The Court refused the applicant’s leave to appeal the Respondent Commission’s interlocutory ruling and the Commission was entitled to proceed against the Applicant, notwithstanding that the CDNX exchange had imposed penalties on him in respect of the same underlying conduct. The Applicant’s other grounds of appeal were deemed premature, as the Court lacked a factual basis for granting appeal.

Administrative law – Stock brokers – Disciplinary proceedings – Hearings – Stay of proceedings – Decisions of administrative tribunals – Securities Commission – Delay – Abuse of process – Judicial review – Appeals and leave to appeal – Jurisdiction

Smolensky v. British Columbia (Securities Commission), [2006] B.C.J. No. 727, British Columbia Court of Appeal, March 24 2006, Ryan J.A.

In 2002, the Executive Director of the Respondent Commission had issued a notice of hearing under section 161(1) of the Securities Act, R.S.B.C. 1996, c. 418, alleging that the Applicant had manipulated the market in shares for a particular company and made trades using material information that was not publicly disclosed. This activity had also been the subject of disciplinary hearings initiated by the Vancouver Stock Exchange in March 2000 in which the Applicant had entered into a consent disposition and agreed to penalty. The Commission’s investigation had been instigated after the settlement with the Exchange had been effected.

The Applicant applied to the Commission to dismiss or stay the hearing on multiple grounds. The Commission ruled against the Applicant, who sought leave to appeal this interlocutory ruling of the Commission. Before the Court of Appeal, the Applicant identified three essential areas in which he said that the Commission had erred in its ruling.

First, the Applicant submitted that the Commission had erred in failing to find that once the Exchange had imposed its penalties on him, the Commission was without jurisdiction to commence proceedings against him. The Court dismissed this argument. While there was a right to appeal the decision of the Exchange, there were certain penalties available to the Commission which were not available to the Exchange. An appeal would not assist the Commission in that circumstance. Moreover, if the Executive Director of the Commission took a different view of the facts, a view that would require a more significant penalty than the Exchange had accepted, the Executive Director would be bound on the appeal by the agreement as to the facts entered into by the Exchange and the Applicant.

Second, the Applicant argued that his right to a fair hearing had been affected by the operation of s. 148(1) of the Securities Act which restricted disclosure of information or evidence obtained from a witness without the consent of the Commission. The Court found that while there may be merit in this argument, it was not persuaded that the ground should be heard on appeal at this juncture in the proceedings.

Third, the Applicant argued that the length of time that the Commission took to issue the notice of hearing impeded his right to a fair hearing, and amounted to an abuse of process. The Court found that there was an insufficient factual record to properly determine this issue.

As to other grounds of appeal raised by the Applicant, the Court found that it was unnecessary to deal with them since the question was whether it was in the interests of justice to interrupt the hearing before the Commission to deal with them. Given the delays that had already taken place in the case and the inadequacy of the record, it would not be in the interests of justice that leave be given to appeal the rulings of the Commission at this stage of the proceedings.

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