  
no right to the funds and he misappropriated.  
If the funds were assigned, did Mr. Martini have an honest belief in his right  
to the funds such that his taking in breach of escrow does not rise to  
knowing misappropriation?  
Was Company B’s claim assigned to Martini?  
[93]  
The credibility of Mr. Martini’s evidence about the existence of the assignment  
and the authenticity of the December 19 letter requires close scrutiny. In his  
interviews with the Law Society, Client A disputed any such agreement existed.  
Mr. Martini’s subsequent correspondence with Client A does not refer to or  
address the assignment.  
[94]  
Mr. Martini never prepared a formal assignment of the claim in accordance with  
Rule 11 of the Rules of Civil Procedure. The December 19 letter was not on  
letterhead, is unsigned and Mr. Martini conceded there is nothing, other than his  
testimony, confirming its delivery to or acceptance by Client A. Despite multiple  
opportunities after 2006, Mr. Martini never formalized the agreement with  
Client A. He did not provide any explanation for his lackadaisical approach.  
[95]  
[96]  
This failure to protect his position and interests cannot easily be reconciled with  
Mr. Martini’s testimony he was furious with Client A and had concluded Client A  
was attempting to “screw him.”  
Moreover, Mr. Martini continued to docket his time on the Company B file and  
rendered what was titled a “final account” to Company B in November 2012  
when the settlement funds were received. These acts are also inconsistent with  
an assignment.  
20  
[97]  
[98]  
All these facts weigh against finding there was an assignment. However, for the  
following reasons, we accept Mr. Martini’s evidence on this point.  
We find the December 19 letter is genuine. We accept Mr. Martini’s evidence  
that retaining unsigned file copies of correspondence, not on letterhead, on the  
correspondence brad was the way things were done at the firm in 2006. There  
was no evidence to refute this. The Law Society’s investigation did not flag the  
December 19 letter as remarkable or inconsistent with other documents  
reviewed during the course of its investigations. The Law Society does not  
suggest the letter was found misfiled or filed out of chronological sequence. The  
Law Society does not dispute Mr. Martini’s evidence the Client A files were sent  
to storage in 2012 after the settlement was reached and we understand the Law  
Society retrieved those files directly from storage. We agree with Mr. Martini  
that creating a letter in anticipation of a future dispute about the funds, and then  
placing it in the right place on the correspondence brad once settlement was  
achieved in 2012, is neither plausible nor probable.  
[99]  
We are also satisfied Client A agreed to the assignment. In 2006 Client A was  
about to become a very wealthy man. There is evidence that he planned to  
leave the country to avoid the tax consequences of his windfall, including the  
fact that SMM provided Client A with advice about tax havens and a possible  
real estate purchase in Panama. We accept Client A wanted to settle the  
dispute with AXA. The fact he had Mr. Martini make a formal proposal to AXA  
supports this. In these circumstances we find it more likely than not Mr. Martini’s  
assignment offer satisfied Client A’s desire to be done with the AXA issue  
without any financial consequences. He was prepared to have Mr. Martini take  
over the litigation in return for a significant discounting of over $100,000 in fees  
already billed and further compensation for him as noted in the assignment  
letter if and when the matter resolved successfully. We accept Client A (and  
indeed Mr. Martini) had no reason to expect the issue with AXA would settle as  
it did, with AXA handing over all the disputed funds.  
[100] Moreover, Client A was present when the settlement was reached in November  
2012. He was aware Mr. Martini was searching for the bonds and, it appears  
from his interview with the Law Society investigator, he understood he could not  
receive any money until the bonds were delivered. There is no evidence  
Client A did anything about the money he claimed was owed to him until mid-  
2014. The evidence shows him to be a hard-nosed and canny businessperson.  
Given that, we find it implausible he would not pursue the full amount of the  
settlement funds soon after November 2012 much less wait until 2014 to do so.  
[101] Mr. Martini testified that in early summer 2014 Client A became aware of his  
earlier discipline proceedings. This triggered Client A to pressure Mr. Martini for  
his compensation for participating in the claim against AXA. On July 28, 2014,  
Mr. Martini transferred $500,000 to Company B which, he explained, reflected  
21  
Client A’s share based on his agreement to assist in the litigation. When  
Client A came in to pick up the cheque, he demanded more money. Mr. Martini  
agreed he would give him the $150,000 in settlement funds owed by the other  
party in the litigation which had not been paid into escrow in November 2012.  
Mr. Martini says that was satisfactory and Client A made no further demands.  
Client A did not initiate the Law Society’s investigation and only filed his  
complaint in January 2015 after being contacted by the investigator the month  
before. This is, in our view, further support that Client A agreed to the  
assignment and was prepared to live with that deal until the opportunity of  
getting out of it and getting access to the unanticipated settlement windfall  
presented itself.  
[102] When interviewed, Client A told the Law Society’s investigator his deal with Mr.  
Martini was that he would get the entire $2.5 million, and Mr. Martini would be  
paid 50% of anything above that amount. If true it would mean Client A would  
pay nothing in legal fees unless Mr. Martini was successful in recovering more  
than the entire amount held in escrow by BLG. In 2006 this seemed utterly  
unlikely given the considerable evidence AXA would be successful in its claims  
against him. But even if, by some unanticipated miracle, this did happen, Mr.  
Martini would then only be entitled to a percentage of any additional recovery as  
fees. That deal is simply implausible. Mr. Martini was adamant he would not  
have agreed to work for nothing or a percentage of potentially nothing on the  
file. We accept his evidence on this point as credible.  
[103] Mr. Martini explained he continued to docket his time on the Company B matter  
because it was his practice and consistent with his work on all files, including  
contingency files. Documenting work in progress on files was necessary to  
satisfy the firm’s credit union. We are prepared to accept this explanation. The  
Law Society did not suggest the practice of docketing on contingency fee files  
was unusual. Moreover, Mr. Martini invoiced Client A in January 2006 for work  
done to that date. If his further dockets were for the purposes of collecting fees  
for his ongoing work, one could reasonably expect to have seen further periodic  
invoices. There were none until the November 2014 invoice.  
[104] Looking at these facts from the perspective of a practical and informed person,  
we find, on a balance of probabilities, Client A agreed to assign the AXA action  
to Mr. Martini on December 18, 2006. We find the assignment letter of  
December 19, 2006 is genuine. We find Mr. Martini’s later payments to Client A,  
and Client A’s acceptance of these payments, conditions that are also set out in  
the assignment letter, support the existence of the assignment.  
Did Martini have an honest belief he was entitled to the settlement funds?  
[105] Although we find the Client A assignment genuine, we are not satisfied  
Mr. Martini held an honest belief he was entitled to the settlement funds when  
22  
he took them from escrow. Rather, the evidence shows Mr. Martini engaged in a  
sophisticated and elaborate scheme of dishonesty and deception. In the end we  
conclude his conduct is inconsistent with an honest belief in his entitlement to  
the funds.  
Circumstances surrounding the absence of honest belief  
[106] The circumstances surrounding Mr. Martini’s handling of the settlement funds,  
while not determinative of the issue of his honest belief, provide a context for  
understanding his conduct.  
[107] Mr. Martini never told AXA the action was assigned to him. He testified that  
disclosure of this information would have hindered settlement and he needed  
AXA to believe Client A “still had skin in the game.” He intentionally misled AXA  
and its counsel to advance his own interests. Mr. Martini allowed Client A to  
sign the release warranting there was no assignment and witnessed Client A’s  
false statement.  
[108] The settlement funds were paid into SMM’s client trust account. Although the  
Law Society does not include this in its allegations, we note that placing funds  
not belonging to a client into trust is contrary to By-Law 9, s.8 (2).1. Mr. Martini  
knew the funds did not belong to his client but nonetheless allowed them to  
remain in trust while he disbursed them.  
[109] Mr. Martini took advantage of the payment into his client trust account to  
stagger his earnings over two years. He testified he did this to obtain tax  
advantages for himself.  
[110] On December 9, 2013, more than a year after the settlement, Mr. Martini wrote  
AXA’s counsel to advise he had been unable to locate the original bonds for the  
purpose of satisfying the escrow conditions. The letter then goes on to state  
that “[n]o funds have been released to [Company B] in accordance with the  
terms of the Minutes of Settlement.” This statement is intentionally misleading.  
It maintains his deception as to the beneficiary of the settlement and  
intentionally misleads AXA’s counsel. At the time he wrote the letter more than  
half the settlement funds had been taken.  
[111] When Client A began to pressure Mr. Martini for his share of the settlement  
funds, Mr. Martini assured him in his June 26, 2014 letter that the settlement  
funds remained in trust pending delivery of the bonds. He told Client A that AXA  
counsel was “taking a very difficult position” about delivery of the bonds. In his  
September 19, 2014 letter to Client A, he says he intends to obtain an order in  
the next month to void the bonds.  
23  
BREACH OF ESCROW IN THESE CIRCUMSTANCES IS MISAPPROPRIATION  
[112] The minutes of settlement and the November 30, 2012 and December 9, 2013  
letters make clear AXA required delivery of the bonds and did not intend to  
waive that condition. By taking settlement funds when he knew their release  
was not authorised, either by delivery of the bonds or waiver of that condition,  
Mr. Martini knowingly took funds to which he knew was not entitled. This was  
dishonest. The existence of the assignment does not remedy his dishonesty.  
Analysis  
[113] In Law Society of Ontario v. Wilkins, 2021 ONLSTA 15, the Appeal Division  
defined misappropriation as follows (paras. 82 and 103-104):  
For the reasons that follow, we define misappropriation as knowing  
unauthorized use of client property by a lawyer or paralegal for their own  
purposes, on the basis that knowledge may be actual knowledge, willful  
blindness or recklessness.  
This definition limits application of the term misappropriation to cases of  
dishonesty and thus to cases where presumptive revocation is  
appropriate.  
More importantly it is consistent with the principles and values set out in  
the jurisprudence on dishonest conduct from the Appeal Division,  
Divisional Court and the Court of Appeal. And although that  
jurisprudence has been developed in the context of lawyer participation  
in mortgage fraud, the principles apply equally to misappropriation when  
defined, as we propose, to require comparable dishonesty, a  
fundamental breach of the solicitor-client trust relationship, and a loss or  
risk of loss of client property.  
[114] We have found the settlement funds were subject to an assignment and were  
not Client A’s property, although Client A had an interest in a portion of the  
funds. Given the assignment, Mr. Martini says the money was his; his taking did  
not breach a solicitor-client relationship or risk client property, and therefore,  
applying Wilkins, there can be no finding of misappropriation. Ms. Marusic  
agrees with that analysis and argues the conduct is analogous to pre-taking.  
[115] Both arguments ignore a crucial reality. Until the bonds were delivered and the  
terms of the minutes of settlement fully achieved, AXA retained an interest in  
the settlement funds through the escrow condition. That condition was never  
satisfied. This is where the context described above is most important.  
Mr. Martini held the settlement funds in his client trust account. He actively led  
AXA to believe they were his client’s property and were being held in trust for  
him and subject to a solicitor-client relationship.  
24  
[116] In Thompson, the Tribunal set out the test for assessing whether breach of  
escrow amounts to misappropriation at paras. 11-12:  
(…) The only issue before us in determining whether Mr. Thompson  
engaged in professional misconduct is whether he honestly believed he  
was authorized to pay out the escrow funds. Counsel for Mr. Thompson  
framed the question as being whether Mr. Thompson had an honest  
belief that the release of funds was authorized. Both parties agree that  
knowledge includes willful blindness or recklessness.  
Guidance on the knowledge element comes from the jurisprudence on  
knowing participation in dishonest or illegal activity that has been  
developed in the context of mortgage fraud cases. It requires that the  
lawyer subjectively know there is dishonesty, that he or she suspected  
dishonesty and chose not to inquire (willful blindness), or that he was  
aware of the risks of dishonesty but chose to carry on nonetheless  
(recklessness).  
[117] Wilkins limits misappropriation to cases of dishonesty. Misappropriation does  
not include negligent or inadvertent taking. There must be a mental element  
amounting to wrongdoing.  
[118] Thus, as in Thompson, the issue before us is whether Mr. Martini knowingly or  
honestly believed he was authorized to pay out the settlement funds held in  
escrow. We find Mr. Martini knew he was not authorised to pay the settlement  
funds out of escrow because, as he admitted repeatedly, he knew the term  
authorising their paying out had not been met or waived. This was not  
negligence or inadvertence. He did not pay out the settlement funds on a  
mistaken belief the escrow condition had been satisfied. His argument that the  
bonds had no value and could not be enforced in 2012 does not assist.  
Pursuant to the settlement, the funds could not be released from escrow unless  
the bonds were returned or the condition waived by agreement or order.  
[119] We also disagree the conduct can be characterised as a pre-taking. The rules  
about pre-taking focus on the duty to protect a client’s interest and issue  
invoices before accessing trust funds. Neither is a consideration here where Mr.  
Martini says the funds were his from the outset, and therefore should never  
have been in trust, and no invoice or accounting was owed to AXA other than  
the delivery of the bonds.  
Conclusion  
[120] In releasing funds he knew were subject to escrow in the circumstances we  
have described, Mr. Martini engaged in misappropriation. Mr. Martini misled the  
parties to the litigation and their counsel about his interest in the litigation and  
the settlement. He lied repeatedly to the parties and to his client about his  
25  
takings from the settlement funds. His lies and deception support finding  
Mr. Martini did not have an honest belief he was authorized to release the funds  
to himself, his firm or anyone else.  
MARUSIC’S ROLE IN THE MISAPPROPRIATION  
[121] The Law Society alleges Ms. Marusic assisted in Mr. Martini’s misappropriation  
by co-signing cheques that disbursed funds being held in trust. Mr. Martini  
agreed SMM required two signatures on trust cheques. This was required by its  
bank although Mr. Shulgan suggested it was also a firm policy. We were not  
provided with any firm policy documents to support this. There was credible  
evidence from both Mr. Martini and Mr. Shulgan that assistants preparing trust  
cheques sought the nearest available co-signer. There is no evidence Mr.  
Martini directed Ms. Marusic to co-sign the three cheques. As Ms. Marusic’s  
counsel notes, another member of the firm co-signed the remaining transfer  
cheques.  
[122] Ms. Marusic signed four trust cheques disbursing funds held in trust for Client A  
and Company B. The fourth cheque in the amount of $4,030 is excluded from  
the Notice of Application.  
[123] In doing so, $1,265,104.01 from settlement funds was transferred from trust to  
SMM’s general account. The transfers reduced SMM’s line of credit.  
Ms. Marusic individually benefited from the transfers in the form of fee credits  
for her work on the Client A/Company B matter.  
[124] The first cheque Ms. Marusic co-signed constituted a significant portion of  
SMM’s 2012 income. The Law Society argues this alone ought to have caused  
Ms. Marusic to inquire further.  
What did Marusic know about the bonds?  
[125] Ms. Marusic prepared the mediation brief for the November 2012 mediation. Her  
docket for November 26 records 6 hours spent on the Company B file. The  
entry notes “Mediation, draft Minutes, Releases etc.Mr. Shulgan testified an  
assistant told him Ms. Marusic drafted the minutes of settlement. Mr. Martini  
recalled counsel for AXA prepared them.  
[126] At her suspension hearing Ms. Marusic testified she was aware minutes of  
settlement had been prepared, she may have seen them on the day of  
mediation, and she knew that one of the conditions in the minutes of settlement  
was the delivery of the bonds. In March 2015, Ms. Marusic testified she  
understood the bonds were in SMM’s safe. The Law Society argues that, given  
her presence at the mediation, Ms. Marusic would have been aware the bonds  
were not handed over then.  
26  
[127] Mr. Martini testified he did not ask Ms. Marusic where the bonds were. He  
consistently and emphatically denied ever telling Ms. Marusic about his inability  
to locate the bonds. Given their romantic relationship then and now we are not  
prepared to give Mr. Martini's evidence on this point much, if any, weight.  
[128] That said, there is no evidence before us to indicate Ms. Marusic had actual  
knowledge that the escrow conditions had not been met. The Law Society  
argues that given her involvement in the mediation and knowledge of Mr.  
Martini’s prior disciplinary history, Ms. Marusic ought to have been alive to the  
escrow issue and exercised some due diligence or “heightened vigilance” to  
confirm the bonds had been delivered before co-signing cheques. We disagree.  
Mr. Martini’s prior discipline, not yet determined in 2012-2013, related to  
misleading clients as part of a scheme to cover up his failures to serve. There  
were no allegations of misappropriation or misuse of trust funds. We are not  
satisfied there was an established or an equivalent history of misconduct that  
would trigger heightened scrutiny from his partner.  
[129] Nor are we satisfied that mere knowledge that delivery of the bonds was a term  
of the settlement triggered an obligation on Ms. Marusic to inquire whether that  
term of the agreement had been satisfied. Still, we find Ms. Marusic’s conduct in  
signing the two cheques in February 2013 troubling. At that point, she knew  
settlement had been achieved three months before and had co-signed a  
significant cheque transfer accompanied by an invoice, a final invoice, made out  
to Company B.  
[130] Neither the February 4 cheque for $226,000 for fees or the February 27 cheque  
for $113,000 for fees was accompanied by an invoice or an account for the fees  
claimed. The serial payments of undocumented fees where a final account had  
already been rendered ought to have caused Ms. Marusic to ask questions,  
particularly when she testified on the motion to vary that her practice was to  
“final bill” matters on their completion.  
[131] However, we do not see how these concerns could or would have triggered  
actual knowledge the escrow condition had not been satisfied. Nor can we  
conclude the evidence establishes Ms. Marusic was wilfully blind or reckless as  
to compliance with that condition.  
Conclusion  
[132] For these reasons we are not satisfied the Law Society has met its burden to  
prove Ms. Marusic misappropriated or knowingly assisted in the  
misappropriation of settlement funds when she co-signed three cheques  
transferring funds held in SMM’s trust.  
27  
PRACTISING WHILE SUSPENDED AND FAILING TO PREVENT UNAUTHORIZED  
PRACTICE  
[133] The Law Society alleges Mr. Martini continued to practise law while suspended  
when he actively assisted Client B and Ms. Marusic during the Client B matter  
and assisted clients and Ms. Marusic on nine other matters. This conduct is  
contrary to Rule 7.6-1.2 of the Rules of Professional Conduct.  
[134] The Law Society alleged Ms. Marusic failed to assist in preventing the practice  
of law and/or provision of legal services by Mr. Martini contrary to Rule 7.6-1 of  
the Rules of Professional Conduct and associated with and/or used the services  
of Mr. Martini without the express approval of a panel of the Hearing Division of  
the Law Society Tribunal contrary to Rule 7.6-1.1.  
Law Society Act  
[135] Section 26.1(1) of the Law Society Act, RSO 1990, c. L.8 as amended (the Act),  
prohibits the practice of law or provision of legal services in Ontario by anyone  
other than a licensee whose licence is not suspended. There are certain  
exceptions to this prohibition for non-licensees but none for a licensee whose  
licence is subject to suspension.  
Legal services defined  
[136] Section 1 of the Act provides a very broad definition of legal services. The  
relevant portions are set out below:  
(5)  
For the purposes of this Act, a person provides legal services if  
the person engages in conduct that involves the application of legal  
principles and legal judgment with regard to the circumstances or  
objectives of a person.  
(6)  
Without limiting the generality of subsection (5), a person  
provides legal services if the person does any of the following:  
1. Gives a person advice with respect to the legal interests, rights  
or responsibilities of the person or of another person.  
2. Selects, drafts, completes or revises, on behalf of a person,  
i. a document that affects a person’s interests in or rights to or  
in real or personal property,  
(…)  
vi. a document that affects the legal interests, rights or  
responsibilities of a person, other than the legal interests,  
rights or responsibilities referred to in subparagraphs i to v, or  
28  
vii. a document for use in a proceeding before an adjudicative  
body.  
3. Represents a person in a proceeding before an adjudicative  
body.  
4. Negotiates the legal interests, rights or responsibilities of a  
person.  
(7)  
Without limiting the generality of paragraph 3 of subsection (6),  
doing any of the following shall be considered to be representing a  
person in a proceeding:  
1. Determining what documents to serve or file in relation to the  
proceeding, determining on or with whom to serve or file a  
document, or determining when, where or how to serve or file a  
document.  
(…)  
3. Engaging in any other conduct necessary to the conduct of the  
proceeding.  
Rules of Professional Conduct and Guidelines for Suspended Lawyers  
[137] A lawyer whose licence has been suspended must comply with the  
requirements of the by-laws and “shall not (a) practise law”: Rule 7.6-1.2.  
[138] The Guidelines for Lawyers Who are Suspended or Have Given an Undertaking  
not to Practise list the permitted and prohibited activities. The relevant portions  
follow:  
Permitted Activities  
2. (1) During the term of the suspension or undertaking not to practise,  
the suspended lawyer may only:  
(a) See clients only for the limited purpose of assisting them in  
transferring their past or present legal work to another lawyer;  
(b) If requested by the client, suggest a referral to a particular  
lawyer to continue work on the client’s file. The ultimate choice of  
who is retained rests with the client and not with the suspended  
lawyer;  
(c) Collect accounts receivable;  
(d) Render accounts for work completed on or before the  
effective date of the suspended lawyer’s suspension or  
undertaking not to practise; and  
29  
(e) Arrange with the lawyer whom the suspended lawyer has  
retained to complete outstanding reporting letters and  
undertakings for his or her remuneration.  
Prohibited Activities  
4. (1) Effective from the date of suspension or undertaking not to  
practise, the suspended lawyer shall not:  
(d) Report to clients, other than to:  
i) inform them of the suspension or the undertaking not to  
practise; and  
ii) deliver an account for services rendered prior to the  
suspension or undertaking not to practise;  
(g) Provide services to a lawyer or paralegal in relation to that  
lawyer’s practise of law or paralegal’s provision of legal services  
in contravention of Subrule 7.6-1.1 of the Rules of Professional  
Conduct.  
[139] Rule 7.6-1 of the Rules of Professional Conduct places a positive obligation on  
a lawyer to “assist in preventing the unauthorized practice of law and the  
unauthorized provision of legal services.” The commentary to the Rule explains  
this obligation is necessary because unauthorised persons are not subject to  
regulation or discipline.  
[140] The current Rule 7.6-1.1 provides that:  
Without the express approval of a panel of the Hearing Division of the  
Law Society Tribunal, a lawyer shall not retain, occupy office space with,  
use the services of, partner or associate with, or employ in any capacity  
having to do with the practice of law or provision of legal services any  
person who, in Ontario or elsewhere, (…) has been suspended, has had  
their licence to practise law or to provide legal services suspended (…)  
and has not had their licence restored.  
[141] We understand that, at the relevant times, the Rules provided that a committee  
of Convocation was required to approve such a request.  
The Client B matter  
[142] Client B, a former lawyer, commenced a claim against the RCMP for malicious  
prosecution in 1984. In 2007, the Attorney General of Canada was added as a  
30  
defendant. Client B retained SMM on a contingency fee basis in October 2010  
after his previous counsel withdrew.  
[143] Ms. Marusic’s involvement in the Client B matter began in 2011. She prepared  
the affidavit of documents and responded, successfully, to the Attorney  
General’s April 2012 motion to dismiss for failure to comply with production  
orders. The matter was set for a six-week trial beginning May 2015 in Ottawa.  
Mr. Martini and Mr. Shulgan were to have been co-counsel at trial.  
[144] The written contingency fee agreement between SMM and Client B was signed  
by Client B and Mr. Martini and witnessed by Ms. Marusic in October 2011. The  
agreement provided that if the amount recovered was less than $10 million, the  
fees would be 30% of the amount recovered. Client B was also responsible for  
HST and disbursements.  
[145] Mr. Martini agreed that, had SMM not broken up and had he continued to  
represent Client B, subject to his impending suspension in the prior discipline,  
the terms of the fee agreement would have governed fees at the time of the July  
2015 settlement. SSM would have received 30% of any settlement that was  
reached.  
[146] In December 2014, when Mr. Martini left SMM, the Client B matter was  
expected to settle and, given the number suggested to the parties during an  
October 2014 mediation, for several million dollars. It was a valuable file. Mr.  
Shulgan wanted to keep it. Mr. Martini wanted Ms. Marusic to take it on. Mr.  
Martini and Ms. Marusic shared a significant financial interest in retaining the  
file and its success at trial. To use Mr. Martini’s language, they both had “skin in  
the game.” It was very important not to lose the trial date as another might not  
be available for over a year and important witnesses were elderly.  
[147] On December 17, 2014, Client B agreed to transfer his file to Ms. Marusic and  
Marusic Law. On January 7, 2015, Client B e-mailed Mr. Shulgan confirming his  
decision to transfer the file to Ms. Marusic. Client B agreed the SMM retainer  
was not transferred to Marusic Law. There was no formal retainer or  
contingency fee agreement with Marusic Law. Any discussions with Client B  
about Ms. Marusic’s fees and disbursements were not documented.  
[148] Prior to Mr. Martini’s suspension and the dissolution of SMM, Mr. Martini  
intended to act as lead counsel with Mr. Shulgan primarily responsible for  
arguing damages. In January 2015, Mr. Morga was brought on to assist Ms.  
Marusic. He would ultimately step into Mr. Shulgan’s role handling the damages  
aspect of the file.  
31  
[149] Settlement hopes were dashed when early in 2015 the defendants offered  
$200,000, substantially less than expected, after the October 2014 mediation.  
Client B made a formal offer to settle for $7,500,000, plus interest and costs.  
[150] Preparation for trial began in earnest and the trial commenced on May 11,  
2015. During Ms. Marusic’s cross-examination of the defendants’ first witness, it  
became clear the the defendant had failed to disclose documents, in breach of  
court orders. There was a significant possibility of a mistrial. The time was ripe  
to settle.  
[151] A settlement conference, described as an in-trial pre-trial, was held on July 14,  
2015. Mr. Martini flew to Ottawa to be present for an expected discussion on  
fees. The defendants offered to settle at a number very much closer to  
Client B’s $7.5 million offer. That day, during a brief meeting with Mr. Martini  
and Ms. Marusic, Client B executed an authorization offering to settle (the  
specific amount is subject to a publication ban) and a direction that $3,500,000  
inclusive of HST and disbursements of that amount be paid as legal fees to Ms.  
Marusic and Marusic Law LLP.  
Martini’s Involvement in the Client B Litigation  
[152] Mr. Martini was suspended January 5, 2015. Between January and July 2015  
Mr. Martini and Ms. Marusic were in frequent communication about the Client B  
matter. In January he met with Client B, Ms. Marusic and Mr. Morga in Toronto.  
In April Mr. Martini met with Ms. Marusic and Client B twice for full-day trial  
preparation sessions. Mr. Martini was present in Ottawa on the first day of trial.  
Mr. Martini was present in Ottawa again on July 14 and met with Ms. Marusic  
and Client B to discuss the settlement and fees.  
[153] Looking only at their over 50 e-mails from this period the following stand out:  
February 9: Mr. Martini drafted an e-mail for Ms. Marusic that she sends,  
unrevised, to Client B and his advisor Leighton Roslyn.  
March 1, March 28, April 2, April 8 and April 13: Ms. Marusic and Mr.  
Martini exchanged multiple e-mails about expert evidence. In the March 1  
e-mail he directed Ms. Marusic to “get it out to (the expert) asap.” Mr.  
Martini provided numerous substantive suggestions and revisions on draft  
expert reports.  
April 15: Mr. Martini e-mailed Ms. Marusic asking her to provide a document  
in Word “so I can correct without having to bother you.”  
April 17: Ms. Marusic forwarded her e-mail to Client B setting out a plan for  
April 18 trial preparation meeting to Mr. Martini.  
32  
April 18: Mr. Martini e-mailed an updated draft outline of Client B’s  
examination-in-chief to Ms. Marusic.  
May 4: Mr. Martini e-mailed his “to dolist and draft witness list to Ms.  
Marusic.  
May 11: Mr. Martini advised Ms. Marusic against sharing her opening  
statement with DOJ counsel.  
May 16: Mr. Martini e-mailed Ms. Marusic his notes of issues and further  
witnesses to consider.  
May 25: Mr. Martini e-mailed Ms. Marusic’s assistant asking that documents  
be sent to a witness, copied to Ms. Marusic and blind copied to him.  
May 25, 26, 27, 28: Mr. Martini and Ms. Marusic exchanged multiple e-mails  
about witness preparation and Mr. Martini’s meetings with witnesses. Mr.  
Martini provides outlines for examination of witnesses Zito, Sterling and  
Straub. He advised Ms. Marusic about the contents of witness Cedillot’s  
transcript of previous testimony. He made suggestions about additional  
witnesses and the order of witnesses.  
June 12 and 28: Ms. Marusic forwarded e-mails from DOJ to Mr. Martini.  
July 9: Mr. Martini e-mailed Ms. Marusic advising her to “read between the  
linesof DOJ’s position.  
July 13: Mr. Martini e-mailed a detailed settlement and costs analysis to Ms.  
Marusic’s assistant and asked that it be typed up for Ms. Marusic. He  
directs the assistant to keep it “between you and I.On July 14 Ms. Marusic  
and Mr. Martini exchanged several emails about the in-trial pre-trial.  
[154] Mr. Morga was not copied on the e-mails, even those that relate to the issue of  
damages, which was his area of responsibility at trial.  
What the e-mails tell us  
[155] The e-mails disclose Mr. Martini’s involvement in the following activities, all of  
which we find come within the broad definition of legal services set out in s. 1(5)  
of the Act and the practice of law.  
Preparing witnesses  
[156] Preparing witnesses and outlines of examination is work lawyers preparing for  
trial and assisting trial counsel must do regularly. This lands solidly within the  
definition of legal services and the practice of law. It is work that requires the  
application of legal principles and legal judgment with regard to the  
circumstances or objectives of Client B (s. 1(5) of the Act), and necessary to the  
representation and conduct of the Client B litigation (s. 1(7).3 of the Act).  
33  
[157] Mr. Martini spoke to and possibly met with two witnesses to prepare them. He  
prepared outlines of examinations-in-chief for Client B and three other  
witnesses. He advised Ms. Marusic on her review of a fourth witness’s  
testimony. He provided suggestions about other witnesses. Multiple detailed  
e-mails addressed the expert witness’s report and evidence.  
[158] We reject Mr. Martini’s argument that, because this is work that might be  
assigned to a law clerk, it does not come within the rubric of legal services.  
Moreover, a law clerk or assistant works under the direction of a lawyer and the  
lawyer is responsible for their work. Under R. 7.6-1.1, that was not possible in  
Mr. Martini’s case.  
Trial strategy  
[159] Mr. Martini’s advice about trial strategy also required the application of legal  
principles and legal judgment with regard to the circumstances or objectives of  
Client B and was necessary to the representation and conduct of the Client B  
litigation. Mr. Martini was fully engaged in advising Ms. Marusic on trial strategy.  
As examples, he told her not to share her opening with DOJ counsel, identified  
other witnesses for particular issues, gave notes on research, and suggested  
how Ms. Marusic might get DOJ to agree to the in-trial pre-trial. He warned Ms.  
Marusic to read between the lines” when assessing DOJ counsel’s position. He  
drafted a detailed costs and damages proposal in preparation for the pre-trial.  
Involvement with Client B  
[160] The Guidelines are clear that a suspended lawyer may see clients only for the  
limited purpose of assisting them in transferring their past or present legal work  
to another lawyer.” Mr. Martini’s contact with Client B went well beyond this.  
[161] While Mr. Martini testified that he did not “sit down and advise the client,”  
Client B testified Mr. Martini spoke to him more than once on his cell phone  
during the trial. Mr. Martini attended two lengthy meetings with Client B in April.  
In his July 9 e-mail to Ms. Marusic, Mr. Martini indicated he intended to give  
Client B “a piece of my mind.” Mr. Martini’s communications with Client B  
eventually triggered a request to Ms. Marusic that she “kindly make sure there  
are no further communications from Claudio. As much as I appreciate what he  
has done for me, I will not tolerate any further ranting from him.”  
Negotiating Fees  
[162] In its decision granting the Law Society’s appeal of the decision on the motion  
to vary Ms. Marusic’s suspension, the Appeal Division commented on  
Mr. Martinis involvement in the fee negotiation with Client B. While not  
technically binding on us, we find the appeal panel’s concerns a useful starting  
point for our analysis:  
34  
Negotiating fees with clients is not for “…the limited purpose of assisting  
them in transferring their past or present legal work…” (s. 2(1)(a)). Nor is  
it a matter of rendering accounts under s. 2(1)(d), or otherwise  
permissible under the Guidelines. Unlike the permissible activities,  
negotiating a fee in the midst of a settlement negotiation is a very  
sensitive matter: the client’s interests and his lawyer’s interests are in  
conflict.  
Law Society of Upper Canada v. Marusic, 2016 ONLSTA 22 at para. 52.  
[163] Mr. Martini met with Ms. Marusic and Client B on July 14 after receiving the  
DOJ’s offer to settle. At that brief meeting, Mr. Martini prepared the direction  
and authorization confirming the amount of the settlement and portion to be  
paid in fees. Mr. Martini testified Ms. Marusic dictated terms and he wrote them  
as her handwriting is messy.  
[164] We do not accept Mr. Martini’s evidence he was merely Ms. Marusic’s scribe in  
this meeting. We find it more likely than not he led the meeting that resulted in  
the direction and authorization. First, we reject the messy handwriting  
explanation. The record contains documents in Ms. Marusic’s handwriting  
which, while not perfect penmanship, are completely legible.  
[165] Further, the evidence supports finding Mr. Martini was the driver on the fee  
issue. He agreed he flew to Ottawa that morning, to Mr. Morga’s surprise,  
expressly to be present for discussion of fees. That was significant travel simply  
to be an observer. Moreover, as his July 13 e-mail to Ms. Marusic reveals,  
Mr. Martini had prepared a detailed settlement and cost analysis for  
Ms. Marusic the day before directing her assistant to keep that information  
between them. We find he crafted the respondents’ mutual position on fees.  
[166] Ms. Marusic wanted and needed Mr. Martini in the discussion with Client B  
about fees. She e-mailed just before 5 PM, “… I am going to bring back so you  
can talk to him.” The use of the pronoun is important. She does not say does  
not say so “we” can talk to him. Although Ms. Marusic had an equal interest in  
collecting outstanding fees on behalf of SMM, she wanted Mr. Martini involved  
in making the deal and he would be doing the talking.  
[167] Finally, Mr. Martini’s role in leading the discussions with Client B on July 14 is  
revealed most clearly in his July 28 e-mail responding to Ms. Marusic’s  
concerns if the fees were not resolved. Mr. Martini told her:  
(…) That was my idea to extort [Client B]. he did what I asked. Just  
leave it sit. I created this. I will fix it. I don’t need you getting sick. Don’t  
know where you are. Love me. (emphasis ours)  
35  
Other than describing his use of the word extort was “horrible,Mr. Martini did  
not explain or take issue with what it suggests of his role or his intention. As is  
clear from this email Mr. Martini was the person doing the “asking.”  
[168] We find Mr. Martini was involved in both advising Client B about the offer to  
settle and negotiating fees. Mr. Martini drafted the authorisation and direction  
for Client B’s signature. This engaged the application of legal principles and  
legal judgment with regard to Client B’s circumstances and objectives and was  
incompatible with his status as a suspended lawyer.  
Covering up Martini’s involvement  
[169] Mr. Morga appeared shaken during his testimony when taken through the  
documents showing the extent of Mr. Martini’s involvement in Client B’s trial  
preparation and during the trial. He had testified in-chief that he believed the  
witness preparation work was “all Maria.” He believed Mr. Martini was only  
involved in the two April meetings. He admitted candidly he was unaware of the  
e-mails or the extent of Mr. Martini’s involvement. Asked whether Mr. Martini  
was assisting Ms. Marusic with the trial he conceded, “it certainly appears that  
way.”  
[170] Mr. Martini conceded the record showed his communications with Ms. Marusic  
were almost never shared with Mr. Morga. He testified he did not know why  
Mr. Morga was not copied on certain e-mails but had never questioned  
Ms. Marusic about this. He offered no explanation why he had not copied his  
e-mails to Ms. Marusic to Mr. Morga, or why he had requested Ms. Marusic’s  
assistant to keep the summary he prepared for the July 14 in-trial pre-trial  
“between you and I.”  
[171] We find both Mr. Martini and Ms. Marusic intended to hide Mr. Martini’s  
involvement in the trial from Mr. Morga. It happened too often over the course of  
too long a period to accept Mr. Morga was omitted through inadvertence or  
accident. This was a deliberate decision intended to disguise their misconduct.  
Martini’s involvement in nine other matters  
[172] The record also shows that, in addition to the Client B matter, Mr. Martini  
provided legal services after being suspended and Ms. Marusic failed to prevent  
him from doing so and associated with him without permission in at least nine  
more files that had been transferred from Mr. Martini to Ms. Marusic.  
[173] Mr. Martini justified his conduct on the basis of having limited time to transfer a  
large number of his files, the urgency of the files and his view of the duty he  
owed to the clients.  
36  
I did what I could to help the individual lawyer who had the file  
understand what the file was about, the status of the file, and and any  
other assistance they may need. I didnt have the luxury of sitting down  
and preparing transfer memos. I mean, there were 700 files, so, you  
know, what I did after December 12th and after January 5th was  
undertake whatever efforts I could to help contextualize the files,  
understand the facts of the files, understand the issues of the files. I  
didnt get paid a penny for any of it. I didnt want a penny. I didnt ask for  
a penny. But there were clients who had serious imminent issues that  
needed to be addressed, whether it was Ms. Marusic addressing them or  
some other lawyer. So thats what I did.  
[174] The work done on the specific files in 2015 included:  
PA v. PE: In January Ms. Marusic and Mr. Martini forwarded e-mails to each  
other on this file. Mr. Martini could not explain why Ms. Marusic’s January 6  
e-mail to the client is blind copied to him. On January 26, Mr. Martini  
e-mailed the client directly with advice about litigation strategy, copying  
Ms. Marusic.  
WGH Arbitration: On January 14, Mr. Martini provided detailed comments  
on draft submissions to Ms. Marusic. On January 28, Ms. Marusic blind  
copies Mr. Martini on her e-mail to the client.  
AC Arbitration: On January 11, Mr. Martini wrote directly to the clients,  
copying Ms. Marusic, commenting on strategy and with plans to meet for  
witness preparation. In a second e-mail sent to the clients later that day,  
also copied to Ms. Marusic, Mr. Martini commented on an evidence issue.  
The following day Mr. Martini e-mailed Ms. Marusic suggesting he meet  
with clients alone to save her time. Mr. Martini then e-mailed the clients  
saying he had reviewed the file with Ms. Marusic over the weekend, the  
planned meeting would proceed without her and he would keep Ms.  
Marusic up to date.  
Client X: On January 12, Mr. Martini e-mailed Ms. Marusic’s assistant,  
copying Ms. Marusic, asking her to prepare a letter he revised and  
indicating he would be meeting the client that afternoon. Mr. Martini agreed  
his revisions to the letter included specific statutory references and the  
letter was a legal submission on behalf of a client.  
JB: On January 22, Mr. Martini e-mailed Ms. Marusic’s assistant with  
instructions that a letter to the client be sent to him and Ms. Marusic for  
approval. Mr. Martini acknowledged he assisted on this matter.  
L v. SC: On February 11 Mr. Martini e-mailed Ms. Marusic directing her to  
send him a motion and affidavit to him for revision “before you spend any  
time on it.”  
37  
JM v. S: On March 7 Mr. Martini forwarded his e-mails responding directly  
to a client’s complaint about mediation delay to Ms. Marusic.  
AP: Mr. Martini e-mailed Ms. Marusic on April 14 with a draft e-mail to be  
sent to the client summarising facts and providing the client with advice  
about the argument to be made.  
MP: On May 18 a client e-mailed both respondents complaining he had not  
received a response to an earlier inquiry. Mr. Martini responded directly and  
offered a meeting. On June 24 Ms. Marusic forwarded the client’s email  
complaining he cannot reach Mr. Martini to him. Mr. Martini responded  
“sorry forgot to email him. Will do now.”  
Findings  
Martini provided legal services on Client B matter and nine other files  
[175] Mr. Martini agreed that drafting factual outlines, strategizing about trial and  
making decisions about witnesses were all a key part of trial preparation and  
work he would have done and billed for as a lawyer. However, he argued that  
he did no more than make suggestions and offer ideas which Ms. Marusic could  
consider and accept or reject as she wished. He explained his intention was  
simply to provide assistance.  
[176] We have no testimony from Ms. Marusic explaining her understanding of Mr.  
Martini’s intentions or his many suggestions, corrections, ideas, revisions,  
directions and proposals. Nonetheless, we reject Mr. Martini’s argument.  
[177] In Law Society of Upper Canada v. Eversley, 2015 ONLSTH 136 at para. 49,  
the Tribunal confirmed that “the definition of legal services is much broader than  
formally representing someone in court, on the record.” As the Tribunal made  
clear in Law Society of Upper Canada v. Spiegel, 2017 ONLSTH 188 at para.  
83, it does not matter how an individual licensee characterises the provision of  
services. What matters is what the licensee is actually doing.  
[178] We acknowledge some of Mr. Martini’s e-mails begin with “this is for your  
consideration” or “use as you see fit” language. In our view that does not  
change the nature of the legal services Mr. Martini was providing. We see those  
comments as standard, respectful communication between professionals.  
[179] We also understand Ms. Marusic was an experienced litigator and, as the  
person appearing in court, ultimately decided what to say and how to say it. It  
may be that some of Mr. Martini’s advice was ignored. At least once, on May 11,  
Ms. Marusic appears to express impatience with one of his suggestions. But  
when he replies, “ok I will stay out of it,” Ms. Marusic almost immediately  
responds, “What do you mean? I want you in it.”  
38  
[180] In Law Society of Ontario v. Collins, 2021 ONLSTH 177, the suspended lawyer  
performed factual and legal research, clerical work, filing, provided information  
on a file gained from before Collins’s involvement, drafting and filing court  
documents, liaising with the registrar and trial coordinator, occasionally  
corresponded with the court and opposing counsel and was granted permission  
by the presiding justice to sit ungowned at the counsel table during a trial. The  
Tribunal considered all these acts to be the provision of legal services.  
Mr. Martini similarly provided factual and legal research, drafted and revised  
legal documents and provided information on the files gained prior to  
Ms. Marusic’s involvement. There is no basis to distinguish Mr. Martini’s  
conduct in performing similar functions from the conduct in Collins.  
[181] We are satisfied on a balance of probabilities Mr. Martini applied legal principles  
and legal judgement when he prepared and provided advice, thoughts,  
suggestions, directions, ideas and outlines to advance the interests of his  
former clients with full knowledge of their circumstances and objectives. In  
doing so, we are satisfied Mr. Martini provided legal services within the meaning  
of s. 1(5) of the Act.  
Legal services went beyond transfer or transition  
[182] The respondents both argue that, if legal services were provided, they were  
properly part of the transfer or transition of client files from Mr. Martini to Ms.  
Marusic and came within the scope of activities permitted by 2(1)a of the  
Guideline. That was how Mr. Morga had understood Mr. Martini’s role and was  
shocked when presented with the evidence showing the extent of Mr. Martini’s  
involvement.  
[183] Mr. Martini relies on Law Society of Upper Canada v. Houlahan, 2017 ONLSTH  
38, in support of his argument that providing legal services incidental to the  
transfer of a file to a new lawyer in the case of a suspension does not constitute  
the practice of law.  
[184] That proposition, with respect, is taken completely out of context. The question  
for the Tribunal in Houlahan was whether to grant the lawyer’s request for  
nearly five months to transfer his files before he commenced an interlocutory  
suspension. The Tribunal refused and, instead, permitted the lawyer two weeks  
to complete his transfers. To the extent Houlahan applies to the facts before us,  
it supports interpreting the permission to see clients for the purposes of  
assisting in the transfer of a file as both time limited and of a very short duration  
prior to commencing the period of suspension.  
[185] In response to Ms. Marusic’s argument that Mr. Martini’s work was similar to  
general discussions about the law or an interesting legal issue with a retired  
licensee, we find Mr. Martini’s involvement went well beyond disinterested  
39  
advice or discussions. He had an interest in the result, particularly on the  
Client B matter, and had ongoing access to and involvement with the client.  
Mr. Martini was not merely opining on a legal question, he was integrally  
involved in providing advice, devising strategy and preparing legal materials.  
[186] Mr. Martini repeatedly argued he provided his services to uphold his fiduciary  
obligations to clients. We reject that argument. Mr. Martini’s professional and  
fiduciary obligations are governed by the Rules of Professional Conduct. Those  
Rules restrict the conduct of suspended lawyers and place a positive obligation  
on lawyers to prevent unauthorised practice unless permission is obtained.  
Those were the professional obligations which both respondents chose to  
ignore.  
[187] We also disagree with Mr. Martini’s suggestion his duty to clients was  
analogous to obligations placed on lawyers who withdraw their services. A  
lawyer who withdraws services remains subject to the control, regulation and  
discipline of the Law Society. A lawyer who withdraws services has not been  
found to pose a significant risk of harm to members of the public or to the public  
interest in the administration of justice: Crawford v. Law Society of Upper  
Canada, 2017 ONLSTH 218 at para. 13. Neither circumstance applies to  
Mr. Martini.  
Marusic failed to prevent  
[188] There is no evidence Ms. Marusic ever resisted or attempted to dissuade  
Mr. Martini from assisting her or remaining involved in matters while suspended.  
To the contrary, she continued to keep Mr. Martini informed about matters and  
to actively seek his assistance managing client demands. She assisted and  
facilitated his unauthorised practice of law. She took his legal work (draft  
e-mails, witness preparation, witness outlines) and allowed Mr. Morga to believe  
it was her own. She allowed Mr. Martini to interact directly with her clients.  
Mr. Martini stayed “in it” and Ms. Marusic never told him to stay out.  
No request for approval  
[189] Rule 7.6-1.1 provides that a lawyer may request permission from the Tribunal  
to, among other things, associate with a suspended lawyer. No such request  
was ever made to the Tribunal. Ms. Marusic did not request the Tribunal’s  
permission to allow Mr. Martini to associate with and assist in the Client B trial  
or on the other nine matters.  
Conclusion  
[190] We find Mr. Martini provided legal services and engaged in the practice of law  
while his licence was suspended.  
40  
[191] We find Ms. Marusic failed to prevent Mr. Martini’s unauthorised practice of law  
and associated with and used Mr. Martini’s services without the express  
approval of a panel of the Hearing Division of the Law Society Tribunal.  
Therefore, we are satisfied Ms. Marusic failed to assist in preventing  
Mr. Martini’s unauthorised practice of law and provision of legal services,  
contrary to Rule 7.6-1 of the Rules of Professional Conduct. Further, she  
associated with and used the services of Mr. Martini without approval, contrary  
to Rule 7.6-1.1.  
THE CLIENT B SETTLEMENT AND MARUSIC’S INTEGRITY  
[192] At the July 14 meeting, Client B provided his authorisation to settle the litigation  
and a direction that a significant portion, exceeding the 30% agreed to in the  
SMM retainer, be paid to Ms. Marusic and her firm as fees, disbursements and  
HST. The amount of the settlement is subject to a publication ban and for that  
reason we have been careful not to provide information about the amount of  
fees which might disclose the settlement amount.  
[193] At the time the Client B matter settled, Ms. Marusic and Mr. Martini owed their  
bank approximately $2,532,598 plus accrued interest. Ms. Marusic was  
primarily responsible for paying off this debt because “Mr. Shulgan left and  
Mr. Martini [could not] practice.”  
[194] In its final submissions the Law Society articulated Ms. Marusic breached  
Rule 2.1-1 of the Rules of Professional Conduct and failed to act with integrity in  
negotiating the settlement of the Client B litigation when she failed to ensure the  
terms of her and Mr. Morga’s retainer were clear and understood by Client B;  
failed to detail for Client B what fees were outstanding and provide support for  
those fees; when she corresponded with Mr. Martini regarding the settlement  
conference; when she invited or permitted Mr. Martini to meet with Client B to  
“extort” him; and when she preferred her own fees over Client B’s interests in  
respect of the authorization.  
No new fee agreement with Client B  
[195] There is no dispute Client B had a contingency fee agreement with SMM but no  
formal fee agreement with Ms. Marusic and Marusic Law or Mr. Morga. The  
SMM agreement provided that, if the amount recovered was less than $10  
million, the fees would be 30% of the amount recovered. Client B was  
responsible for paying HST and disbursements in addition to this fee.  
[196] No one, not Ms. Marusic, not Mr. Morga, not Client B, nor Mr. Roslyn (Client B’s  
friend and long-standing advisor) clarified or confirmed what and how fees  
would be calculated for the work done by Ms. Marusic or Mr. Morga. Client B  
testified Mr. Martini agreed to assign the SMM retainer to Ms. Marusic but this  
41  
was never done. Mr. Roslyn recalled some discussion about a transfer but  
agreed nothing had been done. Mr. Morga agreed there was no fee agreement  
was in place subsequent to the SMM retainer. Mr. Martini was unable to recall.  
In-trial pre-trial  
[197] Ms. Marusic understood there was a “strong possibility” the matter would settle.  
This was a significant achievement given the DOJ’s Rule 49 offer prior to the  
trial had been $200,000. After decades of litigating, Client B agreed he was  
keen to settle although disinclined to engage in mediation or settlement  
discussions if they were likely to be fruitless. When Ms. Marusic advised the in-  
trial pre-trial was set and that it appeared the defendants had a genuine interest  
in settling, Client B responded, "Music to my ears.”  
[198] At the in-trial pre-trial, the DOJ proposed a multi-million dollar settlement. The  
DOJ required authorisation to make an offer but believed it could be obtained.  
Client B testified he recalled that when the pre-trial judge communicated the  
DOJ’s proposal and warning Client B “Don’t come back for more.” Despite this  
Client B instructed Ms. Marusic to make a counter-proposal for another  
$500,000. She did so. This proposal was rejected.  
[199] Mr. Morga described Client B as “elated” and “walking on air” following the  
DOJ’s proposal. He insisted on pulling the cart with the litigation boxes during  
the walk back to the condo where they were all staying.  
[200] Both Ms. Marusic and Mr. Morga agreed fees had not been discussed with  
Client B at the in-trial pre-trial or before they returned from court on July 14.  
July 14 meeting with Martini  
[201] Following the in-trial pre-trial Ms. Marusic and Mr. Martini met with Client B in  
his condo. The meeting was brief. Mr. Morga thought no more than 15 minutes.  
At the meeting Client B signed a Direction and Authorisation to settle the claim  
for several million dollars and that fees, disbursements and HST inclusive  
amounting to just over half the settlement, would be paid to Marusic Law. Ms.  
Marusic explained on the motion to vary it was her practice to resolve fees  
before putting an offer to the opposing party.  
[202] Mr. Martini testified he did not remember bringing any documents to support his  
work on the file. Mr. Morga confirmed that he did not have work-in-progress or  
dockets with him and did not believe any dockets or bills were provided to Client  
B before the July 14 meeting. The only evidence we have of Ms. Marusic’s fees  
is a pre-bill dated October 14, 2015 recording fees of $997,650.  
[203] Mr. Martini agreed that the fees set out in the authorization were more than the  
percentage Client B had agreed to in his fee agreement with SMM. Mr. Morga  
42  
described the fees in the authorization as on the high end of the range that he  
had suggested to the respondents prior to the July 14 meeting with Client B.  
[204] We are satisfied Client B was aware that significant disbursements were being  
incurred and that Ms. Marusic and Mr. Morga were expending an enormous  
amount of time on his file. Client B told the Law Society’s investigator he had  
paid approximately $700,000 of approximately $1.5 million owed as  
disbursements. He waffled when asked about those statements on cross-  
examination but did not revise them when given that opportunity. He went on to  
concede that, at the time of preparing for trial, he had run out of money and that  
Ms. Marusic was covering all his litigation expenses as well as his travel costs,  
including the cost of his hotel when he travelled to Windsor in April for the  
preparation meetings and his condo while in Ottawa.  
[205] Client B testified he was exhausted following court and felt pressured by  
Ms. Marusic and Mr. Martini to sign the authorization.  
[206] Mr. Roslyn testified he spoke with Client B on July 14 just before everyone went  
out to dinner. Client B told him about the settlement offer and the fee  
agreement. He was “shocked” by Client B’s “very flat, very depressed affect”  
and “was upset.” Client B handed the phone to Mr. Martini. Mr. Roslyn  
described their discussion as “heated” and agreed he suggested to Mr. Martini  
the fees would be assessed.  
Subsequent events  
[207] The parties were able to formally settle two days later, after further negotiations  
and another attendance before the in-trial pre-trial judge.  
[208] Despite claiming to be very upset and concerned about the fee agreement on  
July 14, Mr. Roslyn did not raise or document those concerns with Ms. Marusic  
until 10 days later and only after the DOJ had obtained formal approval to  
settle.  
[209] On July 19 Client B e-mailed Ms. Marusic asking for a copy of the direction and  
a detailed breakdown of her fees and disbursements. The e-mail is friendly.  
Client B raises no issues and expresses no concerns about the fee agreement  
or the July 14 meeting.  
[210] Client B’s July 22 e-mail to Ms. Marusic and Mr. Morga is equally friendly and  
appreciative. It is only at this point, over a week later, that he asks that Mr.  
Roslyn be included in their communications.  
[211] The DOJ sent Ms. Marusic the settlement documents on July 22 and she  
forwarded them to Client B and Mr. Roslyn the same day.  
43  
[212] Client B’s July 23 e-mail to Ms. Marusic included a bad joke and pressed Ms.  
Marusic to push DOJ to pay out the settlement funds quickly in response to an  
inquiry from the expert about his outstanding account.  
[213] On July 31 Ms. Marusic and DOJ counsel were served with a notice of change  
of lawyers sent on Client B’s behalf.  
Analysis  
[214] Ms. Marusic’s practice was to resolve fees before presenting an offer to the  
opposing party. Mr. Roslyn agreed that this was his practice as well. The Law  
Society does not appear to take issue with this general practice but, as we  
understand it, with its application in the particular circumstances of this case  
where there was no agreement about fees incurred by Ms. Marusic or Mr.  
Morga.  
[215] The settlement discussions arose mid-trial. If the matter did not settle following  
the in-trial pre-trial, there was potential for a mistrial. Client B agreed this would  
not be in his interest given costs and certainty of further delay.  
[216] Dockets were in Windsor and the parties were in Ottawa. We are satisfied  
Client B, as a lawyer and businessperson, would know he could ask to review  
dockets and disbursements. In fact, he did so nearly a week later. But he also  
knew that would take time, and on July 14, time was of the essence. Client B  
never asked for time to review disbursements and never asked for dockets at  
the meeting. He conceded he never asked to speak with Mr. Roslyn and agreed  
he would have been free to seek Mr. Roslyn’s advice about settlement and  
never suggested he did not want to proceed with the settlement or the fees  
without Mr. Roslyn’s advice.  
[217] We are also satisfied Client B would have been aware both Ms. Marusic and  
Mr. Morga had expended a huge amount of time on the file. The fees negotiated  
took into consideration the very outstanding disbursements, which were  
significant somewhere in the range of $800,000.  
[218] In our view the pressure to get an agreement on July 14 was driven by  
settlement, not counsel. Client B was legally trained, had practised law and had  
decades of business experience. He was not an unsophisticated or vulnerable  
individual. Had Client B lacked the knowledge or background to understand  
terms such as “all inclusive” and “net after fees, disbursements and HST” there  
might be reason to pause. But this was not the case. He was not under a  
disability nor is there any evidence to support finding Ms. Marusic ought to have  
been concerned about his capacity.  
[219] In these circumstances, we do not accept Client B’s testimony that he was  
pressured to agree to the proposal. We find the brief duration of the meeting  
44  
also supports this conclusion. Mr. Morga had not finished packing before  
Mr. Martini and Ms. Marusic returned with the signed authorization. We  
conclude Client B needed no information or explanation before agreeing.  
[220] We also do not accept Mr. Roslyn’s evidence that Client B was too mentally or  
physically exhausted after the in-trial pre-trial to agree. The in-trial pre-trial  
began at 2 and was over by 5. Client B was not testifying or leading the  
negotiations. We prefer Mr. Morga’s evidence of Client B’s condition, based on  
direct observation, to Mr. Roslyn’s impression based on his phone conversation.  
[221] In this connection we note that Client B had dinner with Mr. Martini and Ms.  
Marusic the evening of July 14 and gave Ms. Marusic a necklace. He e-mailed  
Mr. Morga later asking him what sorts of wine he preferred, behaviour that does  
not suggest Client B felt taken advantage of.  
[222] Since that January, Mr. Roslyn had been only marginally involved with  
Ms. Marusic and the trial. In those circumstances, we reject the Law Society’s  
suggestion Ms. Marusic was obliged to suggest Client B review the July 14  
agreement with Mr. Roslyn before he signed. Similarly, we reject the argument  
Client B ought to have been provided with independent legal advice before  
signing the agreement. The Law Society offered no support for either position.  
Conclusion  
[223] Much of the argument on this issue focussed on the amount of the fees agreed  
to by Client B. However, when considering integrity, it is not our task to assess  
the lawyer’s account or, in this case, the dollar amount of the fees as agreed on  
July 14. Rather, we must look at how the agreement was reached and whether  
those circumstances constitute professional misconduct.  
[224] We are satisfied that in the circumstances of a very generous mid-trial  
settlement offer where there could be real consequences, including the  
likelihood of a mistrial if agreement were delayed, negotiating fees as part of the  
settlement offer did not breach Ms. Marusic’s Rule 2.1 obligations. Where  
preparation for a lengthy trial was conducted under a very tight timeline and  
where the client was a sophisticated litigant, the absence of a formal retainer  
did not breach Ms. Marusic’s Rule 2.1 obligations.  
[225] Similarly, where Client B was well aware of mounting and significant  
disbursements; the time expended by both counsel; and that the agreement  
occurred mid-trial and in a location where counsel did not have immediate  
administrative support, the failure to prepare and provide formal dockets in  
support of fees being negotiated does not breach Rule 2.1. We are also  
satisfied the size of the account would not have come as a shock to Client B.  
45  
[226] In addition, although a breach of Rule 3.6-1 is not alleged in the notice of  
application, we are satisfied the fees themselves were not so objectively  
unreasonable or inappropriate as to amount to professional misconduct. Given  
the DOJ had offered $200,000 less than a year before following a mediation  
where the mediator had assessed damages in the millions, the fees cannot be  
characterised as disproportionate to the result. Nor can we find the result does  
not reflect the work, complexity and skill required to achieve it: Law Society of  
Ontario v. Chijindu, 2019 ONLSTH 147 at paras. 67-68.  
[227] However, that analysis does not resolve this issue. The discussion of fees with  
Client B was far from typical because it involved and, as we have found earlier,  
was led by Mr. Martini, a suspended lawyer.  
[228] There was no need for Mr. Martini’s presence at the July 14 meeting. Although  
not originally counsel on the file, as a partner of the firm Ms. Marusic was  
equally well placed to address SMM’s interests. Mr. Martini had been  
suspended for alleged misappropriation. Less than six months earlier  
Ms. Marusic had described him as a liar and fraudster and herself as a victim of  
his deceitful ways. And yet he was actively involved in both advising Client B  
about the offer to settle and negotiating feesin a context where his interests and  
the client’s were in conflict. He planned to “extort” Client B and, as we have  
found, Ms. Marusic invited him to access her client.  
[229] It is these circumstances, not the amount of fees negotiated,which call  
Ms. Marusic’s integrity into question. We find Ms. Marusic’s decision to invite  
the involvement of a suspended lawyer, about whom Ms. Marusic herself has  
expressed profound doubts as to his honesty and integrity, into sensitive mid-  
trial negotiations of fees, would and did undermine Client B’s confidence in her  
trustworthiness, her usefulness to Client B and her reputation within the  
profession. This conduct in these particular, and perhaps unique, circumstances  
would undermine public confidence in the administration of justice and the legal  
profession. We therefore find Ms. Marusic failed to act with integrity in respect  
of the Client B settlement.  
MISLEADING THE LAW SOCIETY TRIBUNAL  
[230] The Law Society alleges Ms. Marusic misled the Law Society and/or the Law  
Society Tribunal about the nature of her relationship with Mr. Martini between  
March 2015 to August 2015 contrary to Rule 2.1-1 of the Rules of Professional  
Conduct and, in doing so, she failed to conduct herself with integrity.  
What Marusic told the Tribunal  
[231] In March 2015, Ms. Marusic swore an affidavit responding to the Law Society’s  
application for an interlocutory suspension of her licence. In her affidavit,  
46  
Ms. Marusic disclosed her personal relationship with Mr. Martini for the first time  
and made clear it had ended.  
I was involved in a personal relationship with Mr. Martini for many years.  
During that time I believed much of what he told me. I believed that  
although legally married, he had been separated from his wife for a  
number of years. Unfortunately, I now know that he repeatedly lied to  
me. Our personal relationship is now over.  
[232] In an emotional cross-examination on April 1, 2015, Ms. Marusic confirmed the  
relationship had ended sometime between March 13 and 23. Asked to explain  
why the relationship ended at that time, Ms. Marusic testified that, “in the last  
months,” she discovered Mr. Martini had told her numerous lies about his wife’s  
health. Her evidence before the first hearing panel was moving and convincing.  
She testified their relationship was over.  
[233] Ms. Marusic argued that the fact Mr. Martini was under suspension, and she  
had ended her personal relationship with him, weighed against imposing a  
suspension on her.  
What the Tribunal decided  
[234] The panel found Ms. Marusic was “shocked and appalled’ by Mr. Martini’s  
misconduct and considered herself a “victim” of his “deceitful ways.The panel  
noted that Ms. Marusic and the Law Society both took the position Mr. Martini  
was a liar and a fraudster.” Law Society of Upper Canada v. Marusic, 2015  
ONLSTH 81 at paras 37 and 60.  
[235] The panel found Ms. Marusic’s personal romantic relationship with Mr. Martini  
relevant to their analysis of risk to the public and public confidence in the  
profession because their lives, business and personal, were intertwined to a  
considerable extent: Law Society of Upper Canada v. Marusic, 2015 ONLSTH  
81 at para. 53.  
[236] Ms. Marusic’s argument against a suspension was successful. The panel was  
satisfied practice restrictions would adequately protect the public and declined  
to order a suspension.  
Motion to Vary  
[237] Ms. Marusic’s January 18, 2016 affidavit, sworn in response to the Law  
Society’s motion to vary the earlier order, states:  
I was not involved in a romantic relationship with Mr. Martini during the  
Client B trial. Indeed, I had not even seen Mr. Martini from late March,  
2015 until on or about April 17th, 2015 when I met with him to transition  
47  
Client B’s file. I did not discuss my relationship with Mr. Martini with  
Client B.  
[238] In cross-examination on the motion to vary, Ms. Marusic denied being in a  
romantic relationship with Mr. Martini during the Client B trial and expressly  
denied that there had been any such relationship on July 14 when the  
settlement discussions happened. She explained their romantic relationship  
resumed in August 2015 and their intimate relationship resumed three months  
later.  
The Martini/Marusic relationship between January and August 2015  
[239] The e-mail communications between Ms. Marusic and Mr. Martini concerning  
the Client B file and other files establish they were in close, frequent e-mail  
communication between January and August 2015. Their e-mails between  
March and April 17 concerning the expert report for Client B do not demonstrate  
any strain or difference in tone suggestive of a rift in the relationship. While they  
may not have seen each other between the end of March and the April trial  
preparation meetings with Client B, their e-mail communications show no  
change from e-mails sent prior to Ms. Marusic’s discovery of Mr. Martini’s lies.  
[240] When Mr. Martini tells Ms. Marusic in their May 11 e-mail exchange, “ok I will  
stay out of it,” Ms. Marusic almost immediately responds “What do you mean? I  
want you in it.” She clearly wants his support on the Client B litigation and her  
response cannot be squared with the description she gave less than two  
months earlier of Mr. Martini as a liar and a fraudster who had victimised her  
with his deceitful ways.  
[241] Their e-mails also contain phrases and statements out of keeping with  
professional communication. Both Mr. Martini and Ms. Marusic end e-mails with  
endearments such as: “love me”, “love you”, and “babes.For example, their  
e-mail exchange sent May 26 begins with a discussion of witness preparation  
and then moves on to an intimate exchange as follows:  
CM: The defendant production 837 contains a transcript of Cedilot  
interview.........I have read it. It doesn't say much about [Client B] at all.  
The RCMP suggest that [Client B] should have done more and been  
aware of the inflated prices but Cedilot does not agree.  
I attach the pages that deal with [Client B] ...............to make it easier for  
you to review.........  
MM: OK baby love. Love you  
CM: Love you.......trying to be happy and normal.  
MM: We are happy but never normal. Love you  
48  
CM: ): Really miss you a lot. Especially at night. Sorry.  
[242] In an exchange on May 4 about accommodations in Ottawa, Mr. Martini said,  
“There is a Delta I have stayed at……….i was going to have Muffie see what  
she could find. Do you really want to stay in a room with Gino? What about if  
there are nights I can’t be there?”  
[243] Ms. Marusic responded, “I’m not planning that there be nights when you can’t  
stay. Have Muffie look at the Delta. We will compare. I just think that will cost a  
fortune.”  
[244] This was a clear invitation from Ms. Marusic to Mr. Martini to plan to stay the  
night with her while they are in Ottawa. We need not speculate whether that  
was an invitation to sleep together in the same bed or to sleep in the same  
room. It leaves no doubt Ms. Marusic wanted Mr. Martini close to her at night  
while they were in Ottawa. That desire is consistent with a renewed romantic  
relationship.  
[245] Mr. Martini was unable to explain the May 4 exchange about Ottawa  
accommodations. He explained the endearments in their e-mails as still loving  
each other although their relationship had ended. He testified more than once  
that, while Ms. Marusic “hated” him, he did not doubt she loved him.  
Stormy is probably the biggest understatement of this entire weeks of  
evidence. It was a tsunami and she wanted she wanted she hated  
me, Mr. Pratte, okay? And I desperately tried to stay in her life. But did I  
doubt that she loved me? I don't doubt that. I doubt that she wanted to  
be with me? I don't know that I doubted that. But she she was so angry  
with me, she broke it off.  
[246] Mr. Martini stayed overnight in the Ottawa condo being used by Ms. Marusic  
and Mr. Morga at least once. The condo had a pullout couch in the living area.  
Client B testified that when he asked where Mr. Martini stayed when in Ottawa,  
that Mr. Morga pointed to Ms. Marusic’s bedroom. Mr. Morga denied this and  
explained he believed Mr. Martini slept on the pullout couch, although he  
agreed he was not aware where Mr. Martini slept and that Mr. Martini was gone  
by the time he got up in the morning.  
[247] We do not have clear evidence whether Mr. Martini shared a bedroom with Ms.  
Marusic while they were in Ottawa. Client B’s testimony is contradicted by  
Mr. Morga’s, although Mr. Morga’s evidence on this point was qualified. He  
believed that Mr. Martini slept on the couch but agreed he would go to his  
bedroom when Mr. Martini was present and did not discuss or inquire into the  
respondents’ relationship. Mr. Morga did not, or more likely chose not to, have  
any direct knowledge of the respondents’ sleeping arrangement.  
49  
[248] At the end of June, the respondents had the following e-mail exchange:  
(MM) Hump I want to be with you. You don’t realise how much you  
criticize me all the time. You are always questioning. Do what you want. I  
have no emotional reserves left. I am raw. I have tried my best for  
everyone. I am sorry that I routinely fail. Love me  
(CM) Really. I have missed two mortgage payments. Claudio bar  
payment. I am 6099 overdrawn and they took Claudio savings to cover it.  
I cant pay Erica tuition. And I have a woman who lives me (sic) but could  
care less where I hit a house or move to because it will just solve her  
issue of not wanting to live with me. So I am great. Just great.  
(MM) Hump. I will not take this on. I have offered help and you have  
refused. I have no interest in living in lighthouse coverbut (sic) we can’t  
live together now and you are unhappy. I love you the best I can. If it’s  
not enough then you make a decision. Is Randy refinancing? Perhaps he  
can offer some help. I am trying to deal with Client B. I can give you  
$3000 if that would help. I love you.  
(CM) I am done. We will never live together. Ever. You live your life as  
you want. I am done and want no help  
Analysis  
[249] We do not judge Ms. Marusic on her choice to resume a relationship with  
Mr. Martini. The issue before us is whether the evidence establishes on a  
balance of probabilities Ms. Marusic misled the Tribunal about the nature of that  
relationship between March and August 2015.  
[250] The issue for the 2015 panel was the existence of a “personal romantic”  
relationship in which Ms. Marusic’s business and personal life was “intertwined”  
with Mr. Martini’s “to a considerable extent.” That is the context in which Ms.  
Marusic’s 2016 statements described above distinguishing romantic and  
intimate aspects of the relationship from the personal must be understood. The  
breakup, even on the respondents’ evidence, was very brief in the context of a  
longstanding relationship which began in 2001.  
[251] The evidence is clear that by early April 2015 Ms. Marusic had resumed working  
closely and directly with Mr. Martini on expert evidence in the Client B file.  
There is an obvious ease and familiarity to their communications. By May and  
the beginning of the Client B trial they were in frequent communication.  
[252] Ms. Marusic’s conduct of the Client B litigation and the other matters  
establishes her trust in Mr. Martini as a professional never really wavered  
despite her March/April 2015 statements. Ms. Marusic chose not to testify  
before us, to explain when or why she ceased considering herself a victim of  
50  
Mr. Martini’s “deceitful ways” or if she no longer considered Mr. Martini a liar  
and fraudster. Nor did she attend to offer any explanation of the email  
communications between them.  
[253] We find the respondents’ denials that they resumed a romantic relationship  
before August 2015 are not credible. They do not meet the test of harmony with  
the preponderance of the probabilities that a practical and informed person  
would readily recognize as reasonable in that place and in those conditions:  
Farnya v. Chorny, 1951 252 (BCCA).  
[254] The e-mails containing endearments and intimacies, the sleeping arrangement  
discussions, and the exchange about living together easily lead to the  
conclusion Ms. Marusic and Mr. Martini were once again much more than  
professional partners to each other.  
[255] In the documents, the respondents repeatedly express endearments to each  
other and use pet names. If that had been all, we might accept Mr. Martini’s  
explanation the words used were no more than a habit of a formerly close and  
intimate relationship. But it was not.  
[256] The May e-mails discussing where Ms. Marusic wanted Mr. Martini to stay when  
in Ottawa and missing Mr. Martini at night are clearly not business or  
professional conversations. They are communications which a practical and  
informed person would conclude took place between persons in a romantic  
relationship.  
[257] In the June e-mails above, Ms. Marusic told Mr. Martini she wanted to be with  
him, wanted him to love her and that she loved him. These are not simply  
salutations or endearments but affirmative, romantic statements.  
[258] She also told Mr. Martini she “cannot live with him now.” That they would even  
discuss living together supports finding their relationship had moved well  
beyond the professional and returned to the romantic. Further, Ms. Marusic did  
not say she would never live with Mr. Martini or that she did not wish to live with  
him. She says that she cannot live with him at that moment. This is a  
conversation which a practical and informed person would find only to occur  
between romantic, possibly intimate, partners.  
[259] Ms. Marusic distinguished intimate from romantic. There is much to suggest  
intimacy had resumed but no affirmative evidence. It is unnecessary to address  
Ms. Marusic’s distinction because we are satisfied the romantic relationship had  
resumed at least by May 2015.  
[260] Ms. Marusic’s evidence before the Tribunal in 2016 was not forthcoming and  
transparent. She utterly failed to acknowledge that, at some point well before  
the conclusion of the Client B trial, the close, trusting personal relationship she  
51  
led the Tribunal to believe was sundered by Mr. Martini’s lies and deceitful ways  
had resumed. That in itself was misleading. But her explicit lie about the timing  
of the resumption of her romantic relationship with Mr. Martini is even more  
concerning. By lying under oath and misleading the Tribunal Ms. Marusic  
violated her fundamental duty to the profession and to the public to act honestly  
and with integrity. LSUC v. Chin, 2015 ONLSTH 91.  
MOTION FOR STAY  
[261] Mr. Martini asks us to stay the Client A and Client B allegations in the Martini  
application on the basis that the Law Society’s delay in prosecuting those  
allegations was inordinate and a breach of natural justice which resulted in  
procedural unfairness and significant prejudice to Mr. Martini, all of which  
constitutes an abuse of process.  
[262] Mr. Martini argues the Law Society could have issued an application against  
him concerning the Client A and Client B allegations in 2017 when it  
commenced its proceeding against Ms. Marusic. Instead, the Martini application  
was issued more than two years later. Mr. Martini says the decision to stagger  
the Marusic and Martini applications was an attempt to give the Law Society  
two kicks at the canat the expense of procedural fairness to Mr. Martini.  
[263] While counsel also raised concerns about the manner in which the Law  
Society’s investigator, Mr. Spagnuolo, conducted his investigation, we  
understand Mr. Martini’s abuse of process/natural justice concerns relate  
entirely to investigative and prosecutorial delay rather than misconduct.  
The Blencoe Test  
[264] Blencoe v. British Columbia (Human Rights Commission), 2000 SCC 44,  
established the test for a stay on the basis of delay in the administrative law  
context. It is a high test, applicable in only the clearest of cases. Few delays will  
meet the threshold of an abuse of process: Law Society of Upper Canada v.  
Savone, 2015 ONLSTA 26.  
[265] The Blencoe test has two branches:  
The first is where inordinate delay may impugn the validity of the  
proceedings and causes unfairness such that it impairs a party’s ability to  
answer the complaint against them, for example where memories have  
faded, essential witnesses are unavailable or evidence has been lost, that  
brings the administrative process into disrepute: Blencoe at para. 102.  
The second branch is serious personal prejudice where there is inordinate  
or clearly unacceptable delay which, while not resulting in hearing  
unfairness, directly causes significant psychological harm or stigma to a  
52  
person’s reputation, which would bring the administrative system into  
disrepute: Blencoe at para. 115.  
[266] Even where there is significant prejudice directly caused by inordinate delay  
that meets the test described above, it does not necessarily follow that the  
proceeding will be stayed. A stay is not available if the damage to the public  
interest in a stay would exceed the damage to the public interest if the  
proceeding was allowed to continue: Law Society of Ontario v. Stanislawski,  
2021 ONLSTH 102 at para. 257.  
[267] Mr. Martini has not satisfied either branch of the test for a stay. Given the  
context of the proceeding, we do not agree the delay in investigating and  
prosecuting these allegations was inordinate or impugned the fairness of the  
proceeding, including Mr. Martini’s ability to make full answer and defence.  
Further, we find Mr. Martini failed to meet his burden to establish that the delay  
caused him serious personal prejudice.  
Delay in Context  
[268] We agree with Mr. Martini that the length of time between the Law Society  
commencing its investigation of the Client A complaints on December 12, 2014  
and January 5, 2015, and commencing its investigation of the Client B  
complaint on October 7, 2015, and issuing the notice of application dated April  
3, 2020 was, on its face, significant. But prejudice is not inferred based on delay  
alone: Savone at para. 14.  
[269] To be found inordinate, delay must be assessed having regard to the nature of  
the case and its complexity, the facts and issues, the purpose and nature of the  
proceedings, whether Mr. Martini contributed to the delay or waived the delay  
and any other circumstances: Blencoe at para. 122.  
[270] Ken Doering is the team manager in the Investigation Services Department of  
the Law Society and Mr. Spagnuolo’s supervisor since February 2017. He  
reviewed the investigation files concerning the Martini and Marusic  
investigations. Given the privileged documents issue, Mr. Doering rather than  
Mr. Spagnuolo provided an affidavit in response to Mr. Martini’s motion to stay.  
[271] As described in Mr. Doering’s affidavit, between 2014 and January 2017 the  
Law Society began 31 investigations into Mr. Martini’s conduct and 10 into Ms.  
Marusic’s conduct. Twenty-two investigations were assigned to Mr. Spagnuolo  
and the rest to another investigator. Eight investigations were fully investigated  
by Mr. Spagnuolo and submitted to the Proceedings Authorization Committee  
(PAC). The remainder were closed because there was insufficient evidence of a  
breach or were discontinued/closed when it was determined that the Law  
53  
Society had a core number of serious files to submit to the PAC for  
consideration and any additional ones would not further the public interest.  
Communications with Martini  
[272] On December 12, 2014, in the course of investigating complaints filed earlier in  
the year, Mr. Spagnuolo spoke with Mr. Martini. Based on that conversation, in  
which Mr. Martini admitted his escrow breach, the Law Society began its  
investigation. On January 5, 2015, the Law Society began its investigation of  
the Client A complaint. On January 13, 2015, Mr. Spagnuolo wrote to Mr.  
Martini, notifying him of the investigation and requesting information and  
documents.  
[273] On October 1, 2015, Mr. Martini responded to that request for documents as  
well as requests for information and documents with respect to 11 other  
investigations, through his former counsel.  
[274] On November 2, 2015, Mr. Spagnuolo wrote outlining the outstanding  
information, including information and documents required on the Client A  
matter, and setting November 27, 2015 as a deadline for response. Mr. Martini’s  
counsel requested a three-week extension. On December 18, 2015, counsel  
requested a two-month extension due to Mr. Martini’s ongoing health issues.  
[275] On January 7, 2016, Mr. Martini’s counsel wrote to Mr. Spagnuolo enclosing a  
brief letter from Mr. Martini’s physician which advised:  
I have been the treating physician for Mr. Martini since November 2013.  
On my last appointment with him, I found him to be suffering from a  
depression with all the associated symptoms. During that appointment,  
he communicated that the Law Society has been requesting further  
information regarding the issue that has been at hand. It is my  
professional opinion that, although certainly necessary, Mr. Martini  
cannot presently function adequately, due to his depression, to fairly  
address the Society’s concerns and requests. Hence, I would kindly ask  
the Society to postpone it’s request of matters for Mr. Martini. It is my  
opinion, that his medical status would be put at further risk should a  
postponement not occur.  
[276] Mr. Spagnuolo requested a more detailed medical note. None was provided.  
Following a telephone conversation with Mr. Martini’s counsel, on May 13, 2016,  
Mr. Spagnuolo wrote with respect to outstanding requests for information and  
materials on 21 complaints, including the Client A matter, and to reiterate his  
request for better medical information. Mr. Martini’s counsel responded four  
days later to advise that his firm no longer acted for Mr. Martini and all  
communications should be directed to Mr. Martini.  
54  
[277] On June 9, 2016, Mr. Martini e-mailed Mr. Spagnuolo in response to his phone  
call of the same day to advise he was retaining new counsel and directing him  
to communicate only in writing.  
[278] Mr. Martini explained that his ability to respond to the Law Society’s subsequent  
requests was compromised by the fact that he did not have access to his files or  
firm records as well as the impact the investigation was having on his health.  
[279] In February 2017, Mr. Spagnuolo wrote to Ms. Marusic seeking her assistance  
in obtaining documents relevant to nine investigations, including the Client A  
and Client B matters. Mr. Martini did not make any further response to the Law  
Society until late 2019.  
[280] The investigation of the Client A and Client B allegations, along with multiple  
other allegations against Mr. Martini, continued from 2016 to 2018. Between  
November 2017 and May 2018, Mr. Spagnuolo reviewed the evidence and  
prepared the investigation report. Given the multiple investigations, this required  
time. The investigation report was completed on May 28, 2018 and approved on  
June 29, 2018.  
[281] In addition to conducting the investigations, Mr. Spagnuolo was required to  
assist Law Society counsel to prepare for various proceedings against Mr.  
Martini and Ms. Marusic.  
Between December 18, 2014 and January 30, 2015, Mr. Spagnuolo swore  
three affidavits in support of the Law Society’s motion for an interlocutory  
suspension against Mr. Martini.  
On February 24, 2015, Mr. Spagnuolo swore an affidavit in support of the  
Law Society’s application for a trusteeship order in Superior Court based on  
review of SMM accounts.  
On March 11, 2015, Mr. Spagnuolo swore an affidavit in support of the  
motion for an interlocutory suspension against Ms. Marusic.  
On January 12, 2016, Mr. Spagnuolo swore further affidavits in support of  
the Law Society’s motion to vary the Tribunal’s June 2015 order.  
On July 21, 2017, Mr. Spagnuolo swore an affidavit in response to Ms.  
Marusic’s motion to lift the interlocutory suspension on the basis a conduct  
application had not yet been commenced. The Tribunal refused her request  
but ordered the suspension would be lifted if a conduct application had not  
been commenced by November 30, 2017. Law Society of Upper Canada v.  
Marusic, 2017 ONLSTH 197.  
Mr. Spagnuolo also assisted Law Society counsel in responding to Ms.  
Marusic’s 2018 motion to stay the 2017 application.  
55  
Privileged documents issue  
[282] Between April and June 2018, the Law Society realised that the digital search of  
Ms. Marusic’s computers and servers may have included solicitor-client  
privileged information that should not have been made available for review. The  
Law Society retained external counsel to advise it on this issue. It was unclear  
whether the ongoing Martini investigations were affected.  
[283] In December 2018, BLG was retained to represent the Law Society in resolving  
the privileged documents issue. BLG worked with Ms. Marusic’s counsel to  
develop a protocol for managing the privileged documents. Ultimately, through  
the execution of the protocol, BLG and the Law Society determined that the  
breach did not impact the investigations regarding Mr. Martini.  
[284] The Law Society concedes there was a period of inactivity on Mr. Martini’s  
investigations from the fall of 2018 to the summer of 2019 while BLG was  
addressing the privilege breach.  
BLG retained  
[285] On September 27, 2018, BLG counsel wrote to Mr. Martini to advise she would  
be reviewing the evidence collected during the investigation and preparing a  
memorandum for consideration by PAC.  
[286] Between May and December 2019, BLG was engaged in preparing the second  
conduct application against Ms. Marusic, its motion to join those applications,  
and responding to Ms. Marusic’s motions argued in December 2019.  
[287] In June 2019, BLG received approximately 38 boxes of materials relating to the  
investigation into Mr. Martini. Between August and October 2019, BLG reviewed  
the materials in preparation of the memorandum to be submitted to PAC. BLG  
wrote to Mr. Martini’s new counsel on September 25, 2019, advising that it was  
preparing the matter for PAC.  
[288] PAC authorized the conduct application against Mr. Martini on November 14,  
2019, and he was notified of the authorization on December 27, 2019.  
[289] Mr. Martini’s counsel wrote to BLG on November 20, 2019, noting that, in light  
of the concurrent civil litigation in relation to Client A, “it is entirely premature for  
the LSO to proceed with any disciplinary action against our client.The Tribunal  
had dismissed Ms. Marusic’s attempt to seek a stay on the same basis more  
than a year earlier.  
[290] BLG responded on December 27 advising that the LSO would not agree to a  
stay and attached the Tribunal’s 2018 decision dismissing Ms. Marusic’s stay  
motion on the same ground. In his January 8, 2020 letter, Mr. Martini’s counsel  
56  
agreed to accept service of the notice of application by e-mail but reiterated the  
objection to proceeding while a civil action is outstanding. The notice of  
application was served on counsel on March 30, 2020.  
[291] On May 15, 2020, the investigation report and key evidence brief was disclosed  
although full disclosure was delayed due to the pandemic and provincial  
lockdown. Disclosure of over 8,000 documents was completed in August. Mr.  
Martini’s counsel advised in mid-August that he intended to bring a motion to  
join the Client A and Client B allegations with the Marusic hearing which had  
already begun. The motion was served on September 7 and granted September  
15, 2020. The eight Marusic hearing dates were vacated and, because the chair  
could not continue to hear the matter, this panel was constituted.  
[292] On October 5, 2020, a proceeding management conference was held at which  
the joined Martini/Marusic hearing was scheduled to commence on March 22,  
2021 for three weeks.  
Was the delay inordinate and did it cause unfairness?  
Context  
[293] The preceding description establishes both the size and the complexity of the  
investigations, which involved two licencees and over 40 complaints, which took  
place during the period 2015 to 2018. There were over 8,000 pages of  
disclosure. Multiple complaints revealed allegations of misuse of trust funds.  
They could not be processed and investigated in isolation as the transactions all  
relate to the same accounts, books and records maintained by SMM. We agree  
the LSO properly took a holistic approach to its investigations and that this is  
the context in which we must evaluate the alleged delay.  
[294] Mr. Martini chose not to respond to the Law Society’s requests for information  
and documents sent beginning mid-2014 until October 1, 2015. He provided no  
further documents or information despite the Law Society’s repeated requests  
and requests for a better medical note. We have found Mr. Martini was actively  
working on client matters well into 2015 and had ready access through Ms.  
Marusic to his files. We do not accept Mr. Martini’s ability to respond to the Law  
Society throughout the investigation period was hampered by an inability to  
access his files and documents. He therefore bears some responsibility for the  
time in which it took to complete the investigation of the many complaints  
against him.  
[295] The Law Society contributed to the delay by focusing its investigative resources  
on issuing the first Marusic application before the expiry of the time limit set in  
response to her stay application and as a result of the privileged documents  
issue which required reassigning the investigation to another investigator and  
retaining outside counsel. Having said that, we agree with the Law Society that  
57  
it made good sense to have the same investigator assigned to both the Martini  
and Marusic investigations given the shared books and records and overlap in  
complaints.  
[296] We also agree with Mr. Martini that the approximately five months between  
when PAC authorized the conduct application, and the service of the notice of  
application on his counsel on March 30, 2020, is unexplained.  
[297] Scheduling hearing dates for the conduct hearings in the joined Martini/Marusic  
hearing was difficult. All counsel had extremely busy calendars such that finding  
mutually available hearing days was challenging. The consequences of losing  
eight hearing days in September and October contributed to the time required to  
complete the hearing.  
[298] We also cannot ignore the effect of the pandemic, repeated lockdowns and  
transitioning to entirely electronic documents. This slowed the Law Society’s  
disclosure process and contributed to the difficulty in resuming Client A’s  
testimony. Neither party bears responsibility for these delays.  
[299] Given his position on the degree of overlap with the Marusic applications and  
what he knew of the Client A and Client B allegations against him, Mr. Martinis  
decision to wait from March to September 2020 to ask the Tribunal to join the  
applications is not explained. Had he moved soon after receiving the notice of  
application, it might have been possible to salvage some, if not all, of the eight  
hearing days set in September and October 2020 and retain the original hearing  
panel. We also find Mr. Martini’s objections to proceeding before Client A’s civil  
suit was determined undermines the sincerity of his delay argument. His  
objections may well have led the Law Society to believe Mr. Martini was not  
concerned about moving forward.  
[300] Mr. Martini argues that the Tribunal’s decision on his joinder motion affirms his  
position the applications ought to have been joined in 2017. We have read  
those reasons carefully and can find nothing to support that interpretation. It is  
clear from the reasons the question of whether to join required a very difficult  
and careful balancing of the advantages and disadvantages for both parties and  
for the Tribunal’s process. Moreover, in reasons refusing to award costs on that  
motion, Mr. Wright specifically warns against such second-guessing of  
prosecutorial decisions of PAC: Law Society of Ontario v. Martini, 2020  
ONLSTH 150 at para. 3. Mr. Martini speculates about an improper prosecutorial  
motive but has offered no evidence to support that assertion. Exercise of  
prosecutorial discretion is “a cornerstone of the administration of justice,” and  
Tribunal interference with this discretion must not be undertaken lightly: Law  
Society of Ontario v. Diamond, 2021 ONLSTH 14.  
58  
[301] Mr. Martini argues the Law Society’s November 2016 decision to seek an order  
in the trusteeship application for the distribution of the funds showed the trust  
account analysis was complete. That argument cannot succeed. The Law  
Society knew where the funds subject to trusteeship proceedings were located.  
That did not address questions about funds no longer in the trust account at the  
time it was seized. Those aspects of the investigations remained ongoing into  
2018 when Mr. Spagnuolo began preparing his investigation report.  
[302] There is no period of total Law Society inactivity comparable to the three years  
in Law Society of Upper Canada v. Totera, 2013 ONLSHP 9, or in Law Society  
of Upper Canada v. Savone, 2014 ONLSHP 22, which were found to be  
inordinate delay. Further, the total time between commencing the investigation  
to commencing the hearing is less than the seven years in issue in Law Society  
of Upper Canada v. Abbott, 2014 ONLSTH 194.  
[303] Both parties bear responsibility for some of the delay. Mr. Martini initially failed  
to provide a formal response and information in respect of the Client A matter  
for nearly a year. He never responded to requests for information on the Client  
B matter and the Law Society was required to ask Ms. Marusic for her  
assistance in accessing information on Client B and other matters. He never  
provided the requested follow-up information or a more detailed medical report  
before the investigation was completed in mid May 2018.  
[304] The Law Society concedes a little over one year of inactivity occurred between