Administrative law – Decisions of administrative tribunals – Financial Institutions Commission – Director of corporation – Removal – Notice – Judicial review – Procedural requirements and fairness – Failure to provide reasons
Malik v. British Columbia (Financial Institutions Commission),  B.C.J. No. 999, British Columbia Supreme Court, May 5, 2006, Wedge J.
On November 16, 2005, the Superintendent served Malik with an order removing him as a director of the Khalsa Credit Union. The order was issued under section 99(2) of the Financial Institutions Act, R.S.B.C. 1996, c. 141 (“FIA”), which empowers the Financial Institutions Commission to remove a director on the basis of his or her unsuitability. The removal order was the culmination of a five-month investigation by the Commission into Malik’s suitability as a director. The basis for the investigation was Malik’s acquittal on charges relating to the Air India and Narita Airport bombings and information made public during the trial with respect to those charges. Malik was not given notice of the intended removal order or an opportunity to be heard with respect to it, nor was he given any reasons for the summary nature of the action taken against him.
The Court held that the removal order must be set aside on the basis that the Commission breached the rules of procedural fairness by proceeding summarily. The Court indicated that the Commission could proceed with its inquiry into Malik’s suitability but must provide Malik with notice of any intended action and the opportunity to be heard with respect to it.
The Court rejected the Commission’s argument that the result would have been the same had Malik been provided with an opportunity to be heard. The Court held that once a reviewing court concludes there has been a denial of a right to a fair hearing, the decision must be set aside as invalid. The right to a fair hearing is an “independent, unqualified right” as held by the Supreme Court of Canada in Cardinal v. Director of Kent Institution,  2 S.C.R. 643. The Court held that Malik need not prove he was prejudiced by the Commission’s decision to proceed without notice.
The Commission argued that section 238 of the FIA gave the Commission the extraordinary right to proceed without a hearing. The Commission may invoke section 238 if the length of time required to provide a hearing would be “detrimental to the administration of the Act”. The Court found that the Superintendent had provided no reasons for his decision to proceed without notice and that if he had had sufficient reasons, he ought to have provided them at the time. No urgency with respect to Malik’s removal was apparent from the record. In the result, the Court set aside the section 99(2) removal order.
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