Azeff v. Ontario Securities Commission
CITATION: Azeff v. Ontario Securities Commission, 2016 ONSC 1279
DIVISIONAL COURT FILE NO.: 480/15 DATE: 20160219
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
SWINTON, RADY AND C. HORKINS JJ.
BETWEEN:
PAUL AZEFF and KORIN BOBROW
Moving Parties
(Appellants in Appeal)
– and –
ONTARIO SECURITIES COMMISSION
Respondent
(Respondent in Appeal)
Bruce O’Toole and Clarke Tedesco, for the Moving Parties (Appellants in Appeal)
Anna Perschy and Jennifer Lynch, for the Respondent (Respondent in Appeal)
HEARD at Toronto: February 19, 2016
RADY J. (ORALLY)
[1] This is a motion under s. 21(5) of the Courts of Justice Act to set aside or vary the decision of Kruzick J. of October 19, 2015 dismissing the appellants’ request, pursuant to s. 9(2) of the Securities Act, to stay the sanctions imposed on them by the Ontario Securities Commission on August 24, 2015.
[2] The appellants are appealing the Commission’s decision of March 24, 2015 finding that they contravened ss. 76(1) and (2) of the Act and acted contrary to the public interest because they engaged in insider trading, tipping and misuse of confidential information. They also appeal the Commission’s sanctions decision, imposing a ten year ban on trading, becoming or acting as registrants, investment fund managers, managers or promoters, and from acquiring securities. The appeal has not yet been scheduled although it has been perfected and numerous dates are available in June 2016.
[3] As a preliminary matter, the appellants seek an extension of time under s. 21(5) of the Courts of Justice Act to bring this motion, which was not filed within the four day time period set out in Rule 61.16(6). With respect to the decision of the motions judge, they assert that he erred in law in his application of the second and third steps of the test enunciated by RJR-MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC), [1994] 1 S.C.R. 311.
[4] In my view, the moving parties do not meet the test for an extension of time to bring this motion.
[5] The test requires a consideration of the following:
Did the moving party form an intention to appeal within the four day window?
What is the length of the delay and the explanation for it?
What is the prejudice to the respondent?; and
What are the merits of the appeal?
[6] Overall on a motion to extend, the Court must determine if the justice of the case requires the granting of an extension. See Roberts v. 603418 Ontario Inc., 2014 ONSC 6240 at para. 2.
[7] The purpose of the time limitation is to ensure that any challenges to the decision of a single judge of the Divisional Court are dealt with expeditiously. Extensions ought not to be routinely granted: Zeitoun v. Economical Insurance Group, 2012 ONSC 2974 at para. 12.
[8] In this case, I am not persuaded that the appellants formed the requisite intention to bring this motion within the four day window. On the contrary, the record shows that the appellants intended to proceed with an appeal of the Securities Commission decision on an expedited basis. However, even if they did form the requisite intention, the appellants took no steps to obtain an early hearing date for the motion. The Commission urged their counsel to do so on several occasions. The appellants have not provided a satisfactory explanation for the continuing delay.
[9] On the issue of prejudice to the respondent, the Commission is charged with responsibility for the administration and enforcement of Ontario securities laws and the protection of the investing public. An extension of time, particularly in the face of the continued delay, is prejudicial to the public interest in protecting capital markets and investor confidence.
[10] Finally, on the apparent merits of the motion, I recognize that the threshold is not very high. In this case, however, the other considerations weigh heavily against an extension of time. To borrow from the decision in Sazant v. Ontario (Criminal Injuries Compensation Board), [2011] O.J. No. 1595 (Div. Ct.), “the overriding consideration for us, that is to say the justice of the case would require us to find that the merits of [the motion] are so strong that it overwhelms or trumps the other factors.” That is not the case here.
[11] The appellants submit that the motions judge erred by linking the need for irreparable harm with “disastrous consequences.” They say he also erred in considering the appellants’ spouses’ financial circumstances.
[12] The task of the motions judge is to determine whether there would be irreparable harm. The focus is on the nature of the harm and not its magnitude. The motions judge’s reference to “disastrous consequences” could be a reference to the nature of the harm. If the reference to disastrous consequences is in fact a reference to the magnitude of the harm, then it is an error. In any event, when one reads the two paragraphs that follow, we are not persuaded that he considered the magnitude of the harm rather than the substance.
[13] Evidence of financial loss is not determinative. The appellants rely on the Alberta Queen’s Bench decision in Visconti v. College of Physicians and Surgeons of Alberta. However, the Ontario Court of Appeal has considered this issue and held in Sazant v. College of Physicians and Surgeons, 2011 CarswellOnt 15914, paras. 11 and 12:
In virtually all cases where a governing body of professionals decides to revoke a member’s privilege of practice, a financial inconvenience or loss will inevitably result. Thus although it is a proper factor to consider, it will generally be far from dispositive.
[14] The endorsement of Kruzick J. makes clear that he properly applied Sazant. He commented that there was “little doubt that the appellants will suffer financial difficulties.” However, he also noted that the evidence was “soft and speculative” and that there was “little evidence as to the full and accurate state of the appellants’ finances.” Those findings are fully supported by the record. Moreover, he made no error in considering the spousal assets which the appellants themselves put in issue.
[15] Turning then to the motions judge’s treatment of the balance of convenience, the appellants argue that the motions judge overemphasized the importance of public interest.
[16] In my view, he properly recognized the public interest concerns of the Commission to protect investors and the integrity of capital markets as shown by the record before him and he determined that the balance of convenience favoured the refusal of a stay.
[17] The evidentiary record before Kruzick J. was clear that IIROC’s supervisory conditions were imposed in May 2011 when the appellants were only the subject of allegations by staff of the Commission. However, subsequently, the Commission found that the appellants had committed insider trading and tipping and that there was a risk that they would engage in such conduct again. The Commission did not merely question the effect of supervision but found that the appellants would engage in similar conduct in the future and that supervision was insufficient to protect the public interest when the Commission stated as follows:
[28] Continued registration for Azeff and Bobrow, even under strict supervision, does not provide a sufficient shield to the market. It would leave Azeff and Bobrow, as registrants, in the milieu where financings and takeover bids are regularly discussed. We have no confidence that Azeff and Bobrow would resist temptation any more in the future than they did in the past. Supervision, while laudable, does not cover the whole day. Tipping can occur by various, difficult to-detect, means and may not always occur at the workplace.
[18] Furthermore, as the record demonstrated, IIROC had ongoing concerns about the efficacy of their supervision order.
[19] In conclusion, the justice of the case does not justify an extension of time given the length of the delay, the prejudice to the respondent and the apparent lack of merit to this motion to vary or set aside the order of Kruzick J.
SWINTON J.
COSTS
[20] I have endorsed the Record, “Motion to set aside or vary the order of Kruzick J. and to be granted an extension of time to bring the motion is dismissed for oral reasons delivered by Rady J. today. Costs of the Commission fixed at $1,200.00, an amount agreed upon by the parties.”
___________________________ RADY J.
SWINTON J.
C. HORKINS J.
Date of Reasons for Judgment: February 19, 2016
Date of Release: March 1, 2016
CITATION: Azeff v. Ontario Securities Commission, 2016 ONSC 1279
DIVISIONAL COURT FILE NO.: 480/15 DATE: 20160219
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
SWINTON, RADY AND C. HORKINS JJ.
BETWEEN:
PAUL AZEFF and KORIN BOBROW
Moving Parties
(Appellants in Appeal)
– and –
ONTARIO SECURITIES COMMISSION
Respondent
(Respondent in Appeal)
ORAL REASONS FOR JUDGMENT
RADY J.
Date of Reasons for Judgment: February 19, 2016
Date of Release: March 1, 2016