Winnifred Lee o/a Mortgage Dimensions Company of Canada et. al. v. Ontario (CEO of FSRA), 2019 ONFST 15

FINANCIAL SERVICES TRIBUNAL

Citation: Winnifred Lee o/a Mortgage Dimensions Company of Canada et. al. v. Ontario (CEO of FSRA), 2019 ONFST 15 FST File No.: M0844-2018 Date: 2019/07/18

IN THE MATTER OF the Mortgage Brokerages, Lenders and Administrators Act, 2006, S.O. 2006, c.29 (the “Act”), in particular sections 15, 21, 38 and 39;

AND IN THE MATTER OF the Notice of Proposal to Amend Licence and Notice of Proposal to Impose an Administrative Penalty dated September 29, 2018, 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 Request for Hearing in accordance with sections 21(3) and 39(5) of the Act.

B E T W E E N:

WINNIEFRED LEE o/a MORTGAGE DIMENSIONS COMPANY OF CANADA and WINNIEFRED LEE APPLICANTS

and

CHIEF EXECUTIVE OFFICER of the FINANCIAL SERVICES REGULATORY AUTHORITY RESPONDENT

BEFORE: Bethune Whiston — Chair of the Panel and Vice-Chair of the Tribunal

WRITTEN SUBMISSIONS: For the Applicants – No submissions filed For the Superintendent of Financial Services – No submissions filed

REASONS FOR DECISION

I. INTRODUCTION

1Effective June 8, 2019, the Financial Services Commission of Ontario, or FSCO, transitioned into a new regulatory body called the Financial Services Regulatory Authority, or FSRA. The Chief Executive Officer, or CEO, of FSRA has assumed all of the Superintendent's existing regulatory and enforcement responsibilities under the new Financial Services Regulatory Authority of Ontario Act, 2016 (the “FSRA Act”) and, through the legislation and Ministerial orders, automatically replaces the Superintendent as a party to this proceeding. This is reflected in this decision as appropriate.

2A Notice of Proposal to Amend Licence and Notice of Proposal to Impose Administrative Penalty (“NOP”), dated September 24, 2018, was issued by the Superintendent of Financial Services to Winniefred Lee, operating as Mortgage Dimensions Company of Canada. The NOP proposed two things; 1) to amend the broker licence of Ms. Lee to impose the condition that Ms. Lee is prohibited from acting as principal broker of a mortgage brokerage without the written approval of the Superintendent, and 2) to impose an administrative penalty of $3,500 on Ms. Lee, operating as Mortgage Dimensions Company of Canada, for failing to maintain E&O insurance during a period of approximately 16 months.

3A Request for Hearing was filed on October 12, 2018 by Ms. Lee with the Financial Services Tribunal, also for two things: 1) that the allegations against Ms. Lee by the Superintendent of FSCO be dismissed, and 2) an order that the proposals by the Superintendent be dismissed.

4Three pre-hearing teleconferences (“PHCs”) in this matter have been held. The first on January 9, 2019, the second on April 10 and the third on April 24, 2019. The Applicants were not in attendance at any of the PHCs. The PHCs were documented in Pre-Hearing Conference Memoranda dated January 17, 2019, April 16, 2019 and May 1, 2019 (the “PHCMs”).

5On May 1, 2019, a Notice of Intention to Dismiss was issued to the Applicants. The Notice indicated that the Tribunal proposed to dismiss the proceeding without a hearing if reasonable cause was not shown within 30 days of the giving of the Notice for the Applicants or their representatives’ failure to appear at the pre-hearing teleconferences on January 9, 2019, April 10, 2019 and April 24, 2019.

6The Applicants were advised that they had the right to make written submissions to the Tribunal on the issue of reasonable cause for failure to appear, provided the submissions were received within 30 days of the giving of the Notice. After considering the submissions, if any, the Tribunal could dismiss the proceeding without further hearing or could order it to continue, with or without conditions.

7No written submissions have been received from the Applicants.

II. DECISION

8Having considered the following facts and statutory framework, the FST orders that the Applicants’ Request for Hearing be dismissed.

III. FACTS

9As noted above, three PHCs in this matter have been held and the Applicants have not attended at any of the PHCs. Despite attempts to contact the Applicants by Counsel for the Superintendent and by the FST Registrar, the only written communication from the Applicants that the FST is aware of, other than the initial Request for Hearing, was a fax from the Applicants’ representative, Mr. Bradman Lee, received by the Registrar on April 9, 2019. The contents of the fax are described below at paragraph [12].

10In the PHCM for the January PHC, it was noted that the Applicants had, in their Request for Hearing filed October 12, 2018, indicated a desire to postpone proceeding for approximately five months, due to the unexpected and serious illness of the Applicants’ representative that occurred in September 2018. In response to this, the Respondent was content to adjourn the pre-hearing conference until such time as the Applicants would be available to participate.

11The PHC was adjourned, to be continued in April 2019, more than five months following the filing of the Applicants’ Request for Hearing.

12In the PHCM for the April 10, 2019 PHC, it was noted as follows: “[the Registrar] had sent a letter dated January 30, 2019, by registered mail, email and fax, to Mr. Bradman Lee, the Applicants’ representative, advising the Applicants of the continuation of the pre-hearing on April 10, 2019, commencing at 9:30 am. He further advised that the Applicants had not responded to his attempts to contact them until April 9, 2019 at 3:49 pm, when he received a fax from Mr. Bradman Lee. The fax indicated that Mr. Lee continued to act as the representative of the Applicants and that ‘due to health problems [Mr. Lee] will be unavailable to attend the Conference for tomorrow, April 10, 2019. If all goes well [Mr. Lee] will be available during the months of October 2019 to December 2019.’”

13The April 10, 2019 PHCM further noted that the Respondent “was willing to consider the request for the delay, however, the length of the delay in this matter is unusual. A delay in the PHC also delays the hearing itself and the ultimate resolution of the proceeding. He requested an adjournment of the PHC for two weeks, until April 24, 2019, to seek instructions from his client on how the Superintendent wishes to proceed. It is possible that there may be some concern about Ms. Lee’s continuing to act as Principal Broker of Mortgage Dimensions Company of Canada for an extended period. One possible solution would be for the Superintendent to impose an interim order on Ms. Lee to give the Superintendent comfort that the Act will be complied with in the interim, while permitting the delay in the PHC.”

14In the PHCM for the April 24, 2019 PHC, issued on May 1, 2019, it was noted as follows:

a. “[the Registrar] had attempted to reach the Applicants and the Applicants’ representative respecting the continuation of the PHC, but had been unable to do so.

b. Superintendent’s Counsel advised the Chair that he had received instructions from his client respecting how the Superintendent wished to proceed in this matter. As there is some concern about Ms. Lee’s continuing to act as Principal Broker of Mortgage Dimensions Company of Canada for an extended period, the Superintendent considered imposing an interim order on Ms. Lee not to act as Principal Broker until after the determination of this matter.

c. It was determined that a preferable course of action would be to propose to Ms. Lee that she consent to the imposition of an interim order. Superintendent’s Counsel did just that. He sent an email and attempted to send a fax (the latter was unsuccessful) on April 18, 2019, to Ms. Lee and/or her representative proposing the imposition, on consent, of interim conditions on Ms. Lee’s activity as Principal Broker of Mortgage Dimensions Company of Canada (“Mortgage Dimensions”). It was requested that a response be received prior to the April 24, 2019 PHC. No response to the proposal was received.

d. [Superintendent’s Counsel] indicated that the Superintendent remains willing to consent to a delay, until the fall of 2019, in scheduling further steps in this proceeding if Ms. Lee consents to having interim conditions imposed on her acting as Principal Broker of Mortgage Dimensions until a final decision has been made in the proceeding. However, in light of the non–participation of the Applicants in this process to date, despite repeated attempts to contact them, Mr. Scott requested the Tribunal to issue a Notice of Intention to Dismiss the proceeding without a hearing.

e. It was noted that there is nothing preventing Ms. Lee from representing herself in the proceeding or from getting another person to represent her.

15A Notice of Intention to Dismiss the proceeding without a hearing was issued on May 1, 2019. The Notice included the information set out in paragraphs [5] and [6] above. As noted above, no written submissions were received from the Applicants.

IV. STATUTORY FRAMEWORK

16The FST is governed by certain legislation in Ontario, including the Statutory Powers Procedure Act, R.S.O. 1990, Chapter S.22 (the “SPPA”). Section 4.6 of the SPPA describes the conditions required for a tribunal to dismiss a proceeding without a hearing.

17Subsection 4.6(6) states, “A tribunal shall not dismiss a proceeding under this section unless it has made rules under section 25.1 respecting the early dismissal of proceedings and those rules shall include,

a. any of the grounds referred to in subsection (1) upon which a proceeding may be dismissed;

b. the right of the parties who are entitled to receive notice under subsection (2) to make submissions with respect to the dismissal; and

c. the time within which the submissions must be made.

18The FST has made rules under section 25.1 respecting the early dismissal of proceedings. Rule 35.01 of the Rules of Practice and Procedure For Proceedings Before the Financial Services Tribunal (the “Rules”), states, in part, as follows: “Where a party who has initiated a proceeding does not appear at a scheduled hearing or pre-hearing conference of which proper notice has been given in accordance with these Rules, the Tribunal may give notice of intention to dismiss the proceeding if reasonable cause is not shown within 30 days of the giving of the notice for the party’s failure to appear.”

19Rule 35.02 of the Rules, states, in part, as follows: “A party who has been given notice of intention to dismiss under Rule 35.01 shall have the right to make written submissions to the Tribunal on the issue of reasonable cause for failure to appear within 30 days of the giving of such notice. After considering the submissions, if any, the Tribunal may dismiss the proceeding without further hearing…”

V. ORDER

20In light of the foregoing facts and statutory framework, the Tribunal orders the Applicants’ Request for Hearing is dismissed.