The appeal by the Registrar of Mortgage Brokers from the decision of the Financial Services Tribunal that overturned the Registrar’s finding that a sub-mortgage broker (“Matick”) breached s. 17.3 of the Mortgage Brokers Act, R.S.B.C. 1996, c. 313 by failing to disclose his wife’s position as an employee of T.D. Canada Trust, was dismissed

Administrative law – Decisions of administrative tribunals – Registrar of Mortgage Brokers – Mortgage brokers – Disciplinary proceedings – Penalties and suspensions – Public interest – Judicial review – Disclosure – Evidence – Compliance with legislation – Standard of review – Correctness – Patent unreasonableness

Registrar of Mortgage Brokers v. Financial Services Tribunal, [2007] B.C.J. No. 1670, British Columbia Supreme Court, July 26, 2007, Rice J.

On June 1, 2006, the Registrar of Mortgage Brokers found that Matick breached s. 17.3 of the Mortgage Brokers Act, R.S.B.C. 1996, c. 313 by failing to disclose his wife’s interest in certain of his mortgage transactions. Matick’s wife, in her position as an employee of T.D. Canada Trust, had referred people looking for mortgages to her husband. The Registrar also found that Matick breached his duties under s. 8.1 of the Act as a sub-mortgage broker by receiving from another employee of T.D. Canada Trust certain confidential information about borrowers that he was not entitled to receive. The Registrar imposed a penalty fine of $1,500 and required Matick to take and pass a mortgage brokers course and an ethics course. This decision was appealed by Matick to the Financial Services Tribunal.

The Tribunal upheld the Registrar’s findings that Matick breached s. 17.3 of the Act. The Tribunal noted that a sub-mortgage broker is defined in the Act as “Any person who actively engages in any of the things referred to in the definition of mortgage broker”. The Tribunal concluded that because there were overlapping rules and obligations between a mortgage broker and a sub-mortgage broker, the extent of the overlap must be left to be determined by the Registrar given the specific circumstances at hand. The Tribunal allowed Matick’s appeal on the use of confidential information under s. 8.1 finding that Matick did not solicit or purposely collect the information, but rather it was sent to him by the T.D. Bank employee on her own initiative. The Tribunal substituted a reprimand for the Registrar’s cash penalty. Both Matick and the Registrar appealed this decision.

With respect to the issue concerning the breach of s. 17.3, the Court found that the appropriate standard of review was correctness. The Court noted that expertise was not required to interpret the words “mortgage broker” and “sub-mortgage broker” and that the appropriate interpretation was a question of law. The Court found that the section provided that a mortgage broker, but not a sub-mortgage broker, must disclose its associates. This seeming inconsistency was not a gap that should be filled by the Registrar. Given this interpretation, the Court concluded that s. 17.3 did not apply to Matick as a sub-mortgage broker and quashed the Tribunal’s ruling that there had been a breach of this section.

In reviewing the issue of a breach of s. 8(1)(e) of the Act, the Court noted that this required a finding that Matick “conducted business in a manner prejudicial to the public interest by taking possession of confidential information sent to him by a bank employee”. This involved a consideration relating to the policy of the Act and was a question of mixed fact and law. Based on these factors, the Court found that the appropriate standard of review was patent unreasonableness, which required the Court to identify some immediate and obvious defect in the decision of the Tribunal. The Court held that the Tribunal was not patently unreasonable when it determined that it was appropriate to disregard the conduct of persons other than Matick. The documents in question were faxed to Matick at his office by an employee of T.D. Canada Trust. Matick’s conduct was not voluntary or negligent or anything more than passive receipt of faxed information. There was no evidence that, in these circumstances, the mere receipt of faxes, without more, was “prejudicial to the public interest”. In the result, the Court affirmed the Tribunal’s decision dismissing this complaint against Matick and dismissed the Registrar’s appeal.

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