Administrative law – Decisions of administrative tribunals – Securities Commission – Stock brokers – Disciplinary proceedings – Practice and procedure – Examination for discovery – Judicial review – Legislative compliance – Jurisdiction of court – Privilege and immunity – Evidence – Disclosure – Relevance of information disclosed
Nova Scotia (Securities Commission) v. Potter,  N.S.J. No. 47, 2012 NSCA 12, Nova Scotia Court of Appeal, January 31, 2012, M. MacDonald C.J.N.S., M.J. Hamilton and P. Bryson JJ.A.
In 2006, a Notice of Hearing was issued by the Securities Commission against three individuals alleging that the three individuals violated the Securities Act. The Commission Vice-Chairman ordered the staff of the Commission (the “Staff”) to provide disclosure and authorized discovery limited to evidence directly relevant to the three individuals. Further direction setting out the scope of the discovery examinations was subsequently provided by Commissioner Gruchy (the “Commissioner”), who assumed conduct of the proceedings. During discovery examination, the following question was asked of a staff witness:
“Do you have any knowledge or information as to why the decision was made not to bring enforcement proceedings against particular subjects of the investigation with respect to whom you had recommended there was sufficient evidence to support a violation?” (the “Question”)
Counsel for the Staff objected to this Question on the grounds that it may violate Nova Scotia securities law. The Commissioner ruled that the objection could not be upheld because it did not disclose what securities law would be violated. The Staff suggested an ex parte hearing before the Commissioner for determination of its objection, expressing concern that even specifying what laws might be breached would breach those laws. The Commissioner declined, ruling that the question was irrelevant, but held that the legality of the question could be submitted to the Supreme Court. The Staff proceeded with that application. The judge held that answering the question would not violate securities laws. Appeal of this decision was sought. The Nova Scotia Court of Appeal set aside the judge’s decision and remitted the issue to the Commission. The Appeal Court held that any concern about disclosure, privilege or related evidentiary and procedural questions should be dealt by the Commissioner because these matters fell squarely within the regulatory mandate and expertise of the Commission.
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