Citation: Metro Financial Planning Limited v. Ontario (Superintendent Financial Services), 2016 ONFST 4 Decision No. M0670-2015-1 Date: 2016/02/16

IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act 2006, S.O. 2006, c. 29, in particular sections 8, 18, 19 and 21;

AND IN THE MATTER OF the Notice of Proposal to Revoke Licences and the Interim Order Suspending Licences against Metro Financial Planning Limited and Dinesh Khanna, dated December 22, 2015, 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.

METRO FINANCIAL PLANNING LIMITED and DINESH KHANNA

and

BEFORE:

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

For the Applicants – Brian Duxbury & T. David Marshall

For the Superintendent of Financial Services – Mark Bailey

DATE HEARD: January 27, 2016

1Metro Financial Planning Limited and Dinesh Khanna, the Applicants in this matter, are licensed as a mortgage brokerage and mortgage broker respectively, under the provisions of the Mortgage Brokerages, Lenders and Administrators Act, 2006 (“MBLA Act”). On December 22, 2015, an authorized delegate of the Superintendent of Financial Services (“Superintendent”) issued a Notice of Proposal (“NOP”) pursuant to sections 19 and 21 of the MBLA Act in order to revoke their licences. The same day, the Superintendent’s delegate issued an Interim Order under subsection 19(3) of the Act, immediately suspending said licences.

2On December 24, 2015, the Applicants exercised the right conferred upon them by subsection 21(3) of the MBLA Act; they requested a hearing before the Financial Services Tribunal (“Tribunal”) on the merits of the NOP. Shortly thereafter, the Superintendent’s delegate extended the Interim Order, forbidding the Applicants from dealing or trading in mortgages until the matters raised by their Request for Hearing are finally determined.

3On January 13, 2016, counsel for the Applicants wrote to the Registrar and expressed their intention to bring a motion under Rule 14 of the Rules of Practice and Procedure for Proceedings Before the Financial Services Tribunal (“Rules”). The purpose of this intended motion was to request an order lifting and/or staying the Interim Order issued against their clients. However, upon receiving a copy of this letter, the Superintendent immediately raised a jurisdictional objection. According to him, the Tribunal does not have the authority to grant the relief that the Applicants intend to request.

4On January 19, 2016, I chaired a teleconference for the purpose of determining how to proceed with the Applicants’ intended motion. At the suggestion of counsel, it was decided that a two-step process would be followed. First, upon hearing submissions from both parties, I would determine whether the Tribunal has jurisdiction to lift and/or stay the Interim Order. Second, if necessary, the Tribunal would hold a hearing on the merits of the intended motion and decide whether the Interim Order should be lifted and/or stayed in the specific circumstances of this case.

5On January 27, 2016, an oral hearing was held in order to address the jurisdictional objection raised by the Superintendent. Each party was given the opportunity to present their arguments with respect to the question identified below. In addition, each of them put forward written submissions and a Book of Authorities.

II. Issue

6A single issue must be determined at this step of the process: does the Tribunal have the jurisdiction to lift and/or stay the Interim Order issued against the Applicants, Metro Financial Planning Limited and Dinesh Khanna, suspending their respective licences until the proposal to revoke said licences is finally determined?

7The Applicants made the best arguments that could be advanced in the circumstances. Nevertheless, given the statutory framework and relevant precedents, I am compelled to uphold the jurisdictional objection raised by the Superintendent and conclude that the Tribunal does not have the authority to grant the relief that the Applicants intend to request.

III. Analysis

8The Tribunal is a decision-making body established by statute, namely, by subsection 6(1) of the Financial Services Commission of Ontario Act, 1997 (“FSCO Act”). Like other administrative tribunals, we have no inherent jurisdiction to conduct proceedings or issue binding orders. Our powers – both express and implied – are derived exclusively from our enabling legislation. Therefore, in order to determine whether the Tribunal is authorized to lift and/or stay the Interim Order issued against the Applicants, one must examine the statutory regime created by the Ontario legislature.

9In their submissions, the Applicants have pointed to a number of different legislative provisions in order to define the applicable statutory regime. However, the first place one must look is the MBLA Act. Indeed, this is the statute under which the Applicants are licensed to deal and trade in mortgages in Ontario and pursuant to which the Superintendent’s delegate has issued the contested Interim Order, suspending said licences. For present purposes, sections 19 and 21 of the MBLA Act are relevant, as well as subsections 18(4)-(8). These provisions, in their entirety, read as follows:

(1) The Superintendent may, by order, revoke a licence in any of the circumstances in which he or she is authorized by clause 18 (1) (a), (b), (c) or (d) to suspend the licence.

(2) If the Superintendent proposes to revoke a licence without the licensee’s consent, the Superintendent shall take the steps required by section 21 or 22.

(3) If, in the Superintendent’s opinion, the interests of the public may be adversely affected by any delay in the revocation of a licence as a result of the steps required by section 21, the Superintendent may, without notice, make an interim order suspending the licence and may do so before or after giving the notice required by subsection 21 (2).

(4) Subsections 18 (4) to (8) apply, with necessary modifications, with respect to an interim order.

(4) An interim order takes effect immediately and remains in effect until the expiry of the period for requesting a hearing about the Superintendent’s proposal to [revoke] the licence.

(5) Despite subsection (4), if before the end of such period as may be prescribed the Superintendent does not give the person or entity the notice required by subsection 21 (2), the interim order expires at the end of the prescribed period.

(6) If the licensee requests a hearing about the proposal to [revoke] the licence, the Superintendent may extend the interim order until the proposal is finally determined.

(7) During the suspension, the licensee is not authorized to carry on the business of dealing in mortgages in Ontario or the business of trading in mortgages in Ontario, to deal in mortgages in Ontario or trade in mortgages in Ontario, to carry on business as a mortgage lender in Ontario or to carry on the business of administering mortgages in Ontario, as the case may be.

(8) The Superintendent may revoke a [revocation] order or an interim order at any time.

(1) This section applies if the Superintendent proposes to do any of the following things:

Refuse to issue a licence.

Issue a licence and, without the applicant’s consent, impose conditions.

Amend a licence without the licensee’s consent.

Refuse to renew a mortgage broker’s or agent’s licence.

Renew a mortgage broker’s or agent’s licence and, without the applicant’s consent, amend the conditions to which the licence is subject.

Suspend a licence without the licensee’s consent, except by an interim order authorized by subsection 18 (3) or 19 (3).

Revoke a licence without the licensee’s consent.

Refuse to allow the surrender of a licence.

Allow the surrender of a licence and, without the applicant’s consent, impose conditions concerning its surrender.

(2) The Superintendent shall give written notice of the proposal to the applicant or licensee, including the reasons for the proposal; the Superintendent shall also inform the applicant or licensee that he, she or it can request a hearing by the Tribunal about the proposal and shall advise the applicant or licensee about the process for requesting the hearing.

(3) If the applicant or licensee requests a hearing in writing within 15 days after the notice under subsection (2) is received, the Tribunal shall hold a hearing.

(4) The Tribunal may, by order, direct the Superintendent to carry out the proposal, with or without changes, or substitute its opinion for that of the Superintendent and the Tribunal may impose such conditions as it considers appropriate in the circumstances.

(5) A party to a hearing held by the Tribunal may appeal the order of the Tribunal to the Divisional Court.

(6) An order of the Tribunal takes effect immediately, but if the order is appealed, the Tribunal may grant a stay of the order until the appeal is finally determined.

(7) If the applicant or licensee does not request a hearing or does not make the request in accordance with subsection (3), the Superintendent may carry out the proposal.

10At this stage, four general observations should be made about the provisions that have just been reproduced. First, the statutory basis for the Applicants’ right to a hearing is to be found in subsections 21(2) and 21(3) of the MBLA Act. The Applicants do not have this right, in the circumstances of this case, because the Tribunal is established under the FSCO Act or because the mortgage brokering industry is one of the sectors regulated by FSCO. The Applicants have the right to a hearing because an authorized delegate of the Superintendent has proposed to revoke their licences on December 22, 2015 – one of the nine intended actions that are enumerated in subsection 21(1) of the MBLA Act and that cannot be carried out unless the procedural safeguards listed in section 21 are complied with. On December 24, 2015, two days after the NOP was issued, the Applicants exercised their right by filing a Request for Hearing with the Registrar. Thus, their licences cannot be revoked until the questions raised by the NOP are finally resolved by the Tribunal.

11Second, the legislature has conferred wide-ranging powers on the Tribunal, in the context of a hearing held pursuant to section 21 of the MBLA Act. According to subsection 21(4), the Tribunal is authorized to do any of the following, by order: “direct the Superintendent to carry out the proposal, with or without changes, or substitute its opinion for that of the Superintendent” and “impose such conditions as it considers appropriate in the circumstances”. Given the wording of this provision, our precedents have repeatedly stated that hearings held pursuant to section 21 of the MBLA Act are de novo hearings and that the Superintendent or his delegate are not entitled to any deference: see, for example, Henderson v. Ontario (Superintendent Financial Services), 2008 ONFST 7 (the earliest case making this point) and CDN Financial and Mortgages Inc. v. Ontario (Superintendent Financial Services), 2014 ONFST 10 at para. 17 (the most recent case making this point). Accordingly, in the circumstances of this case, the Tribunal will make its own independent determination as to the suitability of the Applicants to remain licensed, having regard to the evidence presented during their upcoming hearing. However, to repeat what was said in the previous paragraph, these broad-ranging powers do not exist by virtue of the fact that the Tribunal has been established under the FSCO Act or by virtue of the fact that the mortgage brokering industry is one of the sectors regulated by FSCO. These powers exist because they have been expressly conferred to the Tribunal by subsection 21(4) of the MBLA Act, one of the Tribunal’s enabling statutes.

12Third, section 21 does not apply to interim suspension orders issued under subsection 19(3) of the MBLA Act. This point is made clear by the opening words of subsection 21(1): “This section applies if the Superintendent proposes to do any of the following things…”. By definition, interim orders are not proposals; they are binding decisions that take effect immediately and that last for a set period of time. For greater certainty, nine intended actions are enumerated in subsection 21(1) of the MBLA Act, but an interim order issued under subsection 19(3) does not appear on this list. On the contrary, item 6 of this closed list differentiates between a proposal to suspend a licence and an interim suspension order, and clearly states that section 21 does not apply to the latter. Accordingly, the features of the statutory regime that are mentioned in paragraphs 10 and 11 of these Reasons – the right to a hearing granted by subsections 21(2) and 21(3) and the broad-ranging powers of the Tribunal conferred by subsection 21(4) – are not triggered when the Superintendent or his authorized delegate issues an interim order pursuant to subsection 19(3).

13Fourth, the Ontario legislature has turned its mind to the interplay between section 21 of the MBLA Act and interim suspension orders. In fact, it is because of the procedural safeguards listed in section 21 that subsection 19(3) appears in the Act. This is made clear by the opening words of the provision, the words that delineate the Superintendent’s discretion to issue interim orders: “If, in the Superintendent’s opinion, the interests of the public may be adversely affected by any delay in the revocation of a licence as a result of the steps required by section 21…” [emphasis added]. Likewise, subsections 19(4) and 18(4) of the MBLA Act provide that an interim suspension order “takes effect immediately and remains in effect until the expiry of the period for requesting a hearing” about the Superintendent’s proposal to revoke the licence that is suspended by the order. However, pursuant to subsections 19(4) and 18(6), if a hearing is requested by the licensee who is the subject of the NOP, the Superintendent is given additional discretion; he “may extend the interim order until the proposal is finally determined”. Together, these provisions demonstrate that the legislature has contemplated the very predicament in which the Applicants find themselves, that is, having their licences suspended for as long as it takes for the Tribunal to hold a hearing on the merits of the underlying NOP and to determine whether their licences should, in fact, be revoked as proposed by the Superintendent’s authorized delegate.

14With these observations in mind, one must ask the following question: does the MBLA Act authorize the Tribunal to lift and/or stay an interim suspension order, either expressly or by necessary implication? Clearly, we have no explicit powers to this effect. Our express authority to conduct a hearing under this Act and to issue orders is limited to the nine proposals listed in subsection 21(1) of the MBLA Act, and to a number of other intended actions that are irrelevant for the purpose of determining the issue at hand (for example, proposals to issue compliance orders under section 35 and proposals to impose administrative monetary penalties under section 39). But should this authority be inferred? In my view, it should not, because the power to hold a hearing on the merits of an interim suspension order and to lift and/or stay such an order is not “practically necessary for the accomplishment of the object intended to be secured by the statutory regime created by the legislature”, within the meaning of the parameters of the doctrine of jurisdiction by necessary implication established by the Supreme Court of Canada: ATCO Gas and Pipelines Ltd. v. Alberta (Energy and Utilities Board), 2006 SCC 4, [2006] 1 S.C.R. 140 at para. 51 (“ATCO”). On the contrary, if the Tribunal were to infer from sections 19 and 21 of the MBLA Act, and subsections 18(4)-(8), the power to review the merits of an interim suspension order and to lift and/or stay such a measure, this could have a negative impact on the very purpose of interim orders, namely, protecting the interests of the public when time is of the essence. To be sure, I have no doubt that the Applicants are in a difficult situation, as they are forbidden from dealing or trading in mortgages until the matters raised by their Request for Hearing are finally determined. However, this is something contemplated by the MBLA Act, and one cannot infer the powers that the Applicants submit we have without “crossing the line between judicial interpretation and legislative drafting”: ATCO, ibid. at para. 51.

15The Applicants have cited a number of other legislative provisions in support of their position, in particular sections 20 and 21 of the FSCO Act, the statute that establishes the Tribunal. These provisions read as follows:

The Tribunal has exclusive jurisdiction to,

(a) exercise the powers conferred on it under this Act and every other Act that confers powers on or assigns duties to it, and

(b) determine all questions of fact or law that arise in any proceeding before it under any Act mentioned in clause (a).

(1) The Tribunal shall determine all matters before it by order.

(2) The Tribunal may make an order subject to the conditions that are set out in the order.

(3) The Tribunal may make interim orders before making the final order in a matter before it.

(4) An order of the Tribunal is final and conclusive for all purposes unless the Act under which the Tribunal made it provides for an appeal.

Because a hearing has been requested, pursuant to section 21 of the MBLA Act, the Applicants argue that the question of whether the Interim Order should be lifted and/or stayed is a question “of fact or law that arise[s] in [a] proceeding”, within the meaning subsection 20(b) of the FSCO Act. Thus, according to them, the Tribunal has jurisdiction to make this determination. Likewise, they note that subsections 21(2) and (3) of the FSCO Act authorize the Tribunal to issue interim orders and subject them to conditions, powers that are also conferred by section 16.1 of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 (“SPP Act”). According to them, the object of their intended motion will involve “exactly this type of relief”.

16I address these submissions in reverse order. With respect to subsections 21(2) and (3) of the FSCO Act, and section 16.1 of the SPP Act, the question before me is not whether the Tribunal has authority to make interim decisions and orders or to impose conditions on an interim decision or order. Clearly we do, as confirmed by these provisions. Instead, the question is whether the Tribunal has authority to review an interim order issued by the Superintendent or his authorized delegate under subsection 19(3) of the MBLA Act. On this question, subsections 21(2) and (3) of the FSCO Act are silent, as well as section 16.1 of the SPP Act. In the same way, section 20 of the FSCO Act does not support the position advanced by the Applicants. Indeed, the purpose of section 20 is to grant exclusive jurisdiction to the Tribunal over questions of fact and law that arise in proceedings that are held pursuant to our enabling statutes, including proceedings held pursuant to section 21 of the MBLA Act; section 20 of the FSCO Act does not constitute an independent source of authority for conducting a hearing or issuing an order. See Viau v. Ontario (Superintendent Financial Services), 2010 ONFST 8; Gaines v. Ontario (Superintendent Financial Services), 2015 ONFST 9 at para. 14.

17In upholding the jurisdictional objection raised by the Superintendent, I take comfort in the fact that the only precedent remotely on point arrives at the same conclusion. In SNC Insurance Company (Barbados) Inc. v. Ontario (Superintendent Financial Services), 2004 ONFST 9 (“SNC Insurance”), the Superintendent had issued an interim cease and desist order against two corporations pursuant to subsection 441(4) of the Insurance Act, R.S.O. 1990, c. I.8, a provision that is similar to subsection 19(3) of the MBLA Act. In due course, the corporations requested a hearing before the Tribunal on the merits of the interim cease and desist order, as they were entitled to do under subsection 441(4). However, before this hearing could take place, they asked the Tribunal to stay the interim order, on the ground that serious harm would be done to their businesses if the order were to continue in effect until the matter was finally determined on its merits. In arriving at the conclusion that the Tribunal did not have the authority to grant the requested relief, reference was made to subsection 441(6) of the Insurance Act, a provision that allows the Superintendent to extend an interim cease and desist order if the person named in the order requests a hearing – a provision that is identical, for all intents and purposes, to subsection 18(6) of the MBLA Act. Significantly, the Tribunal in SNC Insurance had this this say about the relationship between subsection 441(6) of the Insurance Act and the relief requested by the corporations: “It would be inconsistent with this provision to treat the Tribunal as having the authority to determine whether an interim cease and desist order will have continuing effect, until the hearing is concluded, through the grant or refusal to grant of a stay of the order.”

18In their submissions, the Applicants relied on a recent decision of the Licence Appeal Tribunal, 9897 v. Director, Child Care and Early Years Act, 2015 ONLAT 81692 (“9897”). In this case, the Director appointed under the Child Care and Early Years Act, 2014, S.O. 2014, c. 11, Sched. 1 (the “Act”) issued a protection order pursuant to subsection 37(1) of the Act, immediately suspending the operations of a child care centre (the “Centre”). According to subsection 37(3) of the Act, the person who is required to comply with the order is entitled to a hearing by the Licence Appeal Tribunal (“LAT”), and the Centre made this request in due course. Moreover, according to subsection 37(8) of the Act, the protection order “is not stayed by an appeal to the Tribunal”. Nonetheless, before the hearing on the merits, the Centre brought a motion to stay the suspension of its operations and the LAT concluded that it had the authority to grant the relief requested on an interim basis. However, this case is distinguishable. First of all, the Director did not oppose the Centre’s motion on jurisdictional grounds; the Director simply opposed the granting of a stay on the facts: see 9897, ibid. at paras. 12 and 18. But more importantly, the statutory regime that was interpreted in that case is different from the regime created by the MBLA Act. In particular, the wording of subsection 37(1) of the Act is imperative, that is, the Director is not given any discretion in deciding whether a protection order should be issued: see 9897, ibid. at para. 11. Likewise, there is no provision in section 37 that allows the Director to extend a protection order until a dispute is finally determined by the LAT on its merits. Instead, subsection 37(7) of the Act provides that a protection order is effective immediately. In other words, that case did not involve an interim order issued by the Director pending a hearing before the LAT; it involved a final order that was subject to an appeal by the person named in the order.

19In conclusion, the Tribunal is mindful of the impact that the Interim Order has on the Applicants’ ability to earn a living. However, the following points must also be kept in mind. First, the Tribunal controls its process and our Rules are sufficiently flexible to allow us to proceed with a hearing on an expedited basis. Needless to say, in a case involving an interim suspension order, it will be in everyone’s interests to avoid unnecessary delays and to conduct the proceedings as quickly as reasonably possible. Second, if my conclusion had been different, a hearing to determine whether the Interim Order should be stayed would have required an extensive evidentiary record, a record similar to the one that will be involved in determining whether the licences of the Applicants ought to be revoked. The time that would have been spent on preparing for the Applicants intended motion can now be spent on preparing for the hearing on the merits. Finally, even though the Tribunal does not have the authority to grant the relief requested by the Applicants, courts retain the inherent jurisdiction to review the exercise of any statutory authority to ensure that fundamental fairness requirements are met. Therefore, nothing in this decision precludes the Applicants from making an application for judicial review with respect to the Interim Order issued by the Superintendent’s delegate.

IV. CONCLUSION

20For the reasons given above, I conclude that the Tribunal has no jurisdiction to lift and/or stay the Interim Order issued by the authorized delegate of the Superintendent in this matter.

21As a result, it is not necessary to hold a hearing on the merits of the Applicants’ intended motion. Instead, as previously arranged, we shall hold a pre-hearing teleconference on February 19, 2016, at 2:00 PM, in order to plan for the hearing.

Dated at Toronto, this 16th day of February, 2016.

“Denis Boivin” Denis Boivin