A controversial New Brunswick trial court judge acted on the basis of a "flawed understanding" of basic law and "without any evidence" when he threatened to jail a lawyer for making an application he disagreed with, the province’s Court of Appeal has ruled.

si-nb-fredericton-court-220

The Court of Appeal unanimously overruled Court of Queen's Bench Justice Hugh McLellan's decision to order a lawyer to personally pay legal costs. (CBC)

Court of Queen's Bench Justice Hugh McLellan ordered Ontario lawyer Sandra Dawe to personally pay $45,087 in legal costs last year for a motion she made on behalf of her client in a complex fraud case and went further, threatening to have her jailed if she didn't pay.

But last week New Brunswick's appeal court, which has reversed McLellan dozens of times, said the ruling was out of line. 

"While much could be written about [McLellan's] award of solicitor-client costs against Ms. Dawe personally, we will exercise restraint," Justice Marc Richard wrote in a terse and unanimous reversal of the order. 

"In our view, there was simply no proper basis in law or on the facts of this case to order such costs,"

Dawe was hired to represent auditors of the Deer Island Credit Union who are being sued for not detecting ongoing theft by an employee that cost the body $1.85 million over 12 years.

'It was probably the most stressful thing I've ever encountered in my career as a lawyer. It was my view from the beginning, it was wrong.'— Sandra Dawe

Dawe had made an application to involve the credit union's board of directors in the lawsuit, arguing that the board's failure to implement the auditor's recommendations and follow government regulations over the years was the true failure.   

McLellan found the attempt to involve the directors so objectionable he took action against Dawe personally.  He called her motion "irresponsible" and "an abuse of process" and ridiculed her for not understanding claims against board members like she was making was forbidden by basic case law.

"I do not accept that Ms. Dawe acted in honest belief that the auditors claim against the directors had merit," he wrote

McLellan then ordered Dawe to personally pay the costs caused by her client's application and if she didn't, the judge told her to appear before him personally for "enforcement" in what the Court of Appeal called "a clear threat to imprison Ms. Dawe."

si-nb-deer-island-union-220

Sandra Dawe was hired to represent auditors of the Deer Island Credit Union. (CBC)

But the court said Dawe's action against the directors was reasonable and it was McLellan who didn't understand the law involved, blaming him for "misapplying" principles from two separate legal precedents in wrongly deciding the credit union's auditors couldn't sue the directors.

"They have every right to come before the courts for a determination of whether or not they are correct in asserting the directors’ negligence caused the Credit Union’s losses," said the appeal court.

Dawe says she's happy to have the episode behind her.

"It was probably the most stressful thing I've ever encountered in my career as a lawyer," she said. 

"It was my view from the beginning, it was wrong."