Shah v. Ontario (Superintendent Financial Services), 2018 ONFST 2

FINANCIAL SERVICES TRIBUNAL

Citation: Shah v. Ontario (Superintendent Financial Services), 2018 ONFST 2 Decision No. M0762-2017-1 Date: 2018/01/31

IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c.29 (the “MBLA Act”), in particular sections 18, 19, 21, 38 and 39;

AND IN THE MATTER OF a Notice of Proposal to Revoke Licence and Notice of Proposal to Impose an Administrative Penalty, dated October 3, 2017 against Gokulesh Shah, 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 subsections 21(3) and 39(5) of the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c.29.

B E T W E E N:

GOKULESH SHAH

APPLICANT

and

SUPERINTENDENT OF FINANCIAL SERVICES

RESPONDENT

BEFORE:

Denis Boivin Chair of the Panel and Vice-Chair of the Tribunal

WRITTEN SUBMISSIONS:

For the Applicant – Harval Bassi, Counsel

For the Superintendent of Financial Services – Michael Spagnolo

REASONS FOR DECISION

I. INTRODUCTION

1The Applicant in this matter is licensed as a mortgage agent under the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c. 29 (“MBLA Act”). On October 3, 2017, two Notices of Proposal (the “NOPs”) were issued by the Director, Licensing Branch, by delegated authority from the Superintendent of Financial Services (“Superintendent”). The NOPs propose to revoke the licence of the Applicant and to impose an administrative monetary penalty in the amount of $10,000 on him on the ground that he (1) provided false or deceptive information to a client with respect to a series of mortgage transactions and (2) received fees from a person other than the brokerage on whose behalf he is authorized to deal or trade in mortgages.

2The NOPs were sent to the Applicant on October 5, 2017, by registered mail and regular mail. The Notices informed the Applicant of his right to request a hearing within 15 days of receipt, a right that is provided by subsections 21(3) and 39(5) of the MBLA Act, and attached a copy of the Request for Hearing form that he should complete, in that event. The Applicant completed the Form 1 – Request for Hearing and filed it with the Financial Services Tribunal (“Tribunal”) on November 1, 2017.

3Based on the foregoing, the Tribunal formed the opinion that some aspects of the statutory requirements for bringing this proceeding had not been met and that the proceeding related to matters that were outside its jurisdiction. Accordingly, on November 15, 2017, the Tribunal issued a Notice of Intention to Dismiss this proceeding without a hearing pursuant to Rule 32.01 of the Rules of Practice and Procedure for Proceedings Before the Financial Services Tribunal (“Rules of Practice and Procedure”). In accordance with Rule 32.02, the Applicant was given the right to make written submissions on the issue of whether the Tribunal should dismiss the proceeding without a hearing.

4Having reviewed the written submissions filed on behalf of the Applicant, on December 15, 2017, as well as the written submissions filed on behalf of the Superintendent, on December 12, 2017, I have decided to dismiss the proceeding without a hearing. Simply put, the Tribunal has no jurisdiction to proceed with a hearing on the merits, because the Applicant filed his Request for Hearing more than 15 days after he received the NOPs and the Superintendent has not consented to waive this statutory requirement.

II. issues

5The Notice of Intention to Dismiss issued by the Tribunal raises five potential issues:

a. When did the Applicant receive the NOPs?

b. When did the Applicant file the Request for Hearing with the Tribunal with respect to the NOPs?

c. Was the Request for Hearing filed within the 15-day deadline imposed by subsections 21(3) and 39(5) of the MBLA Act?

d. If the answer to issue (c) is no, what is the effect of subsections 21(3) and 39(5) of the MBLA Act on the Tribunal’s jurisdiction to conduct a hearing in this matter? In particular, is the requirement to file a Request for Hearing within 15 days of receiving a Notice a substantive or procedural requirement?

e. If the requirement to file a Request for Hearing within 15 days of receiving a Notice is procedural in nature, does the Superintendent agree to waive the requirement within the meaning of subsection 4(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 (“SPP Act”)?

III. statutory framework

6This matter involves two notices issued concurrently. The first NOP was issued under section 21 of the MBLA Act and the second was issued under section 39. Section 21 applies when the Superintendent or his authorized delegate proposes to do any of the things listed therein, including when he proposes to revoke a mortgage agent’s licence. For its part, section 39 applies when the Superintendent or his authorized delegate proposes to impose an administrative monetary penalty on someone alleged to have contravened a requirement established under the MBLA Act.

7With respect to a NOP to revoke someone’s licence, subsections 21(2) to 21(7) of the MBLA Act outline the steps that must be followed by the Superintendent or his delegate before issuing an order under the Act. These provisions read as follows:

21 (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. [Emphasis added.]

8With respect to a NOP to impose an administrative monetary penalty, subsections 39(2) to 39(7) of the MBLA Act outline the steps that must be followed by the Superintendent or his delegate before issuing an order under the Act. These provisions read as follows:

39(2) If the Superintendent proposes to impose an administrative penalty under this section, the Superintendent shall give written notice of the proposal to the person or entity, including the details of the contravention or failure to comply, the amount of the penalty and the payment requirements; the Superintendent shall also inform the person or entity that he, she or it can request a hearing by the Tribunal about the proposal and shall advise the person or entity about the process for requesting a hearing.

(3) A notice of proposal to impose an administrative penalty under this section may be combined with a notice of proposal authorized by any other section.

(4) The Superintendent shall not give notice of a proposal more than two years after the day the Superintendent became aware of the contravention or failure to comply.

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

(6) 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.

(7) If the person or entity does not request a hearing or does not make the request in accordance with subsection (5), the Superintendent may carry out the proposal. [Emphasis added]

9Ontario Regulation 190/08, section 6, deals with the delivery of orders, interim orders and notices under the MBLA Act. Pursuant to subsection 6(1), a notice “is deemed to have been delivered to a licensee … if it is delivered … [b]y registered mail addressed to the mailing address in Ontario of the licensee”. Furthermore, subsection 6(2) states that delivery of a notice by registered mail is effective “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”. [Emphasis added]

10One final provision should be noted. Subsection 4(1) of the SPP Act says that “[a]ny procedural requirement of this Act, or of another Act or a regulation that applies to a proceeding, may be waived with the consent of the parties and the tribunal.”

IV. analysis

A. Issue (a)

11When did the Applicant receive the NOPs? In order to assist the Tribunal in answering this question of fact, counsel for the Superintendent relies on the Affidavit of Marsha Hall, sworn on December 8, 2017. She is a Legal Secretary at the Ministry of the Attorney General, Civil Law Division, Financial Services Commission of Ontario (“FSCO”) Branch.

12Having reviewed the Affidavit of Ms. Hall, as well as the exhibits attached thereto, I draw the following conclusions of fact:

a. The NOPs were mailed to the Applicant on October 5, 2017, by both registered mail and regular mail.

b. The address used to communicate with the Applicant was found in the records maintained by the Superintendent. This address is the same as the one provided by the Applicant on his Request for Hearing.

c. The Canada Post Tracking Information attached to the Affidavit of Ms. Hall indicates that the registered letter sent to the Applicant was successfully delivered on October 10, 2017 at 13:54. A person named “G. Shah” signed for the letter.

13With respect to this issue, counsel for the Applicant makes a number of factual representations on behalf of his client. He acknowledges that the registered letter arrived at the Applicant’s residence on October 10, 2017, but submits that the Applicant did not personally receive the letter until October 17, 2017. Allegedly, the Applicant’s wife received the letter on October 10th and signed for it, but she did not open the letter. Thereafter, “[a] miscommunication between Mr. Shah and his wife, coupled with Mr. Shah being in and out of town during this time, resulted in Mr. Shah not receiving the package until October 17, 2017.”

14In this case, it is not necessary to determine whether the person who acknowledged the receipt of the registered letter (“G. Shah”) was the Applicant or his wife, as alleged. Either way, the NOPs are deemed to have been received on October 11, 2017, “the day after its receipt was acknowledged by the addressee or an individual accepting it on behalf of the addressee” (Ontario Regulation 190/08, section 6) [emphasis added].

B. Issue (b)

15When did the Applicant file the Request for Hearing with the Tribunal with respect to the NOPs? Rule 8.04 of the Rules of Practice and Procedure states that a document is deemed to be filed with the Registrar of the Tribunal on the date on which it is received and date stamped by the Registrar. In this case, the date stamp on the Request for Hearing filed by the Applicant is November 1, 2017.

C. Issue (c)

16Was the Request for Hearing filed within the 15-day deadline imposed by subsections 21(3) and 39(5) of the MBLA Act? The answer is no; the Request for Hearing was filed seven (7) days beyond the deadline imposed by both subsections.

17As noted, counsel for the Applicant submits that his client did not become aware of the NOPs until October 17, 2017, because of a miscommunication involving his wife and because he was “in and out of town” during the relevant timeframe. In addition, once he became aware of the NOPs, it is submitted that the Applicant “thought it appropriate to seek input from his wife and he earnestly considered the future of his family”. These events, it is argued, explain why it took the Applicant until November 1st to file his Request for Hearing.

18There may be special circumstances that would justify one’s delay in responding to a NOP issued under the MBLA Act – circumstances that the Superintendent would surely take into consideration when deciding whether to waive the statutory deadline imposed by subsections 21(3) and 39(5). However, in this case, the explanations provided on behalf of the Applicant are unpersuasive, even if they are truthful.

D. Issues (d) and (e)

19The fourth and fifth issues can be considered together. Counsel for the Superintendent submits that it is not necessary to decide whether subsections 21(3) and 39(5) of the MBLA Act impose a substantive requirement that cannot be waived, because his client has not agreed to waive the 15-day limit established therein. In other words, even if subsections 21(3) and 39(5) involve a “procedural requirement … that applies to a proceeding” within the meaning of subsection 4(1) of the SPP Act, the Tribunal would not have any jurisdiction to conduct the hearing requested by the Applicant, because the Superintendent has not consented to waive the statutory deadline on the facts of this case.

20This submission has been endorsed by the Tribunal in a number of cases involving the time limits established by the MBLA Act: see Combined Dynamic Equity Investments Limited v. Ontario (Superintendent Financial Services), 2015 ONFST 19 at para. 12-15; Lee v. Ontario (Superintendent Financial Services), 2015 ONFST 36 at para. 20-23; Blake v. Ontario (Superintendent Financial Services), 2016 ONFST 24 at para. 20; Kannuthurai v. Ontario (Superintendent Financial Services), 2017 ONFST 16 at para 14-16; and Mpire Credit Corporation & Cavanagh v. Ontario (Superintendent Financial Services), 2017 ONFST 19 at para. 19-21.

21The position of the Superintendent has also been adopted by the Tribunal in a number of cases involving section 441.3 of the Insurance Act, R.S.O. 1990, c.I.8, a provision with similar features to subsections 21(3) and 39(5) of the MBLA Act: see Chandler v. Ontario (Superintendent Financial Services), 2014 ONFST 12 at para. 38; Scriver v. Ontario (Superintendent Financial Services), 2015 ONFST 4 at para. 28-29; Carvalho v. Ontario (Superintendent Financial Services), 2015 ONFST 5 at para. 29-30; Kimber v. Ontario (Superintendent Financial Services), 2015 ONFST 8 at para. 21-22; Raghubeer v. Ontario (Superintendent Financial Services), 2015 ONFST 12 at para. 14; and Pereira v. Ontario (Superintendent Financial Services), 2016 ONFST 11 at para. 20-24.

22In light of the Tribunal’s consistent case-law on this question, I am compelled to adopt the submission advanced on behalf of the Superintendent. Therefore, I conclude that issue (d) is moot, given the fact that the answer to issue (e) is no.

E. Conclusion

23In his Written Submissions, counsel for the Applicant argues that the Tribunal has residual jurisdiction under section 20 of the Financial Services Commission of Ontario Act, 1997, S.O. 1997, c. 28. This argument has been considered and rejected in a number of previous cases. As noted therein, the Tribunal’s decision-making power is derived entirely from its enabling statutes. Unless we are given the authority to conduct a hearing, either expressly or by necessary implication, we cannot intervene in a given matter. See Viau v. Ontario (Superintendent Financial Services), 2010 ONFST 8; Gaines v. Ontario (Superintendent Financial Services), 2015 ONFST 9; and Metro Financial Planning Limited v. Ontario (Superintendent Financial Services), 2016 ONFST 4.

24In this case, subsections 21(3) and 39(5) of the MBLA Act gave the Applicant a right to an oral hearing, but he did not avail himself of this right until the statutory deadline had expired. Moreover, he has not provided any reasonable explanation for his delays. Accordingly, in the absence of both parties’ consent to waive the statutory requirement, the Tribunal has no jurisdiction to conduct a hearing.

V. ORDER

25For the foregoing reasons, the Tribunal orders that the Request for Hearing filed by the Applicant be dismissed without a hearing.