Supreme Court Enlarges Public Interest Powers of Provincial Securities Commissions

Patricia McLean served as a director of Hucamp Mines Ltd., a reporting issuer registered in Ontario under the Ontario Securities Act, from March of 1996 to June of 2001.   Beginning in July of 2001, McLean began cooperating with the Ontario Securities Commission ("OSC") in respect of certain possible improper actions at Hucamp.  Although the OSC announced in July of 2005 that it would hold a hearing under its public interest powers to sanction McLean and others for their alleged misconduct at Hucamp, McLean did not enter into a settlement agreement with the OSC until September 8, 2008.  In the settlement agreement, McLean consented to the making of an order against her which barred her for 5 years from trading in securities, with some exceptions, and banned her for 10 years from acting as an officer or director of certain entities registered under the Ontario Securities Act.  

It was not until 15 months latter - January 14, 2010 - that the executive director of the British Columbia Securities Commission notified McLean that he was applying to that commission for a "public interest" order against her in British Columbia.   The BC Commission relied on McLean's settlement agreement with the OSC in bringing the proceeding.  However, section 159 of the BC Securities Act provides that all proceedings under that Act "must not be commenced more than 6 years after the date of the events that gave rise to the proceedings".   The BC Commission issued an order adopting the same prohibitions that were set out in the OSC's order.  In doing so, it interpreted that "the event" that had triggered the 6 year limitation period was McLean's entering into a settlement agreement with the OSC and not the misconduct that occurred in 2001 or earlier.  The BC Court of Appeal applied a correctness standard of review and upheld the commissions implied decision.  

McLean appealed to the Supreme Court of Canada.  The court dismissed her appeal.  

Justice Moldaver, writing for the majority of the court, held that that issue before the court was whether "the event" that triggered the 6 year limitation period, was the underlying misconduct that gave rise to McLean's settlement agreement with the OSC or the settlement agreement itself.  

Justice Moldaver found that in reviewing the ordinary meaning, the context and the purpose of the relevant provisions of the BC Securities Act, the Commission's conclusion that the event giving rise to the proceeding was McLean's settlement agreement was reasonably supported. 

He further held that the appropriate standard of review of the Commission's decision was "reasonableness", not correctness as the BC Court of Appeal had held.  Justice Moldaver held that both parties, i.e. the Commission and McLean, had proposed reasonable interpretations of the British Columbia Securities Act.  However, under the reasonableness review, the courts will defer to any reasonable interpretation adopted by an administrative decision maker, even if other reasonable interpretations may exist.  Because the Commission'`s interpretation was not shown to be an unreasonable one, there was no basis to interfere on judicial review. 

Justice Moldaver held that the modern approach to judicial review recognizes that courts may not be as qualified as an administrative tribunal to interpret that tribunal's home statute.  In particular, the resolution of unclear language in a home statute is usually best left to the administrative tribunal because the tribunal is presumed to be in the best position to weigh the policy considerations often involved in choosing between multiple reasonable interpretations of such language. 

Allowing secondary jurisdictions (British Columbia in this case) to wait until the conclusion of a primary proceeding (the OSC proceeding) obviates the need for parallel and duplicative proceedings that will overburden securities commissions and the targets of proceedings.  The Commission's interpretation of its statute therefore furthered the legislative goal of improving inter-jurisdictional cooperation between provinces and territories.

Finally, Justice Moldaver found that although the Commission's interpretation significantly extended the duration of time for which a person might be subject to regulatory action, of itself, that was not offensive to the purpose of limitation periods.  Limitation periods are always driven by policy choices in an attempt to balance the interests of the parties.  The Commission's interpretation struck a reasonable balance between facilitation of inter-provincial cooperation and the underlying purposes of limitation periods.  

Regards,

Blair