COURT FILE NO. 567/08
SUPERIOR COURT OF JUSTICE – DIVISIONAL COURT – ONTARIO
RE: ALEXANDRE JOSE ALVES (Appellant)
v.
SUPERINTENDENT OF FINANCIAL SERVICES (Responding Party)
BEFORE: Chapnik, Molloy and Echlin, JJ.
COUNSEL: Jacqueline L. King, for the Appellant
Stephen Scharbach, for the Responding Party
HEARD: July 13, 2009, at Toronto
E N D O R S E M E N T
Introduction
1This is an appeal from the decision of the Financial Services Tribunal (the “Tribunal”) dated October 10, 2008 and subsequent order of the Superintendent of Financial Services dated October 22, 2008, refusing the Appellant’s application for a mortgage broker licence under the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c. 29 (“MBLAA)”. There is a statutory right of appeal from a decision of the Tribunal to the Divisional Court: MBLAA s. 21(5).
2The Tribunal’s decision is based on s. 14 of the MBLAA and s. 10 of Ontario Regulation 409/07 under that legislation. When an application is submitted under the Act, subsection 14(1) directs the Superintendent as follows:
- (1) The Superintendent shall issue a licence to an applicant who satisfies the prescribed requirements for the licence unless the Superintendent believes, on reasonable grounds, that the applicant is not suitable to be licensed having regard to such circumstances as may be prescribed and such other matters as the Superintendent considers appropriate.
3In this case, the Superintendent formed the belief that Mr. Alves was not suitable to be licensed having regard to circumstances 1 and 3 prescribed by Regulation 409/07 which states:
In determining whether an individual is not suitable to be licensed as a mortgage broker or agent, the Superintendent is required by s. 14(1) and 16(4) of the Act to have regard to the following prescribed circumstances:
Whether an individual’s past conduct affords reasonable grounds for belief that he or she will not deal or trade in mortgages in accordance with the law and with integrity and honesty;
Whether the individual has made a false statement or has provided false information to the Superintendent with respect to the application for the licence.
4The Tribunal refused Mr. Alves’ application for a mortgage brokerage licence because of: his criminal conviction for assault, criminal harassment and mischief on May 13, 2008, relating to a dispute with his former girlfriend; the circumstances of his conduct in that regard, including in his dealings with the police; and the fact that he falsely stated in his application that there were no criminal charges outstanding against him, when in fact the charges that later gave rise to the criminal conviction were ongoing at the time.
The Issues
5In argument, the appellant raised three points:
(i) the Tribunal should not be afforded deference because it has no special expertise on issues of morality, such as “honesty and integrity”;
(ii) the Tribunal made no actual findings of fact, but rather simply set out a spectrum of possible findings;
(iii) the Tribunal erred in refusing the license rather than imposing a lesser penalty particularly in light of the more lenient treatment afforded to other persons who have been licensed to practice as mortgage brokers notwithstanding past conduct that was either worse, or more directly relevant, than the conduct of Mr.Alves.
Standard of Review
6Although the appellant’s factum makes some reference to issues of procedural fairness and bias, those issues were not advanced in oral argument. Indeed, any such references in the factum were mischaracterizations of the real issues involved, which relate to findings of fact and law and not to issues of procedural fairness or natural justice.
7It was also conceded in argument that there was no error by the Tribunal that could be characterized as a pure question of law. Counsel for the appellant submitted that the only past conduct that is relevant is that which calls into question whether the individual will trade or deal in mortgages with honesty and integrity and that s. 10 of the Regulations must therefore be considered as being directed towards crimes of dishonesty such as theft or fraud. However, counsel fairly conceded in argument that as a matter of statutory construction, any criminal conviction (or other past conduct) could be relevant and that the Tribunal is not restricted to the consideration of crimes of a financial nature. Obviously, crimes of dishonesty are a matter of particular concern when considering the licensing of professionals who will stand in a position of trust in matters involving money and property. However, the Tribunal was clearly alive to this issue, and of the importance of connecting the conduct to the context of activities in which the person would be engaged as a mortgage broker. For example, the Tribunal cited and applied the principles developed in Henderson v. Superintendent of Financial Services (FST File No. M03129-2008 and specifically noted (at page 12 of its Reasons) that it weighed in Mr. Alves’ favour that there was no financial component to the conduct and no financial advantage gained as a result of the conduct. Nevertheless the Tribunal found it was relevant to consider the conduct and the circumstances surrounding it. This was a correct statement of the law and is not challenged.
8The real issue in this case is the manner in which the Tribunal applied the facts of the case to the law in reaching its conclusion. The ultimate decision of the Tribunal to refuse Mr. Alves’ application for licensing is a question of mixed fact and law. The Tribunal has recognized expertise in a specialized area. It is required to consider issues of public policy and the protection of the public in the context of the regulation of professionals in a complex financial industry. It has considerable discretion to exercise under the legislative scheme. The Tribunal is not called upon to judge “morality” in a vacuum, but rather to consider issues of “honesty and integrity” within the specific context of the mortgage industry. This is an assessment entrusted to the Tribunal by the legislation and about which the Tribunal has specific expertise. All of these factors support the conclusion that the appropriate standard of review is one of reasonableness. This is not an appropriate situation in which to apply the higher correctness standard. (See Dunsmuir v. New Brunswick, 2008 SCC 9, [2008 S.C.J. No. 9; Nolan v. Ontario (Superintendent of Financial Services), [2007] O.J. No. 2167 (C.A.).)
Findings of Fact
9The Tribunal carefully considered the evidence before it and provided cogent reasons for its decision. In doing so it made clear findings of fact and credibility.
10Counsel for the appellant focused on the following statement by the Tribunal at page 14 of its reasons, (referring to the misrepresentation made by Mr. Alves in his application about there being no criminal charges against him):
At worst, the explanations provided by the Applicant . . . support the inference that the Applicant knowingly misrepresented the truth when submitting this application. At best, this evidence supports the inference that he demonstrated a reckless disregard for the truth.
11This statement cannot fairly be considered out of context. In the preceding paragraph, the Tribunal noted that the false statement was in respect of an issue that could have played a material role in the issuance of the licence. It was therefore not an error of no or little consequence. Next the Tribunal considered whether the error was advertent or inadvertent. In the sentence immediately preceding the sentence quoted above, the Tribunal stated, “Second, although the Applicant claims to have made an honest mistake in his March 26 application the Tribunal does not find his testimony credible in this respect.” The Tribunal then sets out the best case/worse case scenario. However, the Tribunal does not end its analysis there, but proceeds to consider the plausibility of the explanations of inadvertence offered by the applicant and rejects them for reasons which it sets out in detail over the course of several paragraphs.
12In my view, the Tribunal made findings of credibility against Mr. Alves that are entitled to deference from this Court, both because of the reasonableness standard of review for this Tribunal on issues of fact and because findings of credibility by a triers of first instance are always afforded considerable deference as they have the distinct advantage of seeing and hearing the witness testify.
13It was open for the Tribunal to reach the conclusions it did on the evidence before it. Those conclusions are rational and supported by articulated reasons. There is no basis for this Court to interfere.
Ultimate Decision and Proportionality
14I also see no basis for interfering with the ultimate decision reached by the Tribunal, which was that the Superintendent’s mandate to protect the public interest and enhance public confidence in the mortgage industry made it reasonable to deny the application in light of the nature of the past conduct, the surrounding circumstances of that conduct, and the recency of it, when combined with the misrepresentation of a material fact by Mr. Alves in his application for licensing.
15In coming to that conclusion, the Tribunal was cognizant of the serious consequences this decision would have for Mr. Alves. The Tribunal took into account the expert testimony of the psychiatrist as to his lack of propensity for violence and the numerous character references attesting to the fact that this conduct was out of character for Mr. Alves. However, the Tribunal was also mindful of the proximity in time between the conduct surrounding the criminal offences and the licensing application, and the additional factor of the false statement about the criminal charges in the application. After weighing all of the evidence along with the public protection and public perception mandate, the Tribunal concluded that the appropriate course of action was to refuse the application for licensing.
16Counsel for the appellant referred this Court to decisions involving other individuals who arguably had committed more serious wrongs, but were nevertheless permitted to carry on business as a mortgage broker, although sometimes with conditions. None of those situations were on all fours with this one and are readily distinguishable on their facts from the situation here.
17In any event, the principle of proportionality as applied in the context of sentencing criminal offenders cannot be imported directly into an administrative context such as this one. Very different issues are at play in a situation involving the licensing of individuals to engage in professional activity that involves issues of public trust. That is not to say that the treatment of others in similar situations is irrelevant to the treatment of Mr. Alves. However, the issue is not what decision this Court might have reached on the same facts, but whether the decision of the Tribunal was a reasonable one in all of the circumstances. The refusal of a licence in this situation was clearly one of a range of reasonable options open to the Tribunal and involved an exercise of discretion. As such, it is entitled to considerable deference from this Court. I see no basis to interfere.
Conclusion
18In the result, this appeal is dismissed. The appellant abandoned his claim for damages, and it is therefore not necessary to deal with that issue. The appellant had argued that if he was successful, he should have costs, but if he was not successful, he should not be ordered to pay costs because of the fact that the legislation is new, the issues are novel and the sanction imposed was disproportionate to the manner in which others have been treated. I do not see the issues as being particularly novel, nor is the “penalty” disproportionate. This is not the type of public interest litigation that would prompt granting an indulgence to the unsuccessful party with respect to costs. The respondent seeks costs of $2000, which is a very reasonable position. Costs are awarded to the respondent in the amount of $2000 all inclusive, payable in 60 days.
MOLLOY J.
I agree:
CHAPNIK J.
I agree:
ECHLIN J.
Date: July 14, 2009