Administrative law – Decisions of administrative tribunals – Securities Commission – Investigations – Director of corporation – Judicial review – Appeals – Procedural requirements and fairness – Reasonable apprehension of bias – Stay of proceedings – Standard of review – Correctness
Curtis v. Manitoba Securities Commission,  M.J. No. 1, Manitoba Court of Appeal, January 10, 2006, Monnin J.A.(In Chambers)
The applicants were all at one time directors of a venture capital corporation created by legislative enactment. The Manitoba Securities Commission (the “Commission”) commenced an investigation and provided notice of hearing to the Applicants into allegations to the extent of their disclosure requirements made under the prospectuses among other things. Prior to the hearing, a shareholder commenced a class action suit naming the Applicants and Commission and others as defendants.
The Applicants applied to have the Commission hearing adjourned pending disposition of the class action suit, arguing that because the Commission is a co-defendant with potential adverse interests, there was a reasonable apprehension of bias irrespective of whether actual bias existed in the ability of the Commission to prosecute impartially the allegations against the applicants. The Commission denied the adjournment request, and the Applicants sought leave to appeal.
The Court disagreed with the Commission’s position that there was a lack of factual evidence on which to find a reasonable apprehension of bias. The basis of the Applicants’ argument is that the Commission has an actual or perceived incentive to use its hearings and evidence derived therefrom to deflect or shift blame from itself onto the Applicants and may be able to, consciously or instinctively, use its own hearing to bolster its case in the civil action when there may be adverse interests between the Commission and the Applicants in its defence. The question of whether a reasonable apprehension of bias exists is a question of law, and the standard of review is correctness. As such, the Commission should not be afforded any deference.
The test to be met on a leave application is whether there is “an arguable case of substance” and whether the issue is one of importance not just for the immediate case, but in determining similar disputes which are apt to arise in the future. In the present case, there was a possible conflict between the interests of the Commission in the outcome of the hearing and their duty to give a fair hearing to the Applicants which was sufficient to raise a reasonable apprehension of bias. Thus, the Applicants had an arguable case of substance. As well, the nature of the objection to proceeding before the Commission at this time is of general public interest because of the importance of impartiality and independence in courts and/or administrative tribunals.
In the circumstances, the Applicants were granted leave to appeal on the question of whether a reasonable apprehension of bias existed and, if yes, whether it was appropriate to grant a stay of the Commission’s proceedings pending disposition of the class action suit.
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