Citation: MSF Group Inc. v. Ontario (Superintendent Financial Services), 2016 ONFST 22 Decision No. M0643-2015-2 Date: 2016/11/22

IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act 2006, S.O. 2006, c. 29 (the “Act”) in particular sections 18, 19, 21, and 43;

AND IN THE MATTER OF the Notice of Proposal to Revoke Licences, dated July 21, 2015, against MSF Group Inc. and Lilia Reznik, issued by the Director, Licensing Branch by delegated authority from the Superintendent of Financial Services;

AND IN THE MATTER OF a Hearing in accordance with subsection 21(3) of the Mortgage Brokerages, Lenders and Administrators Act 2006, S.O. 2006, c. 29.

MSF GROUP INC. and LILIA REZNIK

and

BEFORE:

Florence A. Holden Chair of the Panel and Chair (Acting) of the Tribunal

Denis Boivin Member of the Panel and Vice-Chair (Acting) of the Tribunal

Ian McSweeney Member of the Panel and Vice-Chair (Acting) of the Tribunal

For the Applicant – Graeme Hamilton, counsel

For the Superintendent of Financial Services – Mark Bailey and Jessica Spence, counsel

1This matter was originally before us in relation to a Notice of Proposal dated July 21, 2015 (the “NOP”) issued by the Director, Licensing and Market Conduct Branch by delegated authority from the Superintendent of Financial Services of Ontario (“Superintendent”) proposing to revoke the mortgage brokerage licence of MSF Group Inc. (“MSF”) and the mortgage broker licence of Lilia Reznik. The grounds for the proposal to revoke these licences relate to a series of allegedly false information and/or documents provided by Ms. Reznik, or another agent authorized to deal or trade in mortgages on behalf of MSF, to Scotiabank in support of five separate mortgage applications in contravention of the Act. The Applicants, Ms. Reznik and MSF both filed a Request for Hearing and on consent, the hearing was held jointly.

2The hearing took place on June 6, 7, 8, 9, 10, 21 and 22 of 2016.

3The Tribunal released its decision on September 8, 2016 and ordered the Superintendent to carry out his proposal to revoke the mortgage broker licence of Lilia Reznik, and the mortgage brokerage licence of MSF Group Inc. (the “Decision”). On September 19, 2016, the Superintendent revoked the applicable licences of both MSF and Ms. Reznik.

4Also on September 19, 2016, the Applicant Ms. Reznik filed a Request for Review of the Decision. Her then counsel, Mr. Collins, advised the Registrar that he had also filed an Application for Judicial Review with the Ontario Divisional Court. Mr. Collins filed an amended Request for Review (the “Request”) on September 28, 2016 with the Registrar which was accepted by the Tribunal. The Superintendent filed a response on October 5, 2016.

5In paragraph 53 of the Request, the Applicants indicate that they do not challenge the revocation of the mortgage brokerage licence of MSF, but seek to overturn the Tribunal’s decision regarding Ms. Reznik’s licence revocation. Such a result would, however, be inconsistent with other positions the Applicants take in the Request that the Tribunal find that no contravention of the Act occurred and that the Applicants (both MSF and Reznik) are suitable to be licensed.

6The Tribunal was advised on October 12, 2016 that Ms. Reznik had retained new legal counsel, Mr. Hamilton. Mr. Hamilton advised the Tribunal at that time that he was seeking instructions and reviewing the documents filed. On October 24, 2016, Mr. Hamilton further advised the Tribunal that he would continue with the Request as originally filed and amended, but that the Application for Judicial Review was to be abandoned. The Tribunal was subsequently given a copy of the Notice of Abandonment of the Judicial Review on October 28, 2016.

7For completeness, we note that the Applicants also filed an Application for a Stay of the Tribunal’s Order on October 5, 2016 (the “Stay Application”), which appears to be in respect of both MSF and Ms. Reznik. The Tribunal notes that the Stay Application sought to stay the Tribunal’s Order “pending the panel’s review of the Applicants’ Request for Review and the decision of the Divisional Court in the Applicants’ Application for Judicial Review.” A pre-hearing conference was held on October 26 in respect of the Stay Application to set dates for document exchange and a hearing date following the date of this decision.

8For reasons outlined below, we deny the Applicants’ Request for Review as the Applicants have failed to meet the required threshold for review.

II. THE TEST FOR REVIEW

9The conditions for reviewing the Tribunal’s decisions and orders are set out in Rule 45.01 of our Rules of Practice and Procedure for Proceedings Before the Financial Services Tribunal (“Rules”) which states:

“In deciding whether it is advisable to review all or part of its decision or order, the panel or member may consider any relevant circumstances, including:

(a) whether there is a material error of law or fact such that the panel or member would likely have reached a different decision but for that error;

(b) the extent to which any party or any other person has relied on the decision or order;

(d) whether the public interest in finality of decisions and orders is outweighed by the prejudice to the requester.”

A review is conducted in writing, unless otherwise ordered: Rule 46.02.

10On the facts of this case, the Superintendent has relied on the Orders of the Tribunal to revoke the licence of the Applicants under Rule 45.01(b). The Tribunal’s September 8, 2016 decision is not under appeal or judicial review so 45.01(c) does not apply.

11The case of Olszewska v Ontario (Superintendent Financial Services) relied on Gay Lea Foods Co-operative Limited,¹ and formulated the following threshold test to be applied to a Request for Review:

“A. The Applicant must put forward either new evidence or new arguments or objections not reasonably available at the time of the original hearing; and

B. A Request for Review is not an opportunity to reargue the case.”²

12Olszewska has been applied in more recent Tribunal decisions in Shi v. Ontario (Superintendent Financial Services)³ and Barot v. Ontario (Superintendent Financial Services). ⁴ In this Review, the Applicant has made no attempt to explain how the Request meets the threshold test. In fact the Request concedes that the only new factual evidence, namely in relation to a subsequent alleged job offer to Ms. Reznik, arose at a point in time after the hearing.

13In Olszewska and other Tribunal decisions, the McGrath case has also been cited which states:

“There is a strong public interest in the finality of orders. Accordingly, most Tribunals whose rules provide for review or reconsideration offer such an opportunity only on very narrow grounds...”⁵

Rule 45.01(d), in our view, reflects the concern expressed above in McGrath.

14The relief sought by the Applicants falls into two parts. The first part relates to a request that the Tribunal now find that email evidence admitted at the hearing should not have been admitted and that the Tribunal also find that the Applicants remain suitable to be licensed because the totality of the evidence does not support a finding that the Applicants contravened the Act. The second part related to Ms. Reznik only: the relief requests that evidence of the job offer arising at a point in time after the hearing be considered in a new oral hearing and that a fine be imposed by the Tribunal instead of licence revocation based on that evidence. Ms. Reznik seeks to work as a mortgage agent (rather than a broker) under the supervision of a licensed broker.

15We have carefully reviewed the Request and the Applicants’ submissions as to alleged errors of fact and law under Rule 45.01(a) and have concluded that the threshold test formulated in previous cases has not been met. With respect to the authenticity and admissibility of the email documents, the Applicants offer no new evidence and their submissions largely repeat arguments made at the hearing and rejected by the Tribunal. The Tribunal’s analysis and reasons for its findings of authenticity and admissibility of documents referred to in paragraphs 2-20 of the Request, namely in regard to the copies of email documents attached to Mr. Grieg’s affidavit, were detailed at length in paragraphs 7-20 of our Decision. The Decision outlined in detail the Tribunal’s analysis and reasons in respect of the authenticity and admissibility of that evidence and in our view do not in the circumstances require re-review or repetition herein. To the extent that the Applicants have slightly re-phrased their arguments, this could have been done during their original submissions at the hearing. We see nothing to suggest a material error of law or fact such that we would have reached a different conclusion.

16So that Ms. Reznik understands our result, we will comment on some of the allegations made in the Request. However, to be clear, our comments herein in no way revise, correct or clarify our September Decision which is final.

17The suggestion in paragraphs 3, 4 and 17 of the Request that the Tribunal shifted the burden of proving authenticity to the Applicants is patently false. In paragraph 16 of the Decision, the Panel specifically addressed the issue of whether the Superintendent met its burden to establish authenticity. The Panel found that: “The Superintendent had gone beyond the standard to establish authenticity of the exhibits to Mr. Greig’s affidavit in relation to the alleged contravention.”

18To support this conclusion, the Panel stated:

“We accept Mr. Greig’s affirmation as to the source of the attachments to his email being the RCMP evidence binder and RCMP CD supplied to him directly, and the fact that he kept the documents in a locked cabinet in his office credible. The documents came into existence under circumstances that make them inherently trustworthy.”

19In paragraph 11, the Tribunal stated:

“[11] On questioning by the panel, Mr. Collins conceded that: 1) the standard of proof to be applied on the authenticity of the documents before an administrative tribunal in this case was proof on a balance of probabilities; 2) that there was no suggestion that Mr. Greig was intending to deceive the Tribunal; and 3) that he was not suggesting that Mr. Greig, or the prior FSCO investigators Mr. Logan and Mr. Mang, tampered with or altered or created the documents attached to Mr. Greig’s affidavit. ......”

20The Tribunal did note in paragraph 12 that “Mr. Collins did not provide any evidence that the documents attached to Mr. Greig’s affidavit were not authentic; he just argued that it was up to the Superintendent to prove the authenticity of the documents. We find that it was open to the Applicants to call evidence as to the integrity of the electronic documents (emails). They did not do so.” However, this statement did nothing to change the burden of proof. It merely reflected the right of the Applicants’ counsel to provide such evidence if he could and our observation that he did not. The Request provides no new evidence or argument in respect of the emails.

21The Panel ultimately concluded in paragraph 16 of the Decision that “[t]here is no reason for the Tribunal to believe that the documents are not what they purport to be and are authentic. Consequently, we find that the Greig affidavit and its related attachments are admissible under section 15(4) of the SPPA, and further, we find the documents relevant to prove the alleged offences. Mr. Collins was free during the hearing to question, and did question, the accuracy, proper interpretation and ultimate reliability of the documents.”

22Paragraph 8 of the Request suggests that the Tribunal supported the Applicants’ contention regarding Mr. Grieg’s conduct: it did not. The Decision merely outlined the Applicants’ submissions. Again, Applicants’ counsel offers no new evidence or argument in regard to his allegations regarding the authenticity or admissibility of that evidence. In fact the Request provides no supporting affidavit setting out the facts relied upon by the Applicants as required by Rule 44.04(f). The Request is merely a reprise of arguments already presented at the hearing, and reflects disagreements with the Tribunal’s assessments at the hearing and in its ultimate decision.

23Contrary to the inference in paragraph 10 of the Request, that Mr. Greig’s affidavit was delivered in contravention of the Rules, the Tribunal explicitly ruled that “the affidavit evidence was submitted in accordance with Rule 29.02 as directed by the Tribunal and therefore did not breach Rule 29.01.”⁶ Further, as our decision makes clear, counsel for the Applicants was well aware of the content and source of the documents attached to the affidavit six months in advance of the hearing, as well being provided with witness statements at that early date, all pursuant to agreements reached by the parties and reflected in pre-hearing conference orders. Previous counsel had several days in advance of the hearing to review the affidavits, which in the case of Mr. Greig merely appended documents as exhibits previously disclosed. The witnesses were taken through viva voce evidence in chief and lengthy cross-examination. Consequently it is difficult to see how the Applicants were procedurally disadvantaged.

24The Applicants’ counsel made full arguments at the hearing with respect to witnesses not called (Cst. Picard-Blais and Mr. Mang), Mr. Greig’s updates to an internal memorandum, the reliability of Mr. Greig’s testimony, the professional status of YD, and reliance on the RCMP-obtained evidence. There is no new evidence or argument in the Request in our view, which would meet the threshold test required for the Request to succeed.

25Further the exclusion of evidence referred to as “Tab 30” of Mr. Greig’s affidavit was identified and removed from the record and not considered by the Panel on the Tribunal’s own motion as noted in paragraph 20 of its Decision. The only person to refer to this document after that ruling was Mr. Collins in his submissions and he was asked not to do so as it was not before the Tribunal in evidence. Consequently, we cannot fathom how it could be prejudicial to the Applicants in the Tribunal’s deliberations or in any way defeat the reliability of the evidence actually before the Tribunal.

26The Applicants’ submissions in paragraphs 9-19 simply go over old ground and are an attempt to re-argue earlier failed motions and submissions. The Request does not provide new evidence or argument as grounds to properly support a review of the decision. Consequently there is no new evidence here to support a request that the emails should not have been submitted into evidence as per paragraph 50 of the Request.

27With respect to paragraphs 20-29 of the Request, namely submissions regarding the five disputed mortgage transactions, again the Applicants provided no supporting affidavit with new evidence, or any new arguments. The Tribunal’s detailed findings of fact based on clear, cogent and compelling evidence led us to conclude that the Applicants, Ms. Reznik and MSF, had contravened subsections 43(2) and 43(1) of the Act respectively. In particular, and again on the basis of the clear, cogent and compelling evidence described above, we found on a balance of probabilities that the Applicants knowingly gave false documents to Scotiabank in support of five distinct mortgage applications in contravention of the Act. The Tribunal fully considered the evidence and arguments referenced by the Applicants, but came to a different conclusion. As stated above in Olszewska, a Request for Review must cite new evidence or new arguments or objections not reasonably available at the time of the original hearing. It is not a forum to simply reargue a party’s case. None of the Applicants’ arguments specifically relating to the five mortgage files meet the test for review. In our view, the Applicants have not made a case for any material error of fact or law or other relevant circumstances which meet the threshold for review.

28The only “new facts” alleged by the Applicants in the Request relate to penalty. Essentially the purported new facts relate to an alleged offer of employment to Ms. Reznik as a mortgage “agent” and supervision by a licensed third party; the offer was made after the Tribunal’s Decision. No actual evidence of such an offer has been submitted to the Tribunal with the Request in the form of an affidavit as required by Rule 44.04(f). Even if submitted, these facts were, by Mr. Collins’ own statements to the Tribunal, not in existence at the time of the hearing and therefore do not meet the threshold test for review. New facts of the kind relevant to a request for review are facts that existed at the time of the hearing but were, for some valid reason, not reasonably available.

29We are also mindful of the Tribunal’s prior decisions in Gay Lea⁷ and McGrath⁸, which support the proposition that any new evidence must be “so cogent that it would be practically conclusive of the case in favour of the result sought by the party making the request for review”. In this case, the “new” job offer would not change our determination of penalty for reasons outlined below.

30Significantly the Request fails to recognize that the Applicant, Ms. Reznik is not currently licensed as a mortgage agent, which is a separate licence from that of mortgage broker. Even if Ms. Reznik had maintained her broker licence, she was not dually licensed as an agent who could be supervised. Perhaps counsel and the Applicant were unaware of that material fact, but in any case, the Tribunal will not go so far as to licence a person who has not applied to the Superintendent for such licence in the normal course. This is not a case where an application for an agent’s licence has been considered by the Superintendent, and approved, with or without conditions or refused. The remedy suggested by the Applicant would put the Tribunal in the position of direct regulation, without actual evidence, as opposed to an adjudicative tribunal hearing appeals from a decision of the Superintendent. Further it would leave the door open for future applicants to endlessly delay the imposition of penalty in relation to facts not available at the hearing stage. The test for review is not met on penalty.

31The Applicants also submit that the non-bifurcation of the hearing denied the Applicants the ability to present evidence on the singular issue of penalty. However, from the outset, the Applicants agreed to the statement of issues and the process for the hearing, including the fact that there was to be a single non-bifurcated hearing on both the substance of the allegations and penalty as is the normal hearing process under the Tribunal Rules. Furthermore, the Applicants made no effort at any point before or during the evidentiary portion of the hearing to seek a bifurcated hearing. A party has a duty to raise procedural issues as they arise in the proceedings and cannot after the fact rely on the failure to do so as grounds to challenge the Decision. The Tribunal is entitled by the Statutory Powers Procedure Act and its own Rules to maintain reasonable control of its own process. It is not inherently unfair or a denial of natural justice or error in law to have a single hearing. A party cannot dictate process.

32The Applicants did not have any witnesses available at the hearing to address penalty, and Ms. Reznik, as noted, did not provide any testimony. Mr. Fridman was a character witness of brief acquaintance who did not know Ms. Reznik at the time of the offences and offered no testimony as to her honesty or integrity. He gave no evidence regarding penalty. As a lawyer qualified in Ontario, he did not ask for a translator and the Tribunal found no language difficulties in understanding his limited testimony which had no impact on either the findings of contravention or penalty. To the extent that such statutory declaration contained additional evidence relevant to the Applicants’ case, Mr. Collins had the opportunity to adduce such evidence while Mr. Fridman was giving oral testimony.

33There was no denial of evidence on penalty by the Applicants but a restriction on the ability of counsel, Mr. Collins, to give direct unsworn evidence on behalf of his client during submissions as he repeatedly attempted to do. Counsel was advised not to continue to give evidence, not from calling evidence. By failing to attach the required affidavit setting out the facts relied on by the Applicants in the Request, counsel continues to ignore the Tribunal’s Rules on review.

34The Applicants’ submissions in paragraphs 33-43 of the Request in our view are without merit and do not provide a reason for review. In fact, Applicants’ counsel sought to give evidence himself during his argument with respect to matters he could have easily adduced evidence on during the evidentiary portion of the hearing.

35There is nothing in the Request that would have led us to a different view on penalty. As noted in paragraph 53 of the Decision, “Despite the description by Mr. Collins of Ms. Reznik’s marital difficulties and personal circumstances as a single parent of her three children, there was no evidence that the Applicant was under any unusual and severe pressure leading up to the conduct that is relevant for the purposes of this case....”.

36Counsel also makes reference in the Request in paragraph 44 to settlement discussions as evidence of the Applicant’s remorse. This was, appropriately, not evidence before the Tribunal as settlement discussion are without prejudice discussions and are privileged. Following long-standing legal precedent and the Tribunal’s own decision in Navistar,⁹ such settlement privilege cannot be introduced at a hearing, and does not provide the basis for review under Rule 45.01.

37The Panel considered many factors in assessing the appropriate penalty, including the financial consequences to the Applicant. Counsel’s own submissions against a licence revocation were based on an assertion that the Applicants had not breached the Act. As stated in our Decision, we have found that assertion not to be the case. Counsel now asserts that: “The Panel erred in inferring a failure to testify was a failure to demonstrate remorse.” As Ms. Reznik did not admit the offences, but rigorously defended them, we are unable to see how her silence at the hearing should have been taken for remorse.

38We find no evidence in the Request of any material error in fact or law or relevant circumstances in determining the authenticity or admissibility of evidence, or in our determination of offence or penalty that would cause us to come to a different conclusion. Nor does the Request offer, in our view, any new arguments or objections not reasonably available at the time of the original hearing. The threshold test for review has not been met in this Request.

III. ORDER

39Having failed in our view to meet the threshold test for review, we deny the Applicants, Lilia Reznik’s and MSF’s Request for Review and uphold our Decision directing the Superintendent to revoke Ms. Reznik’s mortgage broker licence and the brokerage licence of MSF Group Inc. We direct the Applicants to Rule 44.03 which provides that no further request for review to the Tribunal is possible.

40A teleconference call will be held with the parties, if necessary, in respect of the continuance of the Stay Application rendered moot by our decision herein.

Dated at Toronto, this 22nd day of November, 2016.

“Florence A. Holden” Florence A. Holden

“Denis Boivin” Denis Boivin

“Ian McSweeney” Ian McSweeney

Footnotes

Gay Lea Foods Co-operative Limited v. Ontario (Superintendent Financial Services) 2010 ONFST 12.
Olszewska v. Ontario (Superintendent Financial Services), 2013 ONFST 7, paragraph 4.
Shi v. Ontario (Superintendent Financial Services), 2014 ONFST 4, paragraph 4.
Barot v. Ontario (Superintendent Financial Services), 2013 ONFST 14 and 2015 ONFST 21.
McGrath v. Ontario (Superintendent Financial Services) 2010 ONFST 9.
Rules were reissued on September 20, 2016 and Rule 29 is now Rule 28.
Op.cited, paragraph 8.
Op.cited.
Navistar Canada Inc. v. Ontario (Superintendent Financial Services), 2013 ONFST 13, para 29.