FINANCIAL SERVICES TRIBUNAL

Citation: Willis v. Ontario (Superintendent Financial Services), 2016 ONFST 25 Decision No. I0676-2016-2 Date: 2016/12/08

IN THE MATTER OF the Insurance Act, R.S.O. 1990, c. I.8, as amended (the “Act”), in particular sections 393(9) to 393(11);

AND IN THE MATTER OF a Decision and Order dated February 8, 2016 of the Executive Director, Licensing and Market Conduct Division of the Financial Services Commission by delegated authority from the Superintendent of Financial Services;

AND IN THE MATTER OF a Notice of Appeal in accordance with section 17(1) of the Act filed by Jeffrey Murray Willis.

B E T W E E N:

JEFFREY MURRAY WILLIS

APPELLANT

and

SUPERINTENDENT OF FINANCIAL SERVICES

RESPONDENT

BEFORE:

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

John Solursh Member of the Panel and Member of the Tribunal

Paul Farley Member of the Panel and Member of the Tribunal

APPEARANCES:

For the Appellant – Barry B. Papazian

For the Superintendent of Financial Services – Deborah McPhail

DATE HEARD: September 13, 2016

REASONS FOR DECISION

I. INTRODUCTION

1The Appellant in this matter, Jeffrey Murray Willis, is licensed to carry on business as a life insurance agent in the Province of Ontario. On February 8, 2016, the Executive Director of the Licensing and Market Conduct Division of the Financial Services Commission (the “Director”), by delegated authority from the Superintendent of Financial Services (the “Superintendent”), issued an Order suspending the licence of Mr. Willis for a minimum period of nine (9) months and imposing a number of conditions on his licence for a further period of twenty-four (24) months. This Order became effective on February 15, 2016.

2The Director’s Order was made pursuant to statutory provisions that are no longer in force today, namely, subsections 393(8) to 393(11) of the Insurance Act, R.S.O. 1990, c. I-8. At the relevant time, these provisions authorized the Superintendent to appoint a three-person Advisory Board in order to hold a hearing, before deciding whether to revoke or suspend an agent’s licence on grounds of unsuitability. The Advisory Board must be composed of a representative of the Superintendent (the chair of the Advisory Board), a representative of insurers and a representative of agents.

3In this case, the Advisory Board appointed by the Superintendent conducted a two-day hearing on June 15, 2015 and August 10, 2015. During said proceedings, Mr. Willis was represented by his current lawyer, Mr. Papazian. The Advisory Board heard five witnesses, including the Appellant, and received eighteen exhibits. Both Mr. Papazian and the lawyer representing the Financial Services Commission of Ontario (“FSCO”) made oral and written submissions. The Advisory Board released its written recommendations – a seventeen-page single-space document – three months later, on November 19, 2015.

4In the end, the Advisory Board was unanimous with respect to the main allegation brought against the Appellant: according to all three members, the allegation that Mr. Willis was unsuitable to remain licensed had been established on a balance of probabilities. However, the Advisory Board was divided on the subject of penalty. The majority recommended a licence suspension for twelve (12) months, followed by conditions for an additional twelve (12) months, whereas the Chair of the hearing – the representative of the Superintendent on the panel – recommended a licence revocation. If the Superintendent, through the Director by delegated authority, had adopted one of the two approaches put forward by the Advisory Board in relation to penalty, Mr. Willis’ licence would have been suspended for a longer period of time or it would have been revoked.

5On February 23, 2016, Mr. Willis filed a Notice of Appeal with the Registrar of the Financial Services Tribunal (the “Tribunal”) with respect to the Order issued by the Director. In his appeal, Mr. Willis challenges the soundness of the finding of unsuitability upon which the Director’s Order is based, as well as the severity of the penalty imposed on him.

6For reasons that follow, we reject both grounds of appeal and confirm the Order made on February 8, 2016, subject to two modifications with respect to the conditions imposed. Simply put, the conclusions reached by the Director with respect to unsuitability and penalty were within the range of reasonable outcomes available to him, in light of the findings and recommendations made by the Advisory Board. Accordingly, with the exception of two changes regarding the conditions imposed on Mr. Willis, there is no reason for the Tribunal to substitute its opinion for that of the Director.

II. ISSUES

7The Pre-hearing Conference Memorandum and Notice of Hearing that were prepared for this matter identify three issues:

a. What standard of review should the Tribunal apply when reviewing the Order made by the Director; is it the standard of reasonableness or correctness?

b. Is the finding of unsuitability made by the Director reasonable/correct in light of the evidence before him and any evidence admitted by the Tribunal pursuant to Rule 40.03?

c. Is the penalty imposed by the Director reasonable/correct in light of the evidence before him and any evidence admitted by the Tribunal pursuant to Rule 40.03?

III. FACTUAL BACKGROUND

8On January 27, 2012, the Mutual Fund Dealers Association of Canada (the “MFDA”) commenced disciplinary proceedings against Mr. Willis in relation to a series of acts that allegedly occurred between May 2007 and May 2009. A hearing before a three-person panel of the MFDA took place on June 1, 2012, via teleconference. During this teleconference, Mr. Willis was not represented by counsel. However, he participated in the hearing and agreed to proceed on the basis of an Agreed Statement of Facts, an eleven-page document that was signed by him at a time when he did have legal representation. In the document, Mr. Willis states that he agrees that the acts outlined therein occurred and that they “constitute misconduct for which [he] may be penalized” at the discretion of the panel.

9The MFDA issued an Order on the same day as the hearing. The panel found that Mr. Willis had engaged in two acts of misconduct, contrary to MFDA Rules. First, he had “engaged in securities related business from October 2008 to May 2009 that was not carried on for the account and through facilities of the Member by selling, referring or facilitating the sale of investments in four investment products that were not approved for sale by the Member to clients and other individuals”. Second, he had “engaged in personal financing dealings from May 9, 2007 to July 29, 2008, with client NF by remaining indebted to client NF in the amount of $150,000 and re-financing his indebtedness to client NF during this period, thereby creating a conflict of interest between [his] interests and client NF’s interests which [he] failed to ensure was addressed by the exercise of responsible business judgment influenced only by the best interests of the client”. On the basis of these findings, the MFDA hearing panel ordered a permanent prohibition on Mr. Willis, forbidding him from conducting securities-related business while associated with any MFDA member. He was also fined $35,000 and ordered to pay costs in the amount of $2,500.

10On December 13, 2013, Mr. Willis applied to renew his license to carry on business as a life insurance agent. On the application, he responded to a number of questions regarding his past. In response to Question 13, he wrote that he was fined and prohibited from participating in the MFDA industry in June of 2012. In response to Question 15, he wrote that a woman (“NF”) and her family sued a number of defendants (including himself), but that the matter had been settled for $580,000 – with his own errors and omissions carrier paying $150,000. Lastly, in response to Question 17, he wrote that he filed an assignment in bankruptcy on August 18, 2011, but received a discharge on May 30, 2013. Pursuant to this application, the licence of Mr. Willis was renewed for another two years, to December 13, 2015.

11On October 6, 2014, FSCO issued a Notice of Hearing to Mr. Willis in accordance with subsections 393(8) to 393(11) of the Insurance Act. The notice advises Mr. Willis that FSCO intends to revoke or suspend his licence on the basis of the following allegations:

1. Mr. Willis is unsuitable to be licensed as an agent because he has demonstrated incompetence or untrustworthiness to transact the insurance agency business for which his licence was granted, pursuant to section 8(d) of Regulation 347/04. He has also demonstrated that he is ungovernable pursuant to subsection 443(1) of the Act.

2. Mr. Willis is not of good character and reputation as required by clause 4(1)(a) of Regulation 347/04.

3. Mr. Willis was disciplined by the Mutual Fund Dealers Association (“MFDA”) for various activities between February 2005 and May 2009 that were contrary to the MFDA Rules. On June 1, 2012, the MFDA imposed a permanent prohibition on the authority of Mr. Willis to conduct securities-related business while in the employ of or associated with any MFDA member, and fined him $35,000 plus costs of $2,500.

4. Mr. Willis was named as a defendant in a Statement of Claim issued in the Ontario Superior Court of Justice by a 78-year-old widow, N.F., for damages for negligence, negligent misrepresentation, breach of contract, breach of trust, unjust enrichment, and breach of fiduciary duty in the amount of $4 million for activities relating to unauthorized investments in insurance funds and securities. The settlement of this action included a payment to the plaintiffs by Mr. Willis’ errors and omissions insurer.

5. Such other grounds as may be imposed.

12A three-person Advisory Board was appointed by the Superintendent in order to hold a hearing with respect to these allegations. The proceedings were held over two days, on June 15 and August 10, 2015, and Mr. Willis was represented by Mr. Papazian, the same lawyer who is currently acting on his behalf. FSCO called one witness – the Commission investigator who was in charge of the file – and Mr. Willis called four witnesses: his employer, his pastor, his former lawyer and himself. The parties filled eighteen exhibits, including an Agreed Statement of Facts in which Mr. Willis unilaterally states that he no longer admits the truth or characterization of the statements set forth in the Agreed Statement of Facts that was executed for the purpose of the MFDA hearing. He states that this document was executed for the sole purpose of expediting the MFDA proceedings – not because he was truly admitting to the content thereof. At the end of the hearing, both parties made submissions on the merits of the allegations and on the topic of penalty. Notably, in his written submissions, Mr. Papazian advanced one main argument in support of Mr. Willis: he submitted that the MFDA disciplinary proceedings had no relevance to his client’s suitability to act as a life insurance agent.

13The Advisory Board issued their recommendations on November 19, 2015. In their report, they reject Mr. Willis’ attempt to disavow himself from the Agreed Statement of Facts upon which the MFDA Order was based. The Advisory Board observes that Mr. Willis is an intelligent man who would have understood the wording of the document in question. In addition, the report states that even though Mr. Willis did not have a representative during the June 1, 2012, teleconference, he was represented by a lawyer (Mr. Dowhan – one of his witnesses) when the Agreed Statement of Facts was signed. In the end, the Advisory Board concludes that Mr. Willis “may now regret the way in which he conducted the MFDA proceedings; however, he remains bound by them” (at para. 102).

14In their report, the Advisory Board also rejects Mr. Papzian’s submission with respect to the relevance of the MFDA proceedings. Relying on the two acts of misconduct upon which the MFDA Order was based and the facts outlined in the Agreed Statement of Facts executed for the purpose of those proceedings, all evidence admitted during the Advisory Board hearing, a unanimous panel came to the following conclusions:

103. The Board is of the view that, for his own financial gain, Mr. Willis knowingly facilitated the investment by his clients in financial products which were not approved by IPC and which resulted in significant losses for his clients.

104. In addition, Mr. Willis borrowed a significant amount of money from a client.

105. Both the facilitation of investments in unapproved products and the borrowing from a client were in breach of MFDA rules. As a result of his misconduct, his clients suffered. To aggravate matters, Mr. Willis obtained financial rewards totaling more than $500,000.

106. It is clear that Mr. Willis breached the MFDA rules. It is equally clear that as a result of those breaches, his clients suffered. The fact that Mr. Willis also lost money does not diminish the loss of his clients.

107. The MFDA regulates members of the mutual fund industry and does so, like the Commission, in the public interest. Both organizations are charged with the task of protecting the public.

108. As indicated in the jurisprudence presented to the Board, it is allowed to rely in decisions of other regulatory bodies. The Board is of the view that it can bring into evidence and rely upon the MFDA proceedings involving Mr. Willis.

109. While it is true that the MFDA proceedings did not deal with insurance and that there are no allegations that Mr. Willis acted in an untrustworthy fashion regarding insurance products, the Board is mindful of its mandate to protect the public interest and is of the opinion that the actions of Mr. Willis in facilitating unapproved financial transactions is directly relevant to his suitability to be licensed as an insurance agent because of the demonstrated untrustworthiness in his admitted conduct.

110. Thus, the Board is of the view that the unsuitability of Mr. Willis to be licensed at this time is established.

15In their report, the Advisory Board does not address one of the allegations listed in the Notice of Hearing dated October 6, 2014, namely, the allegation that Mr. Willis is not of good character and reputation, as required by subsection 4(1)(a) of Ontario Regulation 347/04. Presumably, at the time of the hearing, FSCO decided not to rely on this ground. Furthermore, it should be noted that the Advisory Board considered and rejected the allegation that Mr. Willis was ungovernable (see paras. 81-86 of their Recommendations). Although the FSCO investigator (Mr. Bydal) made a clear request for information from Mr. Willis during an interview, a subsequent email exchange between both men “diminished [the] clarity” of his request, according to the Advisory Board. As a result, Mr. Willis’ failure to provide the information requested by FSCO did not amount to a breach of the requirement to facilitate examinations imposed by subsection 443(1) of the Insurance Act, as alleged in the Notice of Hearing.

16The Recommendations of the Advisory Board on the subject of penalty are detailed in Part IV(c) of our Reasons. For now, suffice it to say that the majority recommended a licence suspension for twelve months, followed by conditions for an additional twelve months, whereas the Chair of the Advisory Board recommended a licence revocation.

17The Director issued his Decision and Order on February 8, 2016. Under the heading “Findings of Fact”, the Director expressly adopts the findings made by the Advisory Board, including their finding that although the Board did not find Mr. Willis ungovernable Mr. Willis was unsuitable to be licensed. The rest of his decision is primarily devoted to the question of penalty, that is, to describing the reasoning process that led him to make the Order that is the subject of Mr. Willis’ appeal. We shall analyse this part of his decision below, in Part IV(c) of our Reasons. Suffice here to note that the Director’s Order decreases by three months the length of Mr. Willis’ suspension, in comparison to the recommendation made by the Advisory Board majority, but increases by twelve months the length of the conditions imposed upon him. In addition, the Director changed the nature of some of the conditions recommended by the Advisory Board majority.

18The Order of the Director became effective on February 15, 2016. On February 23, 2016, Mr. Willis filled a Notice of Appeal with the Tribunal. In this document, his lawyer states his intention to request a stay of the Director’s Order, pending the hearing of his client’s appeal. In the Notice of Appeal, Mr. Papazian also requests a de novo hearing on all substantive matters, including the penalty imposed on Mr. Willis. However, during the first pre-hearing teleconference held in this matter, Mr. Papazian clarified this statement. He assured the Chair of the pre-hearing teleconference that his client did not want to repeat the hearing that was held by the Advisory Board, and that they understood that the proceedings before the Tribunal were in the nature of an appeal.

19Eventually, the Tribunal rejected Mr. Willis’ request for a stay of the Director’s Order, pursuant to subsection 17(6) of the Insurance Act: see Willis v. Ontario (Superintendent Financial Services), 2016 ONFST 13 (“Willis”). In refusing the stay, the Tribunal held that the evidence put forward by Mr. Willis failed to establish that he would suffer irreparable harm, if the stay were refused. In fact, the evidence established the contrary: (1) Mr. Willis had worked for the same employer – the Strategic Alliance Finance Group or “SAFG” – since 2010; (2) the president of SAFG (Mr. Levy) testified in support of Mr. Willis’ competence and trustworthiness during the Advisory Board hearing; and (3) on the day Mr. Willis’ motion for a stay was heard, July 6, 2016, he remained employed and in good standing with SAFG, despite the fact that his life insurance agent licence had been suspended, five months earlier (Willis at para. 11-12). The Tribunal also held that there was a public interest that outweighed any potential harm to Mr. Willis, namely, “public confidence in the ability of the Superintendent and his delegates to discipline members of the insurance industry” (Willis at para. 16).

IV. ANALYSIS

a. First Issue: The Standard of Review

20The first issue raised by these proceedings is the following: what standard of review should the Tribunal apply when reviewing the Order made by the Director; is it the standard of reasonableness or correctness? In order to answer this question, we begin by outlining the statutory framework pursuant to which the Tribunal has jurisdiction to review the Order made by the Director.

21As stated in the Introduction, the Director’s Order was made pursuant to statutory provisions that are no longer in force today, namely, subsections 393(8) to 393(11) of the Insurance Act. At the relevant time, these provisions read as follows:

393. (8) The Superintendent may revoke or suspend a licence issued under this section if the agent has failed to comply with this Act or the regulations.

(9) In determining the granting or refusal of an application for a licence or renewal of licence, or the revocation or suspension of an existing licence under this section, the Superintendent may, and shall when so requested in writing by the applicant or licensee, appoint an advisory board consisting of,

(a) a representative of insurers;

(b) a representative of agents; and

(c) a representative of the Superintendent,

which shall hold a hearing and make a report to the Superintendent with such recommendation as it considers fit.

(10) The representative of the Superintendent on the advisory board shall act as chair of the board and, for the purposes of his or her duties in connection with the investigation and hearing,

(a) has the same power that the Superior Court of Justice has in the trial of civil actions to summon and enforce the attendance of witnesses and to compel them to give evidence on oath or otherwise and to produce documents, records and things; and

(b) may require or permit persons to give evidence before it by affidavit.

(10.1) The Statutory Powers Procedure Act applies to a hearing under subsection (9) and the Commission shall make rules governing the practice and procedure of a proceeding before an advisory board.

(10.2) The applicant or licensee may appeal to the Tribunal the decision of the Superintendent to refuse to grant a licence, to refuse to renew an existing licence or to revoke or suspend an existing licence.

(11) A licence issued under this section,

(a) expires at such time as the regulations provide unless it is automatically suspended by notice under subsection (6) or is revoked or suspended by the Superintendent; and

(b) may, in the discretion of the Superintendent, be renewed upon due application in a form approved by the Superintendent that includes such information as the Superintendent may require, accompanied by a certificate of agency appointment of a licensed insurer and payment of the fee established by the Minister and of any outstanding administrative penalty imposed under Part XVIII.1.

22Plainly, in this case, Mr. Willis’ right to appeal the Order made by the Director is based on subsection 393(10.2) of the Insurance Act, as it existed at the relevant time. However, the statutory powers conferred upon the Tribunal, in the context of such an appeal, are found elsewhere, namely, in section 17 of the Insurance Act. This provision, which has been in force since 1998, reads as follows:

17. (1) If an appeal is provided for, a person affected by a decision of the Superintendent may appeal the decision to the Tribunal.

(2) A notice of appeal shall be in writing and shall be served on the Superintendent and filed with the Tribunal within 30 days after the date of the Superintendent’s decision or within such other time period that this Act specifies.

(3) The Tribunal shall hold a hearing of an appeal.

(4) The parties to an appeal are the person who requests the appeal, the Superintendent and the other persons whom the Tribunal specifies.

(5) Upon hearing an appeal, the Tribunal may, by order, confirm, vary or rescind the decision appealed from or substitute its decision for that of the Superintendent.

(6) The filing of a notice of appeal does not stay the decision of the Superintendent but the Tribunal may grant a stay until it disposes of the appeal.

23Section 17 of the Insurance Act was interpreted by the Tribunal for the first time in Transamerica Life Insurance Company of Canada v. Ontario (Superintendent Financial Services), 1999 ONFST 1 (“Transamerica”). Unlike the present case, Transamerica did not deal with a licence suspension or revocation pursuant to subsections 393(8) to 393(11) of the Insurance Act. That case dealt with a prohibition order issued by the Superintendent to prevent the appellant insurer from issuing a variable insurance contract. More importantly, Transamerica did not address the standard of review that should be applied when reviewing the prohibition order in question. Instead, the case raised the following procedural question: should the insurer’s appeal be viewed as a hearing de novo, as argued by the Superintendent, so that the Tribunal could hear evidence that was not before the Superintendent, but that arguably supported her order, after the fact? (See Transamerica at p. 5.) In rejecting the argument advanced by the Superintendent, and thereby refusing to hear the ex post facto evidence tendered by the Superintendent, the Tribunal made the following observations with respect to the nature of the proceedings: (at p. 6)

The appeal provision in s. 17 is in direct contrast with other provisions in the legislation that relate to the role of the Tribunal if the Superintendent acts through the issuance of a Notice of Proposal. In other words, the Act sets up two different schemes of decision making. In one scheme, the Superintendent does not actually make a decision but, rather, alerts a party that she intends to make a decision through the issuance of a Notice of Proposal. If an affected party wishes to contest the matter, the Tribunal is called upon to hold a hearing. It is very likely that, in such cases, the Tribunal will hold a hearing and treat the matter as one of first instance. No decision has actually been rendered by the Superintendent in such cases, thus, the Tribunal becomes the first instance decision maker and must adopt procedures appropriate to first instance decision making.

In other situations, such as the matter before us, the Act calls upon the Superintendent to make a decision. Once the decision is made, the Act provides an affected party with a right of appeal. The Tribunal is then called upon to act in an appellate capacity, not as a decision maker at first instance. Accordingly, the procedures adopted will be those appropriate to an appeal.

It would make a mockery of the decision making processes of the Superintendent if the Tribunal were to begin afresh to hear evidence in the case at hand. We understand the intent of the legislation, as expressed in section 17, to be that the Superintendent is to make her decision and the Tribunal is to consider the decision and the materials upon which she based her decision to determine whether to confirm, vary or rescind the decision. In coming to this view of our processes, we have relied upon the plain meaning of the word “appeal” in the section and the fact that the legislation provides for a different process when the Superintendent issues a Notice of Proposal. Moreover, if the Tribunal were to decide this type of matter afresh, it could undermine the operation of the Commission. Parties would either view decision making by the Superintendent as superfluous and, therefore, spend little time in presenting their cases to the Superintendent or parties would diligently prepare both for a first instance hearing before the Superintendent and again for a first instance hearing before the Tribunal, thereby leading to additional costs and delays and a needless duplication of effort as full inquiry would be made at both levels.

24In the present case, despite a statement to the contrary in the Notice of Appeal, counsel for Mr. Willis did not argue that the Tribunal was required to treat his client’s appeal as a hearing de novo. That is, during our hearing of the appeal, Mr. Papazian did not ask the Tribunal to repeat the proceedings that had already taken place on June 15, 2015 and August 10, 2015, when the Advisory Board conducted its hearing. Rather, Mr. Papazian argued that we should apply the standard of correctness when reviewing the Director’s Order and that we should not give any deference to this decision-maker’s reasoning process; instead, we should undertake our own analysis of the Advisory Board’s report and decide whether we agree with the conclusions of the Director. With respect to this argument, the Transamerica ruling is noteworthy, but it is neither determinative nor directly applicable.

25This being said, the Tribunal addressed the standard of review that should be applied to appeals brought pursuant to subsection 393(10.2) of the Insurance Act in Suri v. Ontario (Superintendent Financial Services), 2001 ONFST 15 (“Suri”). In that case, the Director revoked the licence of a life insurance agent pursuant to subsections 393(8) to 393(11) of the Insurance Act, following an advisory board hearing during which the agent represented himself. Before dismissing the agent’s appeal on the merits, the Tribunal outlined the relevant standard of review as follows (at p. 3):

On an appeal such as this, the Tribunal should not treat the matter before it as one of first impression and, therefore, decide it afresh, as it were. The Tribunal made that clear in its Reasons in Transamerica Life Insurance Company of Canada v. Superintendent of Financial Services (FST File No. I0028/98), the first case to be decided by this Tribunal. However, when the appeal is from a decision accepting the recommendations of an Advisory Board that were arrived at following a hearing, as in this case, we would be justified in interfering with the decision if we thought that the hearing was unfair or that there was no reasonable basis for the decision. We would also be justified in interfering with that decision if there were new evidence that caused us to take a different view of the matter than was taken by the original decision-maker. [Emphasis added]

26In Suri, the Tribunal did not have the benefit of the Supreme Court of Canada’s decision in Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190 (“Dunsmuir”). The same is true with respect to other Tribunal cases that have expressly followed Suri: see Lee v. Ontario (Superintendent Financial Services), 2002 ONFST 6 at p. 3; Cicvak v. Ontario (Superintendent Financial Services), 2005 ONFST 4 at p. 8; and Smith v. Ontario (Superintendent Financial Services), 2006 ONFST 6 at p. 5. However, the words underlined in the previous quotation support the position advanced by counsel for the Superintendent, in the case at hand. Indeed, when they are interpreted through the lens of Dunsmuir, these words stand for the proposition that the standard of reasonableness applies to an appeal brought pursuant to subsection 393(10.2) of the Insurance Act, and we so find.

27The Tribunal is not a court of law; it is an administrative tribunal that reviews notices of proposal and orders issued by the Superintendent and his authorized delegates. As noted by Mr. Papazian, Dunsmuir and the case-law that follows this ruling are concerned with a different relationship. This jurisprudence deals with the manner in which courts review the decisions of administrative bodies – for example, the manner in which the Divisional Court of Ontario reviews our own decisions. We are mindful of this distinction and agree that Dunsmuir and its progeny are not perfectly analogous precedents. However, this does not mean that the standard of correctness – the standard of review put forward by Mr. Papazian – is better suited to the task at hand. As emphasised by Justices Bastarache and LeBel, the distinguishing feature of the two standards is the degree of deference that a reviewing body should show to the decision maker’s reasoning process: Dunsmuir at para. 44-50.

28There may be proceedings where a decision reached by the Superintendent or his delegates is entitled to little deference, even though the matter comes to the Tribunal by way of a Notice of Appeal. However, in the case at hand, we are dealing with a decision that was reached by the Director on the basis of findings of fact and recommendations made by an Advisory Board, a three-person panel that conducted a two-day hearing during which Mr. Willis was represented and during which both parties presented evidence and submissions. Furthermore, we are dealing with issues of suitability and what penalty should be imposed on a licensee found to be unsuitable, that is, “questions where the legal issues cannot be easily separated from the factual issues”: Dunsmuir at para. 51. In light of these factors, the Director is entitled to deference in the case at hand. Therefore, we reject Mr. Papazian’s submission and reaffirm the proposition put forward by the Tribunal in Suri: the standard of reasonableness applies to an appeal brought pursuant to subsection 393(10.2) of the Insurance Act.

b. Second Issue: The Finding of Unsuitability

29Given our conclusion with respect to the standard of review, the second issue may be reformulated as follows: is the finding of unsuitability made by the Director reasonable in light of the evidence before him and any evidence admitted by the Tribunal pursuant to Rule 40.03?

30The findings of unsuitability made by the Advisory Board are reproduced above, in paragraph 14 of our Reasons. As indicated, these findings were predicated on the two acts of misconduct upon which the MFDA Order was based and the facts outlined in the Agreed Statement of Facts executed for the purpose of those proceedings. We agree with the Advisory Board, when they conclude that Mr. Willis is bound by the Agreed Statement of Facts in question and that he cannot disavow himself from his admissions, after the fact. In addition to the reasons given by the Advisory Board for arriving at this conclusion, we note that Mr. Willis was careful in his admissions. Indeed, he did not agree to one of the three allegations that was made during the MFDA proceedings, namely, the allegation that he had failed to disclose a number of matters to Investment Planning Counsel (“IPC”), the company with whom he was associated at the time of these proceedings. In our view, the fact that he admitted to only two of the three allegations supports the inference that he fully understood the nature of the document he was signing and its contents.

31In his oral and written submissions, Mr. Papazian refers to a letter that was addressed to himself and that was written by Mr. Dowhan, the lawyer who said during the Advisory Board hearing that he acted for Mr. Willis at the time of the MFDA proceedings. In this letter, dated August 29, 2016, the author claims that IPC has recently admitted a number of things, including the fact that Mr. Willis “disclosed that he had borrowed money from a client in his annual questionnaire submitted to IPC as of May 2, 2006”. According to Mr. Papazian, this letter contains “new evidence” that would have had an impact on the reasoning process of the Advisory Board and Director, had the evidence been known at the time.

32We reject this submission, primarily because neither the Advisory Board’s report nor the Director’s decision claim that Mr. Willis had not disclosed these matters. Indeed, the two acts of misconduct upon which the MFDA Order is based – and upon which the Advisory Board’s recommendations and the Director’s Order are based – involve the facilitation of investments in unapproved products and the act of borrowing money from a client. In addition, paragraph 34 of the Agreed Statement of Facts that Mr. Willis signed for the purposes of the MFDA disciplinary proceedings, back in June of 2012, contains the following admission: “During the material period, [Mr. Willis] identified on annual questionnaires required by IPC that he had ‘outside business activity’ (‘OBA’) and also that he had borrowed money from a client”. The Advisory Board takes note of the same fact, in a subparagraph 98(f) of their report. Accordingly, it cannot be said that the letter written by Mr. Dowhan contains “new evidence”; nor can it be said that the information contained therein – whether new or old – would have influenced the finding of unsuitability made by the Advisory Board and accepted by the Director, or their approaches to the question of penalty.

33In his oral and written submissions, Mr. Papazian invited us to apply the nine factors set out in the Tribunal’s decision in Henderson v. Ontario (Superintendent Financial Services), 2008 ONFST 7 (“Henderson”) in order to determine whether Mr. Willis was suitable to be licensed as a life insurance agent. We agree with him that the framework developed in Henderson can be applied to insurance agents, even though the decision involved a different regulatory context. However, we decline his invitation. In this appeal, we are not supposed to conduct our own analysis of the facts and decide whether we agree with the Director. Instead, we must defer to the Director and determine whether his decision falls within the range of reasonable outcomes available to him. In light of the fact that Mr. Willis received a full and fair hearing and that the Advisory Board made a finding of unsuitability based on uncontested evidence, we hold that this aspect of the Director’s decision satisfies the standard of reasonableness.

c. Third Issue: The Penalty Imposed

34Given our conclusion with respect to the standard of review, the third issue may be reformulated as follows: is the penalty imposed by the Director reasonable in light of the evidence before him and any evidence admitted by the Tribunal pursuant to Rule 40.03?

35In order to assess the reasonableness of the Director’s Order, we must put his decision in context – we must outline the recommendations made by the Advisory Board. At the outset, the majority report states that Mr. Willis took advantage of a number of clients by profiting from the sale of unapproved financial products, conduct that would have led them to recommend the revocation of his licence, but for a number of mitigating circumstances. The mitigating factors identified by the majority are the following: (1) the evidence of good character presented by Mr. Willis, including the evidence of his pastor; (2) the evidence that his current employer continues to employ Mr. Willis and trusts him; (3) the twenty-year tenure of Mr. Willis in the insurance industry; (4) the absence of any further concerns arising since the matters raised in the MFDA proceedings; and (5) the price paid by Mr. Willis to date, including the stigma associated with the MFDA findings. The majority was “impressed by the evidence of mitigation” put forward by Mr. Willis, but could not disregard the fact that “this is a serious matter that requires a serious sanction”: at paras. 118 and 123. In particular, the majority emphasised the following (at para. 121): “the placing of his clients in unapproved financial instruments, in which he received a financial benefit which was much greater than the benefit obtained by his clients, was a serious breach of the MFDA rules and raises substantial concerns about his suitability to hold an insurance licence”. In fact, the Advisory Board majority even rejected the submission made by counsel for FSCO on the topic of penalty – a six-month suspension – on the ground that it was “too lenient”, given the fact that Mr. Willis did not need a life insurance agent licence to continue working in his current position with SAFG (at para. 124).

36In addition to a one-year suspension, the Advisory Board majority made the following recommendations: (1) following the termination of his one-year suspension, Mr. Willis be supervised for a period of one year and provide quarterly reports to FSCO detailing his insurance activities and confirming that his client interactions were supervised; (2) during the one-year suspension, Mr. Willis attend and successfully complete an approved course on Ethics and a Chartered Life Underwriter course; and (3) for a period of at least one year, Mr. Willis attend ADVOCIS quarterly meetings – an acronym associated with the Financial Advisors Association of Canada.

37Writing for the minority, the Chair of the Advisory Board – the representative of the Superintendent on the panel – recommended that the licence of Mr. Willis be revoked. In his view, a number of aggravating circumstances supported his recommendation: (1) Mr. Willis had facilitated the investment by 32 clients and others in unapproved financial products, contrary to MFDA Rules; (2) the investors in question had lost substantial amounts of money; (3) even though Mr. Willis sold personal assets in order to repay $198,000 to the investors, this amount represented only approximately 11% of their total investments and was substantially less than the approximately $523,000 earned by Mr. Willis in commissions; and (4) even though Mr. Willis paid interest on the $150,000 loan from NF and eventually repaid the principal in full, the loan in question was a breach of MFDA Rules and represented a conflict of interest. The Chair of the Advisory Board took note of the mitigating circumstances identified by his majority colleagues, but concluded that “the willingness of Mr. Willis to knowingly place his clients at risk in products which he knew were not approved by IPC, and to profit from that arrangement, demonstrates his unsuitability to hold an insurance licence” (at para. 134).

38As the previous summary demonstrates, the recommendations of the Advisory Board on the question of penalty are transparent, intelligible, and thorough. Both the majority and minority members of the panel clearly articulate the reasoning process that led to their respective recommendations, and one could argue that either recommendation comes within the range of reasonable outcomes available to them in light of the evidence that was heard during the Advisory Board hearing, if this were the question. However, in the case at hand, we must determine whether the Director’s Order meets this standard.

39The Director began by stating that he took into account the mitigating circumstances identified by the majority and that his penalty “would have been more serious” (at p. 4), but for these factors. Relying on a number of previous Advisory Board decisions, he then proceeded to describe in general terms the circumstances that are relevant in assessing whether someone is suitable to be licensed as an insurance agent, when this person has previously been the subject of findings of misconduct made by a non-insurance regulator. As emphasised by the Director, each case must be considered on its own merits; “the disciplinary action imposed by another regulator is not solely determinative of any discipline that might be imposed” under the Insurance Act (at p. 5). More specifically, the Director stated that Mr. Willis’ use of unapproved financial products gave rise to a “reasonable concern for the public” (at p. 5) – a concern identified by both the majority and minority of the Advisory Board – and that his failure to respond to the request for information made by the FSCO investigator, though not sufficient to support a finding of ungovernability, would nevertheless “carry some weight in the final analysis” (at p. 7). In addition, the Director stated that there is no evidence of whether Mr. Willis has paid the fine and cost award imposed by the MFDA, and that it would be inappropriate for him to ignore this question. Significantly, the Director correctly noted that the insurance business is premised on the doctrine of utmost good faith and that a key component of this doctrine involves placing the interests of one’s clients ahead of one’s own interests. Applying this doctrine to the case at hand, he made the following observations (at p. 8):

Mr. Willis’ willingness to place his interests ahead of his clients’ interests necessitates the Superintendent requiring closer supervision of the agent to ensure that misconduct related to securities does not become misconduct in the sale of insurance. Regulation would not be possible if licensees did not bear serious consequences for failing to put a priority on the client’s interests.

40Turning to the specifics of the penalty, the Director disagreed with the Advisory Board on three precise items. First, he did not agree that a Chartered Life Underwriter course or that ADVOCIS quarterly meetings – conditions recommended by the majority – would be beneficial in dealing with the risks associated with insurance products. Second, the Director was not prepared to impose the twelve-month suspension recommended by the majority, because it was “at the longer end of the range of suspensions than have been previously imposed by the Superintendent in such cases” (at p. 8). He also disagreed with the Chair of the Advisory Board, saying that Mr. Willis’ conduct did not warrant a revocation. Third, the Director imposed stricter conditions and a longer period of supervision than the majority of the Advisory Board recommended, “to ensure that Mr. Willis’ contraventions are isolated to the securities related business and that he does not pose a risk to insurance clients” (at p. 7).

41In the end, the Director made the following Order:

1. Mr. Willis’ insurance agent licence shall be suspended for a minimum period of nine months commencing February 15, 2016.

2. Mr. Willis is to successfully complete a course in ethics acceptable to the Superintendent within four (4) months from the date of this Order. The ethics course is not to count toward Continuing Education credits.

3. Subject to section 5 below, Mr. Willis’ licence as an insurance agent shall remain suspended until the later of the completion of the period of suspension ordered in section 1 above and the date Mr. Willis provides the Superintendent with the following written confirmations:

a. From the MFDA: that there is an agreement, in writing, to address payment of the $2,500.00 in costs and $35,000.00 in fines ordered by it on June 1, 2012 or proof that [it] has been paid;

b. From an insurance carrier acceptable to the Superintendent: written proof that he has obtained errors and omissions insurance as required under the Act for an insurance agent in his circumstances; and

c. From the provider of the ethics course as referred to in section 2 above: that he successfully completed the course as and within the time required by section 2.

4. Mr. Willis will:

a. not work as a life insurance agent except for Strategic Alliance Finance Group, Suite 201, 3 Director Court, Vaughan, ON, L4L 4S5, unless otherwise authorized, in writing by the Superintendent;

b. notify the Superintendent immediately, in writing, if he is or becomes subject to any proceeding by any regulatory and/or licensing body regarding any licence he has, had, or may have, that is required in order to deal with the public; and

c. notify the Superintendent immediately, in writing, if he is charged with an offence in any province or country.

5. Mr. Willis’ licence as an insurance agent shall remain suspended until the later of the completion of the period of suspension ordered in section 1 above, and the date that the Superintendent notifies Mr. Willis, in writing, that the Superintendent has accepted a written undertaking of another insurance agent (the Supervising Agent) who is licensed in Ontario, located in Ontario and acceptable to the Superintendent, to do the following for a period of 24 months commencing on the day following the conclusion of the period of suspension of Mr. Willis’ licence:

a. supervise Mr. Willis and co-sign all applications, as evidence of joint responsibility for the insurance business transacted by Mr. Willis;

b. confirm that Mr. Willis has not had access to policyholder funds or accounts, and has not facilitated any policy loans or other investments;

c. confirm that the required errors and omissions insurance is continuously maintained;

d. report to the Superintendent immediately any suspected contraventions of the Act or its regulations by Mr. Willis; and

e. prepare promptly after each six month period during the period of supervision a report regarding Mr. Willis’ insurance business, other requirements and his compliance with the terms of this Order, and deliver it to the Superintendent.

6. The Supervising Agent shall notify, in writing, the Superintendent forthwith if he or she is no longer willing to comply with the terms of the undertaking. Mr. Willis shall not act as an insurance agent for any period of time during which he does not have a Supervising Agent.

7. Mr. Willis shall immediately notify the Superintendent, in writing, if he wishes to substitute the Supervising Agent and shall immediately thereafter cease to act as an insurance agent until such time as he has received the written approval of the Superintendent of a substitute Supervising Agent in accordance with section 5 above.

42In our view, the reasons of the Director are transparent, intelligible, and thorough. The Director clearly articulates the reasoning process that led him to reach his decision, and his Order comes within the range of reasonable outcomes available to him, in light of the findings and recommendations made by the Advisory Board. With the exception of two items, we see no reason to interfere with his Order. First, as conceded by counsel for the Superintendent, the condition stated in clause 3a) is not enforceable and should be removed, because Mr. Willis filed an assignment in bankruptcy on August 18, 2011, and received a discharge on May 30, 2013. Second, the restriction on employment stated in clause 4a) should be linked to the period of supervision stated in clause 5. In our view, there is no reason to impose an indefinite restriction on Mr. Willis’ employment.

V. ORDER

43Subject to the following two changes, the appeal of Mr. Willis is denied and the Order of the Director is confirmed:

a. Clause 3a) of the Director’s Order is struck.

b. Clause 4a) of the Director’s Order is modified by adding the following words: “for a period of 24 months commencing on the day following the conclusion of the period of suspension of Mr. Willis’ licence, not work as a life insurance agent except for Strategic Alliance Finance Group, Suite 201, 3 Director Court, Vaughan, ON, L4L 4S5, unless otherwise authorized, in writing by the Superintendent.

Dated at Toronto, this 8^th^ day of December, 2016.

“Denis Boivin” Denis Boivin

“John Solursh” John Solursh

“Paul Farley” Paul Farley