The Petitioner, Mr. Westergaard, successfully sought judicial review of a decision of the Financial Services Tribunal (the “Tribunal”). The Tribunal’s decision had upheld the decision of the Registrar of Mortgage Brokers cancelling Mr. Westergaard’s registration. The Respondent, Registrar of Mortgage Brokers, unsuccessfully brought its own petition for judicial review of the Tribunal’s decision that section 22(7) of the Mortgage Brokers Act applied to suitability hearings.

24. August 2010 0

Administrative law – Decisions of administrative tribunals – Financial Services Tribunal – Registrar of Mortgage Brokers – Mortgage brokers – Penalties and suspensions – Competence – Hearings – Limitations – Judicial review – Evidence – Previous complaints – Compliance with legislation – Standard of review – Patent unreasonableness

Westergaard v. British Columbia (Registrar of Mortgage Brokers), [2010] B.C.J. No. 1301, 2010 BCSC 912, British Columbia Supreme Court, June 29, 2010, I.H. Pitfield J.

Mr. Westergaard was a registered submortgage broker to various mortgage broker companies in British Columbia from 1972 to 1998. From 1996 to 1998, he was the responsible individual for Aaron Acceptance Corporation (“Aaron BC”), a company registered as a mortgage broker. In 1998, Mr. Westergaard terminated his registration and that of Aaron BC and moved to Alberta to carry on business as a mortgage broker in conjunction with Aaron Acceptance Corporation (“Aaron Alberta”).

On June 1, 2001, the Registrar of Mortgage Brokers in B.C. (the “Registrar”), told Mr. Westergaard he must apply for registration as a submortgage broker in BC on behalf of Aaron Alberta because the company was offering mortgages for sale in BC. Mr. Westergaard applied but the Registrar’s staff investigated Mr. Westergaard and recommended he not be registered because he was not a suitable candidate and his registration was objectionable. The Registrar issued a notice of hearing on April 11, 2002 and a suitability hearing was scheduled for September 14, 2003.

Before the hearing, Mr. Westergaard negotiated with the Registrar regarding his 2001 application. The Registrar approved his application subject to a number of conditions and the hearing was cancelled. In August 2004, his registration was renewed for a further term of one year. In July 2005, the Registrar granted the renewal of Mr. Westergaard’s registration for two years but refused to remove the conditions attached to the registration. In April 2006, Mr. Westergaard applied for renewal of his registration. The Registrar’s staff investigated the matter and eventually advised Mr. Westergaard that the Registrar was considering suspending or cancelling his registration or denying his application for renewal.

A suitability hearing proceeded in September 2007. The notice of hearing issued by the Registrar outlined several reasons why Mr. Westergaard was not suitable and his proposed registration was objectionable. On February 18, 2008, the Registrar issued a ruling cancelling Mr. Westergaard’s registration. The Registrar determined that section 22(7) of the Mortgage Brokers Act did not apply to the assessment of an applicant’s suitability. That section states that, “a proceeding under this Act may not be commenced more than two years after the facts on which the proceeding is based first came to the knowledge of the registrar.”

On February 19, 2008, Mr. Westergaard appealed the Registrar’s decision to the Financial Services Tribunal (the “Tribunal”). The Tribunal dismissed Mr. Westergaard’s appeal. However, the Tribunal found that the Registrar erred in holding that section 22(7) did not apply to suitability hearings. Despite that finding, the Tribunal concluded that the Registrar had knowledge of sufficient facts within the two-year period to justify the decision. In response to the Tribunal’s ruling, Mr. Westergaard filed a petition in respect of the Tribunal’s decision. The Registrar also filed a petition (to be heard at the same time) disputing the Tribunal’s decision regarding the application of section 22(7).

The Court reviewed the Tribunal’s decision; not the Registrar’s decision. The standard of review applicable to the interpretation of section 22(7) is patent unreasonableness. The Court found that the Tribunal reasonably concluded that a suitability hearing undertaken in response to an application to renew registration is a proceeding within the meaning of 22(7). This conclusion was influenced by the fact that the word “proceeding” is ordinarily broadly construed. The Court refused to accept the Registrar’s argument that section 22(7) was only intended to apply to enforcement proceedings. Therefore, the Registrar’s petition seeking a declaration about the application of section 22(7) was dismissed.

The Court turned to consider the application of section 22(7) to the suitability hearing for Mr. Westergaard. The question of suitability needed to be considered in the context of “new facts” being those the Registrar acquires less than two years before the notice of hearing is issued. If these new facts contradict “old facts” (ones acquired before the two year period), the fact of the contradiction may be relied upon to assess suitability. These principles were followed by the Tribunal. However, the Court found that the Tribunal inappropriately endorsed the Registrar’s reliance upon other facts, which were not “new facts”. In particular, the Registrar’s inquiries in the suitability hearing delved into the circumstances surrounding a very old offence for which Mr. Westergaard had been convicted but pardoned. The Court held that the Tribunal’s decision should be quashed and the matter remitted to the Tribunal for a reconsideration in accordance with the reasons in the within petition.

This case was digested by Scott J. Marcinkow of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact him directly at or review his biography at

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