Citation: Lexxco Investment Services Corporation and Lewis v. Ontario (Superintendent Financial Services), 2017 ONFST 6 Decision No. M0471-2011-1 Date: 2017/06/16

IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c.29 (the “Act”), in particular sections 10, 19, 21 and 36, and Ontario Regulations 193/08 and 189/08;

AND IN THE MATTER OF the Interim Order to Suspend Licence and Notice of Proposal to Revoke Licence, dated July 29, 2011 issued by the Acting Superintendent of Financial Services by delegated authority from the Superintendent of Financial Services;

AND IN THE MATTER OF Orders to Freeze Assets and Trust Funds dated July 29, 2011, August 5, 2011 and September 13, 2011, issued by the Acting Superintendent of Financial Services by delegated authority from the Superintendent of Financial Services and 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.

LEXXCO INVESTMENT SERVICES CORPORATION and ANDRÉ LEWIS

and

BEFORE:

John Solursh Chair of the Panel and Member of the Tribunal

For the Applicant – André Lewis

For the Superintendent of Financial Services – Michael Spagnolo

1Lexxco Investment Services Corporation (“Lexxco”) is a licensed mortgage administrator. On August 9, 2011 the Applicants submitted a Request for Hearing before the Financial Services Tribunal (the “Tribunal”) relating to a Notice of Proposal issued by the Superintendent of Financial Services (the “Superintendent”) on July 29, 2011 to revoke Lexxco’s mortgage administrator licence and certain related orders to freeze assets and trust funds. The proceedings in this matter were held in abeyance at the request of the Applicants as explained below.

2On April 28, 2017 the Tribunal issued a Notice of Intention to Dismiss (the “Notice of Intention to Dismiss”) this proceeding without a hearing pursuant to Rule 33.01 of the Rules of Practice and Procedure for Proceedings Before the Financial Services Tribunal (the “Rules”), based on the oral motion made by the Superintendent at the April 28, 2017 pre-hearing conference in this matter, on the ground that Lexxco and Andre Lewis had taken no steps in the proceeding for an undue period. Accordingly the Tribunal gave notice that it proposed to dismiss this proceeding without a hearing unless reasonable cause was shown for failure to take those steps. The Notice of Intention to Dismiss further gave notice that pursuant to Rule 34.01 of the Rules based on the oral motion made by the Superintendent at the April 28, 2017 pre-hearing conference, the Tribunal proposed to dismiss this proceeding without a hearing if reasonable cause was not shown within 30 days of the giving of the Notice for Lexxco and André Lewis’ failure to appear at the pre-hearing conference on April 28, 2017. The Notice of Intention to Dismiss stated that the parties had the right to make submissions to the Tribunal on the issues that are the subject of that Notice of Intention to Dismiss provided that they are received within 30 days of the giving of the Notice (i.e. by May 29, 2017).

3The Superintendent, in response to the Notice of Intention to Dismiss, filed submissions with the Tribunal dated May 24, 2017 that the proceeding should be dismissed without a hearing pursuant to Rule 33 of the Tribunal’s Rules unless the Applicants provide reasonable explanation for their undue delay and undertake to complete the Request for Hearing within such time as the Tribunal considers appropriate.

II. The Facts

4The following summary of facts are accepted and found by the Tribunal for purposes of this proceeding. It is based on the Tribunal’s limited but uncontradicted record including the sworn Affidavit dated May 24, 2017 of Frances Cordeiro who attested that he is employed as an Enforcement Process Coordinator at the Financial Services Commission of Ontario (“FSCO”).

5Lexxco is currently licensed as a mortgage administrator with licence number 11751.

6On July 29, 2011, the Superintendent issued a Notice of Proposal to Revoke Lexxco’s licence and an order to freeze assets and trust funds.

7On August 9, 2011, the Applicants submitted a Request for Hearing before the Tribunal.

8On January 21, 2012, the Applicants requested that the proceedings before the Tribunal be held in abeyance since Lexxco’s sole officer and Director, Mr. Lewis, was detained in custody pending his trial on a charge of criminal fraud. The hearing before the Tribunal was adjourned sine die due to Mr. Lewis’ upcoming trial.

9On July 22, 2014, following a lengthy trial where Mr. Lewis was found guilty of one count of defrauding the public of an amount exceeding $5,000, Mr. Lewis was sentenced to three years in prison. Mr. Lewis was also ordered to pay a fine.

10On December 2, 2014, Mr. Lewis was informed by the Tribunal that the matter would continue to be held in abeyance due to Mr. Lewis’ incarceration. The Tribunal stated that Mr. Lewis was required to contact the Tribunal when he is released from custody and available to proceed with the hearing.

11On December 30, 2015, Mr. Lewis was released from custody and he did not contact the Superintendent or the Tribunal.

12On March 21, 2017, the Registrar of the Tribunal contacted FSCO and inquired about the status of the Applicant.

13On March 30, 2017, the Registrar for the Tribunal sent a letter requesting that the Superintendent and Mr. Lewis provide their availability in order to schedule a pre-hearing conference.

14On April 13, 2017, the Registrar sent a Notice of Pre-Hearing Conference via both regular and registered mail to Mr. Lewis indicating that a pre-hearing conference would be held on April 28, 2017 at 9:30 a.m.

15On April 28, 2017, a pre-hearing conference was held before the Tribunal. Mr. Lewis did not appear at the pre-hearing conference despite the receipt by him of the Notice of Pre-Hearing Conference. Mr. Lewis had contacted the Registrar by email in the early morning of April 28, 2017, providing a telephone number to be reached at and a voice-mail left at 8:24 a.m. asking to adjourn the pre-hearing. The Registrar’s office returned Mr. Lewis’ call at 8:27 a.m. and left a voice-mail informing him the pre-hearing could not be adjourned at that late time and that Mr. Lewis would be contacted by phone at the commencement of the pre-hearing at 9:30 a.m. Mr. Lewis did not answer when he was called during the pre-hearing conference.

16On April 28, 2017, the parties were sent by the Tribunal, the Notice of Intention to Dismiss the proceeding without a hearing for undue delay and for a failure to appear.

17On May 30, 2017 Mr. Lewis sent an email to the Registrar which stated as follows: “Please be advised that I do not have an interest in pursuing my Mortgage Administrators’ licence”.

18The Registrar replied to Mr. Lewis later in the morning on May 30, 2017 stating that “It appears as though you may be attempting to withdraw your Request for Hearing” and that “if so, can you please clearly confirm ... you are withdrawing your Request for Hearing which relates both to the proposal to revoke Lexxco’s mortgage administrator licence and the Superintendent’s order freezing assets and trust funds.” No subsequent reply or clarification has been received from Mr. Lewis.

III. ORDER

19The Applicants have not provided a reasonable explanation for their undue delay in completing the Request for Hearing to date. It is the view of the Tribunal that the time for providing such a reasonable explanation has past having regard to the failure to meet the 30-day period for submissions set out in the Notice of Intention to Dismiss and having regard to the limited email response dated May 30, 2017 from Mr. Lewis advising the Tribunal that he does not have an interest in pursuing his mortgage administrator’s licence. Mr. Lewis is the sole officer and director of Lexxco. Accordingly, it is ordered that this proceeding is dismissed without a hearing pursuant to Rule 33 of the Tribunal Rules and also pursuant to Rule 34 of the Tribunal Rules.

Dated at Toronto, this 16th day of June, 2017.

“John Solursh” John Solursh