An appeal by Global Securities from a decision of the Securities Exchange Commission Panel was dismissed. Although the Hearing Panel itself could not make submission on the merits of its own decision, the Exchange was not precluded from doing so. The Commission’s decision on standing was reasonable, as it was based on the principle that the decision directly affected the Exchange, as it engaged one of the Exchange’s primary functions, the prosecution of infractions.

28. November 2006 0

Administrative law – Stock brokers – Decisions of administrative tribunals – Securities Commission – Review of a decision of its own disciplinary panel – Hearings – Parties – Judicial review – Compliance with legislation – Standard of review – Reasonableness simpliciter

Global Securities Corp. v. British Columbia (Executive Director, Securities Commission), [2006] B.C.J. No. 2075, British Columbia Court of Appeal, September 14, 2006, Rowles, Ryan and Lowry, JJ.A.

In August 2001, the TSX Venture Exchange Inc. (the “Exchange”) issued a Notice of Hearing against Global Securities, one of its branch managers and two other representatives in the same branch. The Exchange Disciplinary Panel (the “Hearing Panel”) found against the three representatives in relation to the infractions, but dismissed the third infraction alleged against Global Securities. The Exchange and the Executive Director of the British Columbia Securities Commission (the “Executive Director”) subsequently applied to the Commission under section 28(1) of the Securities Act, R.S.B.C. 1996, c.418, (“The Act”) for a hearing and review of the decision of the Hearing Panel.

After the Executive Director and Exchange had given notice to the Commission under section 28(1), Global Securities brought a preliminary application before the Commission Hearing and Review Panel seeking determination on two points. On the first point, Global Securities challenged the standing of the Exchange to seek a review of a decision of its own disciplinary panel, asserting that, under the Act, the standing of the Exchange to seek a review of the Hearing Panel’s decision could only be as a respondent in the concurrent application brought by the Executive Director. On the second point, Global Securities asserted that any argument of the Exchange before the Commission Panel had to be limited to an explanatory role relating to the record and submissions on the jurisdictional issues.

The Commission concluded that it was open to the Exchange to present argument on the merits of the Hearing Panel’s decision. The Commission Panel also concluded that under section 28(1) of the Act, the Exchange was a “person directly affected” by the decision and therefore was entitled to apply for a hearing and review of the decision of the Hearing Panel.

The Court held that the standard of review to be applied to the Commission Panel’s decision on both matters was the standard of reasonableness simpliciter.

In this case, the Court held that it was not the Exchange, but the Hearing Panel that made the decision sought to be reviewed before the Commission Panel. The Hearing Panel heard submissions from the contesting parties, one of which was the Exchange, and rendered the decision. None of the authorities to which Global Securities referred purposed to restrict the submissions made by a contesting party upon the review of an independent tribunal’s decision. Global Securities’ argument was predicated on the assumption that the Hearing Panel’s decision was a decision made by the Exchange itself. This assumption did not withstand scrutiny. The Exchange was responsible for conducting the investigation of infractions and prosecuting them, whereas the Hearing Panel was entirely limited in function to its adjudicative role. The Commission Panel concluded that the Hearing Panel operated independently of the Exchange and that the Hearing Panel’s decision could not be characterized either legally or practically as an Exchange decision. It was on that foundation that the Commission Panel concluded that there was no reason in policy why the Exchange should not be permitted to apply for hearing and review of the decision of the Hearing Panel. The Court held that there was nothing unreasonable about that decision.

With respect to the decision under section 28(1), the Court noted that the decision that the Exchange could apply for a hearing and review independently of the Executive Director could only be found to be unreasonable if there was no line of analysis within it that could reasonably have led the Commission Panel to its conclusion. The Court held that while it had some reservations about the conclusion that the Commission Panel reached on this issue, it was supported by a tenable explanation. In those circumstances, the Court was not persuaded that the decision could be said to be unreasonable.

The appeal was therefore dismissed.

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