Blake v. Ontario (Superintendent Financial Services), 2016 ONFST 24

FINANCIAL SERVICES TRIBUNAL

Citation: Blake v. Ontario (Superintendent Financial Services), 2016 ONFST 24 Decision No. M0702-2016-1 Date: 2016/12/02

IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act 2006, S.O. 2006, c. 29, in particular sections 16, 21, 38 and 39;

AND IN THE MATTER OF the Notice of Proposal to Refuse to Renew Licence and the Notice of Proposal to Impose Administrative Monetary Penalties, dated July 11, 2016 against Denis Blake, Issued by the Executive Director Licensing and Market Conduct Division 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.

B E T W E E N:

DENIS BLAKE APPLICANT

and

SUPERINTENDENT OF FINANCIAL SERVICES RESPONDENT

BEFORE: Bethune Whiston, Chair of the Panel and Member of the Tribunal

WRITTEN SUBMISSIONS: For the Applicant – Denis Blake, self-represented For the Superintendent of Financial Services – Deborah McPhail, Counsel

REASONS FOR DECISION

I. INTRODUCTION AND ISSUE TO BE DETERMINED

1On October 17, 2016, a pre-hearing teleconference was held in the above matter. It was chaired by Ms. Bethune Whiston ("Chair"), Member, Financial Services Tribunal ("Tribunal").

2In the Superintendent's Pre-Hearing Conference Brief, the Superintendent raised the jurisdiction of the Tribunal to hear this matter as a preliminary issue to be determined.

3The Chair ordered a hearing on the motion be held through the filing of written submissions by the parties. The following issue was identified in connection with this hearing:

a. Does the Tribunal have jurisdiction to hear this matter given the provisions of subsections 21(3) [and 39(5)] of the Mortgage Brokerages, Lenders and Administrators Act 2006, S.O. 2006, c. 29 (the "Act") and the timing of the filing of the Applicant's Request for Hearing? [reference added]

4Subsections 21(3) and 39(5) of the Act deal with proposed revocations and proposed administrative penalties respectively. They state that if the applicant or licensee requests a hearing within 15 days after a notice is received, the Tribunal shall hold a hearing. Subsections 21(7) and 39(7) of the Act state that if there is no request for a hearing in accordance with subsections 21(3) and 39(5), the Superintendent may carry out the proposal in the notice.

5Both the Superintendent and the Applicant filed written submissions with respect to the above issue. I have considered the submissions and have concluded that the Tribunal does not have jurisdiction to conduct a hearing in this matter because the Applicant failed to request a hearing in accordance with the requirements of the Act and the Superintendent does not consent to waive the requirements. The following paragraphs provide the background on this matter and how I reached my decision.

II. BACKGROUND AND SUBMISSIONS

6Denis Blake is a mortgage broker licensed under the Act with the Financial Services Commission of Ontario ("FSCO"). On July 14, 2016, the Superintendent issued to the Applicant Notices of Proposal ("NOPs") which proposed to "Refuse to Renew Licence" and "Impose Administrative Penalties". The NOPs were issued for alleged breaches of the Act and regulations related to receiving fees or other remuneration for dealing or trading in mortgages from a person or entity other than the brokerage on whose behalf the Applicant was authorized to deal or trade.

7The NOPs were dated July 11, 2016, and sent to Mr. Blake by registered and regular mail with a cover letter dated July 14, 2016.

8The NOPs indicate, "a hearing...may be requested by completing the enclosed Request for Hearing (Form 1) and submitting it to the Tribunal within 15 days after the Notice is received". The NOPs further specify, also in bold, that if a Request is received within 15 days, the Tribunal shall hold a hearing, but if no Request is submitted within 15 days, the Superintendent will carry out the proposals. This 15 day period reflects the provisions of subsections 21(3) and (7) and 39(5) and (7) of the Act.

9On August 18, 2016, the Applicant filed a Request for Hearing (the "Request") using the same address that was used on the NOPs and the cover letter.

10An affidavit, dated October 20, 2016, was filed with the Superintendent's submissions. The affidavit is sworn by Sean Mitchell, a Regulatory Discipline Officer employed with FSCO. I have set out or summarized a number of the facts sworn to by Mr. Mitchell, as follows:

a. The address on the letter is the address that was shown in FSCO's licensing database for the Applicant at that time;

b. The registered mail copy of the letter was returned, marked "unclaimed", but the regular mail copy was not returned;

c. A search of the Ministry of Transportation's database on or about August 10 2016, showed the same address as shown in FSCO's licensing database and the address to which the NOPs were sent;

d. On or about September 19, 2016, Mr. Mitchell was informed by Counsel for the Superintendent that the Applicant had advised the Tribunal that, while he still owned the property corresponding to his original address registered with FSCO, he had changed his address.

e. As of September 19, 2016, the Applicant had not changed his address with FSCO's licensing database.

f. Licensees are obliged to update their contact information with FSCO as otherwise FSCO has no way of communicating with them and enforcing compliance;

g. The Superintendent does not waive the Applicant's delay in requesting a hearing.

11The Applicant provided written submissions for the Tribunal to consider. I have set out or summarized a number of the comments made by the Applicant in his submission, as follows:

a. He did not receive the registered letter that was deemed to be delivered on July 19, 2016;

b. The day he sent the Request, namely, August 18, 2016, was only a couple of days after he received the mailed copy of the NOPs;

c. He was locked out of his home at the end of June, 2016, by the holder of his mortgage and given until July 4, 2016, to pay the arrears. As of July 4, 2016, he was no longer at the address;

d. He now understands that he was required to change his address immediately after he moved, but "the only thing that was on my mind at this particular time was to try and save my house". The Applicant considers he responded in a reasonable time considering the large circumstances that he was dealing with, which caused him to forget to change his address.

12Counsel for the Superintendent submits that the NOPs should be deemed to be delivered on July 19, 2016 (five days after the registered and regular mail letters were sent), and the deadline for requesting a hearing would then have expired 15 days after that date, on August 4, 2016. As the Applicant did not request a hearing until August 18, 2016, the Tribunal should hold that it has no jurisdiction to hear his Request.

13Counsel further submits that, unlike certain other legislation in Ontario, the Act does not have a provision that allows a person to establish that, acting in good faith, the person did not receive a notice, order or other document.

14Ms. McPhail reasons that, unlike the other legislation, the Act regulates licensees who are obliged to provide contact information to the Superintendent at all times. I have set out the provisions of the Act that speak to this requirement under Legal Framework and Analysis below.

15Counsel for the Superintendent argues that the legislature enacted an enforcement scheme with a strict 15 day time limit. If licensees are not held to the requirement to keep the Superintendent notified of changes in contact information, in accordance with the legislation, mischief could result. Licensees could fail to keep their address up to date and FSCO would have no way of communicating with them and enforcing compliance.

16Counsel indicates, in her reply submissions, that while she is sympathetic to Mr. Blake's situation, there is no evidence that Mr. Blake was incapacitated and unable to notify FSCO of his change of address. She suggests that licensees under the Act are not excused from compliance with the Act during times of stress.

III. LEGAL FRAMEWORK AND ANALYSIS

17The Tribunal clearly has jurisdiction to hear a matter, in accordance with subsections 21(3) and 39(5) of the Act (described above at paragraph 4), if an applicant or licensee requests a hearing within 15 days after a notice is received. Subsections 21(7) and 39(7) of the Act state that if there is no request for a hearing in accordance with subsections 21(3) and 39(5), the Superintendent may carry out the proposal in the notice.

18In Singh v. Ontario (Superintendent Financial Services), 2013 ONFST 4 ("Singh"), the Tribunal held as follows at paragraph 13:

"The process for requesting a hearing is a procedural requirement. Under section 22 of the FSCO Act, the Tribunal has been granted the power to make rules for the practice and procedure to be observed in any proceeding before it. Under section 15(2) of the Tribunal's Rules of Practice and Procedure for Proceedings Before the Financial Services Tribunal...a Request for Hearing "shall be filed within the time period set out in the statute establishing the right to a hearing..". It can only be waived by the Tribunal on consent of the parties and the Tribunal under section 4(1) of the Statutory Powers Procedure Act."

19The section references noted in the excerpt from Singh remain the same today.

20A number of Tribunal decisions have addressed the nature of time limits established by the Act and by other legislation the Tribunal regularly considers (i.e., are they procedural or substantive). I find it unnecessary to address this topic in this decision. It has been thoroughly reviewed at paragraphs 10 to 13 of Combined Dynamic Equity Investments Limited v. Ontario (Superintendent Financial Services), 2015 ONFST 19, and also at paragraphs 17 through 22 of the Tribunal decision in Lee v. Ontario (Superintendent Financial Services), 2015 ONFST 36 ("Lee"), two cases included with the Superintendent's submissions, and it has no impact on my decision, as the Superintendent does not waive the Applicant's delay in requesting a hearing.

21Subsection 11(1) of Ontario Regulation 187/08 made under the Act (O. Reg. 187/08) requires as follows: "A mortgage broker or agent shall maintain a mailing address in Ontario that is suitable to permit service by registered mail."

22Section 6 of Ontario Regulation 193/08 made under the Act (O. Reg. 193/08) indicates, "If a licensee changes the licensee's mailing address in Ontario, the licensee shall give the Superintendent particulars of the new address no later than five days after the change occurs."

23The Applicant admits in his submissions that as of July 4, 2016, he was no longer at the address specified in FSCO's licensing database, and he did not take action to advise FSCO of the new address where he could be reached by registered mail in accordance with the requirements of the Act and its regulations. As of September 19, 2016, the Applicant still had not changed his address on FSCO's licensing database.

24The Applicant submits that he should be excused from the strict requirements of the Act in this regard, as he had been locked out of his home and trying to save his house was the only thing on his mind.

25Counsel for the Superintendent brought to my attention the Tribunal's decision in Platinum Financial Corporation v. Ontario (Superintendent Financial Services), 2014 ONFST 5 ("Platinum Financial"), which was another proceeding under the Act and involved a failure to maintain errors and omissions insurance. In the decision of the Tribunal at paragraphs 59, 60 and 72, it is stated:

"With respect to the issue of Mr. Cameron's illness, we accept that Mr. Cameron was suffering from Sciatica for a prolonged period beginning in November 2011 and that some of his symptoms are continuing to this day. However, his evidence about his illness fell far short of establishing that he was incapacitated from dealing with the renewal of his E&O insurance. His evidence that his "capacity to think was totally eradicated" was a self-diagnosis unsupported by any medical evidence, and we do not accept it...

He appears to have simply put his regulatory obligations on the back burner while he coped with his illness. Giving priority to his health may be understandable from his personal perspective. It is not, however, an acceptable course of action for a professional functioning in a regulated industry...

...We must bear in mind that it is precisely in times when professionals engaged in this industry are experiencing stress that regulatory enforcement is most necessary for the protection of the public interest. Those who choose to conduct business in this industry must comply with the regulatory regime even when they encounter problems in their personal and business lives. The public interest requires no less."

26I have no objective evidence before me that proves that the Applicant was locked out of his home at the end of June, but I am willing to accept his submissions in that regard. However, I find the analysis in Platinum Financial compelling and I further find that the circumstances the Applicant has described in his submissions are not sufficient to show that he was unable, or incapacitated to such a degree that he should be excused from the requirement, to keep the Superintendent informed of the appropriate address at which to reach him by registered mail. Keeping the lines of communication open with the Superintendent is of critical importance in order to permit the Superintendent to regulate the mortgage broker industry and protect the public interest.

27Subsection 6(1) of Ontario Regulation 190/08 made under the Act (O. Reg. 190/08) indicates that a "...notice is deemed to have been delivered to a licensee or applicant by the Superintendent if it is delivered...by registered mail addressed to the mailing address in Ontario of the licensee or applicant as it appears in the records maintained by the Superintendent." [emphasis added]

28I find that the NOPs were sent by registered mail to the mailing address at that time showing in the records maintained by the Superintendent (the same address provided by the Applicant in his Request for Hearing) and were therefore sent to the Applicant at the appropriate address.

29Subsection 6(2) of Reg. 190/08, specifies that, "Delivery of...[the] notice by the Superintendent is effective...[i]f sent by registered mail, on the earlier of the fifth day after mailing or the day after its receipt was acknowledged by the addressee or an individual accepting it on behalf of the addressee."

30The registered mail was returned, marked "unclaimed". However, as I read subsection 6(2), it does not require that the registered mail be claimed. I read this section as follows: if the registered mail notice is acknowledged by the addressee or an individual accepting it on behalf of the addressee, delivery is effective on the earlier of the fifth day after mailing or the day after its receipt was acknowledged. In any other case, for example, if the registered mail notice is not acknowledged by the addressee or an individual accepting it on behalf of the addressee, delivery is effective on the fifth day after mailing.

31I find support for this conclusion in the Singh case noted above. In that case the NOP was sent on November 8, 2012, by regular and registered mail, to Mr. Singh's address on file with FSCO, but the address was not current. FSCO received confirmation from Canada Post that the notice was not picked up by the applicant. The applicant in that case admitted that he had not notified FSCO of his change in address and he had used the same address on his Request for Hearing. These facts are very similar to the facts in this case. In the Singh case the Tribunal held that the delivery of the notice was not defective (despite the notice not being picked up by the applicant) and the deemed delivery date was held to be November 13, 2012, five days after it was sent.

32I am mindful that the letter enclosing the NOPs, sent by regular mail by the Superintendent to the Applicant, was not returned. It was sent to a property that the Applicant still owned and the address that was shown in FSCO's licensing database for the Applicant at that time. The Applicant did receive that letter at some point prior to his Request. The Applicant indicated in his submissions that he received the mailed copy of the NOPs a couple of days prior to submitting his Request, however, there is no objective evidence of when the letter was received by the Applicant.

33Despite the regular mail copy of the NOPs not being returned, FSCO staff made an effort to determine if the Applicant had changed his address, searching the Ministry of Transportation database and rechecking the FSCO licensing database. It was in the Applicant's power to have ensured he received any communications from FSCO, including the NOPs, either by changing the address shown for him on FSCO's database or picking up the regular mail at his property more frequently. In fact, it was the Applicant's obligation to update FSCO within five days of any change to the address where he could be reached by registered mail, and he did not do so. The legal obligations placed on licensees under the Act must be respected so that FSCO can properly enforce the legislation and protect the public interest.

34The consequences of the Superintendent carrying out the proposals, namely the revocation of the Applicant's mortgage broker's licence and the imposition of a significant monetary penalty, are very serious and will have an impact on the Applicant's ability to earn a livelihood. The Lee case, noted above in paragraph 20, also involved the potential revocation of an individual's licence. The Tribunal in that case quoted from Law Society of Upper Canada v. Neinstein, 2007 8001 (ON SCDC), as follows, "Given those serious consequences, the quality of evidence required to support disciplinary action against a licensee is enhanced; the evidence should be 'clear, convincing and cogent'". I find the evidence, the case law and the statutory provisions in this case to be just so.

35Based on the above analysis, including the precedent of the Singh decision, I must conclude that the Applicant failed to file his Request for Hearing within the 15-day deadline imposed under subsections 21(3) and 39(5), and therefore, in the absence of consent from the Superintendent to waive the time limit, the Tribunal has no jurisdiction to conduct a hearing in this matter.

IV. ORDER

36The Request for Hearing is dismissed and the pre-hearing teleconference scheduled for December 8, 2016, is cancelled.